During this volatile market, digital shelf space has become increasingly expensive, with inflation at an all-time high. In times when CPCs are very expensive, it has become difficult for advertisers to offload excess inventory and drive customer awareness of their products.
When ROI is essential for many advertisers, it can be challenging to justify bids on super competitive keywords. Some categories are more expensive than others, leading to more concerns about advertising costs while still staying competitive and winning bids. With prices getting increasingly higher for driving brand awareness and getting rid of surplus inventory, reducing costs where feasible has become a huge factor in maintaining profitability.
With CPCs trending higher, Walmart has now transitioned to an industry standard allowing everyone to share relevant first-page space. An advertiser can set up a maximum bid, but they will only pay what is needed to win the auction, helping reduce costs.
A few things to note are that relevancy will still play a massive role in what products win bids, and the higher the relevancy in a customer search query, the more likely you will win the bid. For instance, if three products are bidding and product A is bidding at $1.25; product B is bidding at $3, and product C is bidding at $1.75, product B might not automatically win because it has the highest bid. Walmart will consider what is more relevant to the search query and, based on their algorithm, choose the most relevant product. That bid could be between $1.25, the lowest bid, to $3, the highest bid, if all three products are relevant to the search. Previously, Walmart would've shown product B or C depending on relevancy and due to their bids being higher than product A.
The new bidding system levels the playing field and gives the advertiser the confidence to bid their best without the risk of overpaying. Advertisers can now win digital shelf space with less investment while maintaining search relevancy to increase conversions.
It's no secret that CPC has been trending higher as more sellers join Walmart Marketplace. More competition leads to higher bids—and while Walmart Connect had recently announced expanded ad inventory on Walmart.com, ad space was still at a premium.
Pacvue is pleased to see declines in the average Cost Per Click across several categories immediately following the June 6 release of Walmart's 2nd Price Auction. For the uninitiated, 2nd Price benefits advertisers by only charging the amount needed to win a bid—which may be much lower than the highest bid entered by the advertiser.
Early data indicates a drop in average Cost-Per-Click ranging from 5 to 30%, depending on the category. Those that bid aggressively saw the most benefit. The following looks at the change in CPC in various categories—We measured the period for one week before and following the release.
Start taking advantage of Walmart’s Second Price Auction today and help drive brand awareness to grow your business. It’s the perfect time to leverage this new update to increase bids on high-performing keywords.
Contact us to learn more about how Pacvue Advertising can help you take advantage of Walmart’s Second-Price Auction today.
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