On July 30, Yandex announced that by the end of August the auction system in Yandex.Direct will change from GSP to VCG auction model. In addition, the new ranking rules will apply and the system of cumulative discounts will be dropped. According to Yandex, these changes aim to help PPC advertisers get more clicks for a better price in any position in the ad block of the SERP. Let’s see what awaits us and be prepared!
From GSP to VCG auction model
According to the current GSP (generalized second-price) auction, Yandex PPC advertisers pay for the bid of the competitor behind them plus the bid increment. In this case, while they pay twice more for going one ad block up, they receive just about 15% clicks more for it.
In the new VCG auction system which Yandex is about to introduce, the CPC will grow while traffic grows. In other words, even in a higher position an advertiser will pay more only if they get more clicks for that position.
How will it look in the interface? You’ll still see the bids needed for position entries and be able to set your own bids. Plus, Yandex.Direct will begin to show the relevant price for each position as it is at that moment, which should make the whole bidding process more transparent.
New ranking rules and no more discounts
Besides the transition to the VCG auction, Yandex also changes the way the ads on the SERP are ranked. From the end of August, Yandex PPC ads will be placed in the ad blocks according to the same factors they are selected for them, i. e. measuring their CTR, bids and the so-called quality coefficient. As Yandex states, this should result in more attractive and relevant ads showing up to the users in the search results.
Lastly, Yandex will no longer offer a discount system to advertisers with large volumes of traffic. Yandex explains that due to the new auction system, CPC will significantly decrease even for the ads in higher positions, hence it is likely to make up for the difference in CPC for those who currently have discounts.
To be prepared for changes that will happen at the end of August, all current Yandex PPC managers have some time to adjust their biddings in Yandex.Direct. And for those wishing to gain some extra time for studying a new auction system, Yandex suggests temporary switching to Average CPC or Average CPA (automatic bidding strategies).
Meanwhile, to help PPC advertisers plan the bidding strategies more effectively, Yandex published more details and recommendations on the new bidding process in the Yandex.Direct API documentation.
All in all, it’s an interesting change that may benefit both users and companies. If the new system works as promised, Yandex PPC advertisers may go more often for bidding for higher positions as it will hopefully become easier to get maximum clicks for an optimal price.