Walmart Advertising: Advanced Second-Price Auction for Walmart Sponsored Products

Last Updated on July 16, 2022 by

The second-price auction brings in a brand new bidding process to how Walmart manages PPC. Instead of advertisers bidding their maximum amount as they do currently in the first-price auction, they now have the option to seemingly place a bid without making an actual bid. This is done by marking a bid at one penny higher than the next highest ad.

For example, using a first-price auction, if the current highest bid is $0.55 and you bid $1.00, you pay $1.00 per click regardless that the highest bid was lower. In a second-price auction, if the current highest bid is $0.55 and you bid $1.00, you would pay $0.56 per click.

The new system is an online auction, where advertisers will be bidding against each other. The second-highest bid will determine the winner.

How Does This Affect Me?

As an e-commerce seller, you are likely wondering how this changes things for you and your business. Well, you’ve come to the right place!

As a seller, you need to try to understand how these new changes might impact you. While it may seem like a disadvantage, the second-price auction is actually a step in the right direction for e-commerce sellers trying to be successful on Walmart.com.

With this new system, sellers will be able to save money and still compete against their competitors as it will allow you to save money while still placing the highest bid.

It means that you will get more competition, which will somewhat increase your visibility in the search results. With some competition, you will end up paying less.

With a second-price auction, your competitors will be forced to bid higher and higher prices, which should give you an upper hand, as your bidding prices will be lower. Therefore, the second-price auction allows you to win with fewer funds, which will be handy when bidding on more competitive keywords.

How To Win Second-Price Auctions

So, if the highest bidder does not win the auctions, how do you win them? 

You are only eligible to win the auction in a second-price auction if you place your bid at a penny higher than the second-highest bidder. This rule should be followed to understand how to win the auction.

You cannot simply place a bid on your competitor and win the auction. This will not work. Instead, you have to place a bid at a penny higher than the next highest bid.

The second price auction might be a little confusing at first, but you can turn it to your advantage if you understand the rules.

For instance, if you are competing with an ad that has a bid of $0.10 and you want to stay a step above your competitor, you can place your bid at $0.11, which will automatically be the highest bid.

How To Bid In Second-Price Auctions

The second price auction allows you to win with fewer funds, which will be handy when bidding on more competitive keywords.

You should know how to bid in this auction. You can only bid on the competitor’s bid by a penny extra.

For instance, if your competition is bidding $0.10, then you have to bid $0.11 to win the auction. This should be kept in mind because, otherwise, you would end up bidding the same amount as your competitor, which is the lowest bid. If you bid the lowest bid, then you will not win the auction.

Bid Above The Competition

However, oftentimes with second price bidding, you cannot see the competition’s bids. So what do you do in this case?

Because you do not pay the price as you bid, you can bid a bit more aggressively if you do not go over the price you are willing to pay.

Let’s look at an example

Let’s assume you are planning to bid $0.10 for an ad, and your competitor is also bidding $0.05. If you bid for $0.10, you will pay $0.06 instead of the $0.10 you originally bid. Even if your competitor places a bid between $0.05 and $0.10, you will still win the auction and pay one cent more than what the competitor bid.

Of course, if your competitor takes on the same strategy, you will both drive up the price by outbidding each other.

How Is It Better Than A First-Price Auction?

You will not be charged the bid price you originally placed in a second-price auction. Rather, you will be charged one penny more.

Walmart PPC used the first-price auction, which meant that your ad would only be placed if you bid the highest price.

You’d be charged the same price whether you were number one or number two in the auction. This means that you would pay the same price whether your ad showed up at the top or the bottom of the search results.

Following the majority of the industry, Walmart has decided to start using a second-price auction. This is a welcome change as other platforms like Google Ads, Microsoft Ads, and Amazon Ads all use a second-price auction. 

So, Walmart’s transition to a second-price auction will be extremely beneficial to advertisers as it will reduce the risk of overpaying and could potentially  increase a brand’s overall return on investment on Walmart . However, it is important to adjust your strategy based on this change  as well as your specific marketing objectives to ensure that you are fully leveraging the benefits of this new auction dynamic.  

Leave a Comment

BLOG CATEGORIES

BOOK FOR FREE CONSULTATION

    How Did You Hear About Us

    Sign Up For Our Newsletter

    Keep yourself updated with latest trends to maximize revenues across all of your sales channels.

    POPULAR TAGS

    What Clients Say About Us?

    Wow, their team has been great! I have been working with freelancers and remote marketing agencies for about a decade and they are among the best.

    Isaac Curtiss

    Office Furniture Outlet INC.

    Helped overcome difficult tasks that would have taken us a lot of time. We do recommend their services!

    Blake Tanner

    Tanner International INC.

    I’ve been working with Fred and his team for the past few months and have been very happy with their work.

    Dan Hawkins

    Mixles Limited

    Great help/addition to our business. All tasks are fully completed in a timely manner.

    Maurice Embry

    Sam Tucker LLC

    Used for years now and wil continue to use for many more years. I also have no doubt recommending friends and colleagues to use too.

    Nathan Reeves

    Xenons Online Limited

    Our company has worked with Ecomclips for over a year now. I’ve found the team to be very flexible, easy to coach, and adaptable. You won’t regret working with them.

    Abraham Kwan

    PG Incorporation

    The team at Ecomclips has served all my needs with excellence. They are very attentive to my requirements. Communication is fast and crystal clear. I definitely recommend them.

    PR

    Right Parts Group INC.

    So far I have hired Freddy and his team has been excellent, they are guiding me as grow my business. I will continue to work with them.

    Bev Matushewski

    FiTTeck INC.

    Excellent friendly prompt service

    Ahmedani

    Ahmedani Canada INC.

    We’ve been working with Ecomclips for a couple of years now and we are more than happy and appreciative of the their service. Definitely recommend.

    Michael Burnley

    Zooshoo INC.

    A+++ Perfect!!

    Imran Hassam

    Amedeo Apparels Limited

    RECENT BLOG POSTS

    How to Add Product on Amazon Vine – Enrollment Process of Amazon Vin ..

    Customer reviews tremendously impact a product’s selling potential because they prov

    Read More

    Amazon Accelerator Program – How Does it Help you? Should You Join o ..

    Amazon launched the Amazon Accelerator program to support local brands or manufacturers to

    Read More

    WHAT IS THE AMAZON BRAND STORY, AND HOW CAN YOU CREATE IT?

    Introduction: Amazon is a competitive marketplace of online platforms. Marketers spend hun

    Read More