eBay’s global marketplace gives buyers access to billions of listings from brands and sellers around the world to shop their passions and find unique items they can’t get anywhere else. To boost buyer discovery and the likelihood of a sale, we empower sellers to increase listing visibility through Promoted Listings, an advertising tool that helps listings stand out.
How does Promoted Listings work? The fee for Promoted Listings is based on an “ad rate”: Sellers choose the percentage of the final sale price they’ll pay if a buyer purchases the item within 30 days of clicking the promoted listing. But even with visibility into detailed metrics and sales reports, calculating the optimal ad rate for an item can be tricky.
To help sellers stay competitive, eBay used machine learning to develop an algorithm that provides an item-level suggested ad rate. Ultimately, this helps sellers to balance cost and performance.
Here are the three things you need to know about our new recommendations tool.
It guides you in setting effective ad rates
The recommendations tool estimates the probability of an item gaining a significant visibility boost based on a specific ad rate. Here’s the process:
- The tool evaluates an item’s features like clicks, transactions, price, etc. over a set of potential ad rates.
- Then, it generates a probability score. A “successful” item will show significant improvement in impressions and score/rank higher than to its organic status in major channels, like the search result page and the view item page
- Finally, the tool reviews ad-rate options and their probabilities for success to recommend the optimal rate to the seller based on the formula:
(price – final value fee – ad fee) * score
The resulting suggested ad rate is designed not only to boost visibility, but also to help balance visibility with cost. This rate is then shared with the seller as the suggested item-level ad rate.
It helps you reduce advertising costs
Before the new recommendations tool, we provided a “trending ad rate” for each promoted item that took into account the average ad rate across similar items sold via Promoted Listings. When we compared the new suggested ad rate of the tool, to the trending ad rate for over 81 million experimental items, we made an important discovery:
The tool helps sellers reduce their advertising costs by recommending ad rates lower than the trending ones when appropriate.
It’s best to bid equal to or higher than the tool’s recommendation, not lower
In evaluating the effectiveness of our recommendations tool, we found that setting an items ad rate equal to or higher than the suggested ad rate performed significantly better compared to bidding lower than the recommendation.
Here’s what’s next…
Improving adoption of suggested ad rates will help sellers bring more high-quality listings into Promoted Listings. Expanded participation will not only increase sellers’ item-based visibility, but it will also enhance the overall buyer experience. We’ll continue to analyze different seller needs and incorporate more signals to make the recommendations more robust, transparent, and accurate.
And increased seller participation will also enhance the shopper experience – what’s good for the seller is also good for the buyer. Buyers will be able to find more of what they love. To learn more about Promoted Listings and start listing your merchandise on eBay today, click here.