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How the Product Ads bidding system works

The new Product Ads functionality allows you to boost the visibility of your products and group them into different campaigns.

Growing your business is now easier with the new Products Ads bidding system.

What is the bidding system?

The Product Ads bidding system is a feature that
allows you to prioritize ads based on the ad quality and
what you are willing to invest for your products to gain
positions and be placed above your competitor.

When competing, Product Ads will take your objective into account to decide who wins and is placed first in the advertising positions.

How does the bidding system works?

Every time a user makes a search in Mercado Libre, Product Ads puts your ads and those of other sellers in competition to define which ad is shown first.

How does product ads choose the winner of a
bid?

In order to decide who wins a bid, Product Ads considers both target ACOS (advertising cost of sales) defined by the advertiser as the ad quality, expressed as a variable called ad-score.

Which are the benefits?

The Product Ads bidding system allows you to take control of each or your campaigns to achieve different objectives according to your strategy. With the bidding system you will be able to:

» Define your strategy and objective.

» Optimize your budget.

» Stand out from the rest.

How are the ads prioritized?

The ad-rank or ads ranking is a score that determines how ads are prioritized at the search results. The highest value will be the one that will be shown in the best positions.

To obtain the ad-rank for each ad, Product Ads uses the following formula:

The Maximum CPC (cost per click) is automatically determined from the target ACOS, the campaign and the conversion history of each publication. As mentioned before, the target ACOS expresses how much the seller is willing to pay based on the revenue that the campaign will generate.

» The ad-score or ad quality expresses how relevant a publication is based on its history of views and sales. Some elements that determine that track record are photo quality, selling price, claims handling, etc.

» This way, Product Ads ensures that potential buyers see relevant ads that guarantee them a good shopping experience.

Note: for the time being, ad-rank and ad-score are not visible at the campaign manager.

What will I pay?

Each seller defines a target ACOS for their campaign. From that ACOS, Product Ads calculates the maximum CPC (cost per click) that that seller is willing to pay.

Nevertheless, to collect the CPC of the winning ads, Mercado libre uses the second-best price modality. This modality consists in that the winning sellers pay only the minimum necessary to beat their closest competitor. The following formula is used to calculate the CPC to be paid:

* (0.01) The value may vary according to the country.

As you can see, the second-best price modality is beneficial to the winning sellers. You will pay less than you were willing to pay in the first place!

REMEMBER! With Product Ads you will only pay for the clicks your publication generates.

Now to be able to use the bidding system, and achieve more successful campaigns, you only have to log in to your administrator and follow three simple steps.

1. Choose the right strategy for your campaign

When defining a strategy for your Product Ads campaign, you have to ask yourself the following question: “what do I want to achieve with my campaign?”

Each campaign is different: you may need to promote new products that require more visibility or ensure the presence of your best-selling products. Next, explore each of the strategies that you can establish for your campaigns.

» If you are looking for Profitability: you are going to improve your return on investment. This is recommended to boost your best-selling products.

» With the objective of Growth: we can increase the exposure of your medium-notation products with medium levels of profitability.

» And if we are looking for Visibility: we will get the best positions, promoting new products or competitive categories. This way we will achieve greater visibility over profitability.

2. Define a target acos

The target ACOS responds to your campaign strategy
Do you remember the ACOS concept?

The target ACOS shows the percentage of the cost of the campaign/advertisement in relation to the revenue obtained. It is a key data to understand the return on your advertising investment.

For example, if your ACOS is 10%, it means that you invest $10 for every $100 that you generate from sales with advertisement.

3. Done!

¡You are ready to boost your business with the new Bidding System!

Boost your business with the new Product Ads Bidding System.

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