Walmart Connect recently unveiled impactful changes to its search relevancy algorithm that improve the search results and brand ability to spend on Walmart by allowing any item to be promoted via Sponsored Products in order to appear in relevant in-grid results. Next up in this round of changes is how Walmart Connect sells advertisements in online auctions. Coming soon, Walmart is implementing a second-price model, which is a more transparent way to award the ad space, and something brands have requested. This post is all about how a second-price auction works, how it affects advertisers, and some best practices on how to win second-price auctions.

How Second-Price Auction Works

The advanced second-price auction is a new bidding process to how Walmart Connect manages pay per click campaigns, similar to how bidding works on Amazon Advertising and Google Ads campaigns. The new system is an online auction, where advertisers will be bidding against each other. Instead of advertisers paying their maximum amount, now they can pay bids higher than the next highest ad to try and win the auction.  This gives Sponsored Products and Search Brand Amplifier advertisers the confidence to submit their best cost-per-click bids without the risk of overpaying.  

On Walmart, the second-price auction still factors in relevancy. On the search term “laundry detergent,” the relevant products will serve an ad and win the auction versus a dryer sheet brand bidding on the same term. Even if the dryer sheet brand has the highest bid, the more relevant products will win the auction.

How Does This Affect Me?

This change from a first to second-price bidding auction will result in more profitable advertising for brands. They can expect to see lower cost-per-click (CPC) ads, and in turn, a higher return on advertising spend (ROAS).  

How to Win Second-Price Auctions

In order to win on Walmart after second-price auction bidding is implemented, advertisers need to bid above the competition and must ensure they’re bidding on relevant terms for their brand’s products. But keep in mind that even if you bid high on terms deemed irrelevant by Walmart’s system, you are not guaranteed to win those placements.

Best Practices to Consider

Top Tips for Refreshing Your Strategy Heading into Summer 2022

As we head into the summer season, it’s important to keep a log of all things you can do on a quarterly basis to track past learnings, keep up with seasonal trends, and continue momentum with your sales and profitability on Walmart.  

Here’s a list of tips to consider for Pacvue users.

Feel like you’re not ready for this major upcoming change on Walmart Connect from first to second-price bidding auction? Contact us today and we will walk you through all the changes to come and how to best prepare your product’s ads to ensure higher relevancy and lower costs.