June 13, 2022

3 Reasons Why Brands Should Use Walmart Connect's Second-Price Auction

By Rose Huang / Walmart.com

Whether you are a brand currently on Walmart marketplace or considering an upcoming launch, it is important to understand Walmart Connect’s updated advertising offerings so your advertising strategy is set to win.  The Walmart Connect advertising platform has moved from a first-price to a second-price auction bidding system, which helps brands stretch their advertising dollars farther and drives more traffic which improves your success on Walmart’s marketplace by increasing page views and product sales. 

At Pattern, an official Walmart partner, our advertising team has worked with countless brands on Walmart.com to build and execute advertising strategies and campaigns across a myriad of advertising models that optimizes your ad spend and improves return on ad spend (ROAS).  

Historically, on Walmart.com advertising has been more manual and labor-intensive, and involved more guesswork than brands can afford to experiment with–it is hard for any executive to justify consistently poor ROAS.  So we see brands throw listings up, thinking they will drive traffic through organic channels, but a customer cannot buy a product they do not know about.   Organic ranking on Walmart.com relies on proven sales history, but new products take awhile to ramp up, remaining buried in search results for way too long.  And to increase existing product sales, a brand needs to reach new customers, but the previous first-price auction bidding system deterred brands from spending on ads due to poor ROAS.  Therefore, it is key to spend on advertising and leveraging the second-price auction on Walmart.com will drive traffic for your brand.

Because we know advertising remains an essential way to accelerate your products on marketplaces like Walmart.com, Pattern has the resources and knowledge to continuously improve and update your strategy on new Walmart Connect formats.

Why Advertise on Walmart.com

Walmart.com boasts over 450 million average monthly users, which, for context, is greater than the population of the entire EU, while providing a proportionally lower number of sellers per product type, especially in comparison to Amazon. Since Walmart.com is far less saturated, it is a better place for sellers to get an early-adopter advantage, and experience relatively low competition between sellers, which drives down the costs of your ads.

3 Benefits of Second-Price Auction to Brands

1. More Effective Spend

Walmart’s original, first-price, pay-per-click auction model was relatively blind. A brand would either pay more than what was necessary to win the bid on sponsored product placements or under-bid and lose the spot. And, if they lost the ad placement, there was no way to know how much higher to set their base bid in order to win. 

The only benefit to the now defunct first-price auction bidding was the absolute nature of knowing how much you were bidding as a base cost. But winning the ad placement spot took constant monitoring and a manual stepping-down or -up method to get the bid amount as precise as possible.  So any money you saved in ad spend was essentially spent in resources to monitor and adjust all bids.

Second-price auction bidding potentially lowers the minimum spend threshold for participation in advertising, and creates more uniformity between advertising on Walmart and Amazon.  Brands using second-price auctions are reducing ad spend and effectively improving ROAS as well.   And now, brands can trust that when using bid multipliers, they are not overpaying by even larger margins when the guesswork is taken out of the base bid.  And, by using Walmart’s second-price auction, brands are paying significantly less for every ad click—only $0.01 more than the next highest bid. 

2. Simple and Intuitive

Advertising on Walmart Connect via the second-price auction is more accessible to more brands than ever before.  For any brand running ads on Walmart connect, the second-price auction is simpler, more user friendly, and intuitive than previous platforms. 

Now, brands only have to set a bid ceiling and the platform does the price adjustments for you.  Therefore, you will dedicate less time and resources executing your ads and can focus time on the strategy and budgeting for your campaigns.   In addition, it ultimately costs less to advertise because each bid will only be won by one cent over the next best.  Gone are the days when you would have huge gaps between the next best bid, creating a lack of transparency and losing control over your campaigns.   In addition, the cost per click is now easier to follow, and allows you to track competitive bids which improves your strategic next move.

3. Improve Control on Walmart.com

In this new format, generally increasing your budget for bids is not the ticket to winning the ad placement, you need to control your listing.  Second-price bidding incentivizes brands to optimize their product listings, which ultimately drives a sponsored item rank ahead of the competitive set.  This happens because the second-price auction focuses more on an item's relevance to the search query and having a solid listing helps the algorithm process a product’s relevancy.  

Besides increasing the chance of winning the sponsored ad spot, having a solid listing increases the chance of conversion when the customer has a clean, clear, and compelling product page, and the sponsored ad presented is relevant to what the customers are looking for.

With more effective and compelling product imagery and copy, brands have better control over their advertising opportunities because, with a best-in-class listing, they can start bidding on more keywords than before.  It stretches every penny of a brand's advertising budget a bit further, and Walmart marketplace customers experience a more pleasant, relevant shopping experience, in turn, increasing your brand equity, customer loyalty, and lifetime value.

Pattern Places the Winning Bids on Walmart.com

As the world’s premier global ecommerce accelerator and an official Walmart Partner, Pattern works directly with the Walmart Connect team and can offer insider insights and strategy.  Pattern helps your brand establish, maintain, and maximize advertising on Walmart Connect since we use technology to take the guessing game out of second-price ad bidding by tracking prices and execute data-driven campaigns based on brand and competitive performance. In addition, our brand managers and creative teams make sure your product listing–images, copy and reviews–are curated, accurate, and showcase all the brand values. 

If you’d like to learn more about how we can help you improve your ROAS and win the buy box on Walmart.com and other marketplaces, set up a meeting today.

 Want to learn more or see an example of the Walmart Connect second-price bid system?  Click here

More Resources
Selling on Walmart: Why You Should & Where to Start