If you’ve ever searched an online marketplace, you can imagine how difficult it is to get a listing to the top of results, which often include thousands or tens of thousands of listings. Advertising is one way of boosting visibility – for a fee, of course.
Etsy said it added a feature called contextual bidding to make its sellers’ ads more effective. In a blog post describing the feature, it explained that sellers who participate in the Etsy Ads program (which is optional) only pay for a promoted listing when a buyer clicks on their ad.
In the past, Etsy Ads gave sellers the option to set static bids for their listings based on their best estimate of value, but over time, Etsy changed it to an automated, real-time auction that allowed listings to be highlighted alongside organic search results when the ad system judged them to be relevant.
“Over the past year, we’ve doubled down on improvements to the bid system, developing a neural-network-powered platform that can determine, at request time, when the system should bid higher or lower on a seller’s behalf to promote their item to a buyer,” Etsy techies wrote on the company blog on Tuesday.
“We call it contextual bidding, and it represents a significant improvement in the flexibility and effectiveness of the automation in Etsy Ads.”
The feature accounts for variables when determining conversion rates: “Our data shows that conversion rates differ across many axes: hour-of-day, day-of-week, platform, page type. In other words, context.”
(Estimated conversion rates are important, since paying for ads that never convert into sales would be fruitless. Etsy made the point that making the same bid at the highest-converting times during the weekend as at 4 am on a Tuesday, for example, would not be optimal.)
The authors of the post explain in detail how they implemented contextual bidding using machine learning.
The post sums up the initiative as follows: “We took on a lot of responsibility two years ago when we moved all our sellers to our automated bidding system, but we can confidently say that even the most sophisticated of them (and we have some very sophisticated sellers!) are benefitting from our improved bidding system.”
While sellers should understand whether their investments in Etsy Ads are showing a return, it’s difficult for sellers to know whether they are over-paying for ads. Could they have paid less for the same number of clicks?
If you’ve seen an improvement in your Etsy Ads performance over the past year, let us know.