Solving the Challenge of Marketplace Feed Management with a Cost Threshold Rule
Capping Bids on High-CTR, Low-CVR Listings Improves Efficiency
Adlucent manages PLAs for our client, an ecommerce marketplace, which has 16-20M products listed on their site at any given time. These products are member-generated and therefore vary greatly in listing quality and price. Every day, members add 300,000 new products. Because of high product turnover, coupled with efficiency goals and budgets, less than 1% of products receive a click each day. Each product, new or used, has an inventory of 1. So, once it’s purchased, it no longer exists in the feed. Google gives preference to products that have high CTRs because they are profitable for the search engine.
However, high-CTR products are not necessarily an indication of conversion rate, especially whenever the user clicks through to a landing page displaying a used product that may have some drawbacks. Certain products accrue high search costs, yet customers never purchase them. Not only does this waste money, but there’s also the missed opportunity cost of superior products that should receive greater investment. Given budget limitations, size of product offering and product turnover, it is only feasible to bid on a small percentage of the overall product offerings. The low-converting products change every day since the site catalog is constantly in flux. So, there is no manual solution to reduce wasted ad spend and promote better listings.
The client had an overall goal ROAS of 7, but the low-converting feed listings were a threat to campaign efficiency. Products that were shown more frequently had high CTRs, which is why they were favored by Google. They had low CPC as a result of their high CTR, but the CVR was incredibly low. These products were less than half as efficient as standard listings for the client, so reducing their priority in search would have the potential to boost revenue on an ongoing basis.
How Adlucent Helped
Adlucent’s solution was to create a Cost Threshold rule. When a product reached 7% of its advertised price in ad spend, we assigned it a custom label and bid down on these products. Implementing this rule ensured that these products with low conversion rates that were not meeting our efficiency goals were suppressed. In turn, we could invest more in showing higher-converting products instead.
In our first week applying this custom label rule to identify inefficient products, the Adlucent team generated substantial additional revenue at an even higher-than-standard efficiency. By strategically capping bids, Adlucent helped the client achieve a 17% increase in daily revenue after they had begun to see a plateau.