One of the quirks of metasearch campaign management is that each media channel presents a challenge on how best to optimize your bids.
Each channel offers a varying level of control (or multipliers) which enable DerbySoft to fine-tune final bids to make sure it is optimized to your campaign objective.
The more multipliers available, the more control we have to tweak your bids. Which is why we are excited to hear TripAdvisor’s intent to introduce additional control to their bidding calculations. If rolled out, the impact these changes would bring are huge and should not be underestimated.
DerbySoft and TripAdvisor will soon test two major changes to their metasearch auctions: Per Night Bidding and Second Price Auction models.
What is PNB?
PNB is a bid type of TripAdvisor meta auction. It lets you submit a per-night bid on a location and apply bidding levers (multipliers). The initial multiplier for PNB will be the length of stay, but TripAdvisor will roll out additional multipliers in the future.
This change in how bids will be calculated will let you achieve better bid efficiency by offering more control on your bids, especially for those users who search for a longer length of stay.
How is it calculated?
The per-night bid will be multiplied by the number of days in a selected stay (LoS), and by a multiplier set by us for that LoS.
The formula to calculate your final bid is:
Final bid = PNB x Searched LOS x LOS multiplier
$1 x 5nights ($5) X 0.7 = $3.50
PNB will be tested in Canada, Germany, Singapore, Mexico, Switzerland and Taiwan.
Second Price Auction means you pay true value
Currently in TripAdvisor, what you bid is what you pay. With the introduction of SPA, your final CPC will be relative to others. Meaning you will no longer be punished for bidding too high.
Here is what bidding in TripAdvisor currently looks like:
Here you can see when SPA is applied your bid of $2 is not what you will pay as the true value of your bid. This leads to more budget becoming available across the channel.
For the initial tests, SPA will be rolled out for bidding in in Mexico, Switzerland and Taiwan.
Harmonization of Auctions
We encourage the introduction of PNB and SPA. With this, we can see the main metasearch channels beginning to harmonize the way bidding works; bringing in similar multipliers which allow more bidding granularity and control over your performance.
This ultimately benefits you and your digital marketing budget. With more granular control across multiple metasearch channels, you can be more targeted on how you spend your budget and generate better leads.
From our perspective, increased granular control also allows for better cross-channel optimization, allowing for budgets to be shifted between channels to target the best-qualified users to aid conversion.
We welcome the update by TripAdvisor and are keen to see the results of the test. When rolled out, the introduction of new multipliers such as length of stay will undoubtedly improve performance. In the end, this granular control over you final CPC bid will lead to better bid efficiency.
With the introduction of PNB, we believe average CPCs will increase. This, however, is not a bad thing. With more control, budgets will be better spent with new multipliers, and you will see better-qualified leads. This will lead to more relevant search results and qualified leads and, therefore, an increase in conversion rates.