Auctions and Bidding

Martailer employs a sophisticated retail-optimized auction system to determine auction winners, prioritizing relevance over bid amount. This ensures that ads shown are competitive, meaningful for users, and drive higher engagement, ultimately delivering better revenues for retailers. Ad relevance plays a significantly larger role in the auction winner selection process than the bid amount— even a very high bid with a low click or conversion probability might lose to a lower bid with high engagement potential.

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Martailer auction algorithm can be customized per our retail partner's needs

Auction Process

When a user interacts with a retail platform, Martailer initiates an auction to select the most appropriate ad. The decision is based on two key factors:

1. Relevance Score:

This score evaluates how well an ad aligns with user intent and historical data signals. Factors contributing to the Relevance Score among other parameters include:
• Users' past purchases and browsing history.
• Users' current session behavior.
• Keyword relevancy.
• Product metrics such as click-through rate (CTR), conversion rate, and add-to-cart frequency, margin.
Ads with higher Relevance Scores are prioritized, ensuring better outcomes for retailers.

2. Bid Amount:

The monetary value an advertiser is willing to pay for placement. We support pricing models like CPC, CPM, and CPA.

Auction Models

Martailer supports multiple auction models to suit different retail media strategies. Below are the models, with examples and their respective pros and cons:

1. First-Price Auction

The highest bidder wins the auction and pays the exact amount of their bid.

Example:
• Advertiser A bids $1.20.
• Advertiser B bids $1.00.

Advertiser A wins and pays $1.20.

Pros:
• Simple and transparent pricing model.
• Encourages advertisers to bid their true value for ad placements.

Cons:
• Can lead to overpayment, especially in high-competition scenarios.
• Less forgiving for advertisers without clear bidding strategies.

2. Second-Price Auction

The highest bidder wins, but they pay just above the second-highest bid.

Example:
• Advertiser A bids $1.50.
• Advertiser B bids $1.10.

Advertiser A wins and pays $1.11.

Pros:
• Encourages strategic bidding without the risk of overpaying.
• Helps optimize cost efficiency for advertisers.

Cons:
• Slightly more complex to understand for new advertisers.
• May reduce aggressive bidding in low-competition environments.

3. Custom Auction Models

Retailers can design custom rules, such as setting minimum bid thresholds or creating exclusive placements for premium advertisers.

Pros:
• Highly flexible and tailored to retailer-specific goals.
• Optimized for premium inventory and unique use cases.

Cons:
• More complex to set up and manage.
• Requires clear guidelines for advertisers to ensure transparency.

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Please note

We always suggest our retail clients start with a first-price auction model and set minimum bids.

Relevance as the Core Driver

While bid amount plays a role in ad selection, Relevance Score is weighted far more heavily. A lower bid with high engagement potential—such as strong click-through and conversion rates—may outperform a high bid with lower relevance. This approach:
• Ensures users see ads that resonate with their needs.
• Helps retailers maximize ROI through higher engagement and sales.
• Encourages advertisers to focus on ad quality and performance rather than solely increasing bid amounts.