Yandex to Change Auction Model and Ad Ranking Rules

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19 August 2015. The Russian search giant Yandex is changing its auction model and ad ranking rules. Starting from the end of August, the current General Second Price Model (GSP) will be replaced with the Vickrey-Clarke-Groves model (VCG). Unlike the current auction system, where an increase in the cost-per-click is only associated with an increase in position, the new auction system increases the cost-per-click based on the additional traffic received. The principle behind it is that the advertiser with a higher position would only pay higher price for the extra clicks gained in comparison to those that he could achieve in the lower position. Yandex claims that, as a result of the change, the price for the top positions will go down significantly. The way the ads are ranked on the Yandex search results page is also changing. In the past, if, for example, eight advertisers were trying to get to the premium placement, only 3 of them would fill in the available places; the ones with the highest combination of click-through-rate and bid would enter the adblock. However, out of the 3 selected, the highest position within the adblock would be given to the advertiser with the highest bid. Now this is changing. The ads will be displayed based on their ranking points achieved simply by multiplication of the bid and click-through-rate. The new ad ranking calculations show that Yandex is putting significant pressure on advertisers to make sure their campaigns are of a high quality. The advice for advertisers with low click-through-rates is therefore to take steps to improve this.

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