How does the algorithm behind bol Sponsored Products work?
Lars HurkmansCo-founder16 November 2023Reading time 6 minutes
The algorithm behind bol Sponsored Products determines which products it promotes using an auction score: relevance times expected CTR times conversion rate times your bid. bol compares your product to an ideal base product and shows what best matches what consumers search for. A well-optimised, relevant product can therefore beat a higher bid.
This article is part of a longer long-read on Sponsored Products, which you'll find here. Below you'll read which factors this algorithm uses to determine which products it puts in the spotlight.
What is the ideal base product as a frame of reference?
bol assesses your product against an ideal base product: an imaginary product with the characteristics consumers search for most, based on historical search and purchase data. The better your product matches that, the sooner the algorithm sees you as a candidate for promotion. After all, bol wants to offer customers the most relevant search results, and this ideal picture is the yardstick for that.
Important characteristics include, among others:
- Price: is your product competitively priced in the market?
- Specifications: does your product match the most searched-for characteristics?
- Keyword relevance: do the title and description of your product match the search terms consumers use?
bol benefits from promoting products that most closely match this ideal picture, because it increases customer satisfaction and maximises the chance of conversions. If your product matches this base product, the algorithm regards it as an important candidate for promotion and increases your visibility in the search results.
What role do CTR and expected CTR play in the algorithm?
The click-through rate (CTR) is the ratio between how often your ad is shown and how often it's clicked, and it carries significant weight. A high CTR indicates the relevance of your ad to the user and the appeal of your product.
Say you have an ad for "marten repeller" and it's shown 1,000 times in the search results on bol. If 50 people click on it, your CTR is 5 percent (50 clicks divided by 1,000 impressions, times 100). Here's how CTR fits within the algorithm:
- Historical performance: the algorithm analyses the historical performance of your ads to determine an expected CTR.
- Expected CTR: this forecast is based on your product's past performance, compared to the ideal picture of a product for a specific search term. The higher the expected CTR, the more relevant the algorithm considers your ad for that search term.
- Effect on ad position: a higher expected CTR can deliver a better ad position, even if your bid isn't the highest. bol wants to show the most relevant products for an optimal user experience.
What effect do conversions have on the algorithm?
Conversions confirm that your ads not only attract attention, but also lead to sales. The Sponsored Products algorithm uses conversion data to measure the effectiveness of your ads. A higher conversion rate can signal to the algorithm that your products are appealing to customers and match their search intent well, which can result in better visibility for your ads on the platform.
Within Sponsored Products, bol determines conversions through an attribution model. A click counts as a conversion when:
- Direct conversions: the direct purchase of the advertised product after a click.
- Secondary conversions: purchases of other products within the same campaign after a click.
- Tertiary conversions: purchases of other products from the same seller in the same category.
To count as a conversion, the consumer must have bought the product within 14 days of the click.
A calculation example
Suppose you run a Sponsored Products campaign for a range of ultrasonic repellers for 14 days and get the following data:
- Total number of clicks on your ads: 1,000 clicks
- Direct conversions (sales of the advertised product): 50 sales
- Secondary conversions (sales of other products within the same campaign): 30 sales
- Tertiary conversions (sales of other products from the same seller in the same category): 20 sales
That gives the following conversion rates:
- Direct conversion rate: 50 / 1,000 = 5 percent
- Total conversion rate including secondary and tertiary conversions: (50 + 30 + 20) / 1,000 = 10 percent
These numbers show that while 5 percent of clicks directly lead to the sale of the advertised product, the total impact of your campaign on sales, including secondary and tertiary sales, is actually 10 percent.
What effect does your bid have on the auction?
Your bid is the amount you're willing to pay per click on a specific keyword or product, and it forms the last factor in the algorithm. It has a big effect on your ad position, but needs to be balanced with the other factors, such as product relevance and CTR.
Factors that determine the relevant bid:
- Competition on keywords: the greater the competition on a keyword, the higher your bid needs to be to be visible, because more products compete for the same positions.
- Price of your product: the price of your product relative to the best-performing comparable products plays a role. If your product is more expensive than the top products, you may need to bid more to stay competitive.
- Minimum bid per category: every category on bol applies a set minimum bid. That amount differs per category and determines the lowest bid to participate in the auction.
With your bid you can, to a certain extent, steer your chance of a favourable sponsored position:
- Higher bid with lower relevance: if your product is new or not yet optimised for keywords, a higher bid can partly compensate for the lower relevance and CTR and still deliver the desired visibility. There are limits to what a higher bid can compensate for, though, especially with strong competition and better-optimised products from others.
- Lower bid with higher relevance: if your product is already well optimised for relevant keywords and has a strong CTR, you may still be able to reach high positions with a lower bid. The algorithm then regards your product as more relevant, giving you a natural advantage in the auction.
So it's important to find the right balance between your bid and the optimisation of your products. A well-optimised product with a reasonable bid can achieve better results than a less relevant product with a high bid. That underscores the importance of understanding the algorithm and of investing in the presentation and optimisation of your products.
How is the auction score calculated?
Your product's auction score is the product of four factors: relevance, expected CTR, conversion rate and bid price. In summary, the auction score is determined by:
- Relevance: the degree to which your product matches what the consumer is searching for.
- Expected click-through rate (CTR): the estimated chance that your ad is clicked when it's shown.
- Conversion rate: the share of clicks on your ad that leads to a purchase.
- Bid price: the amount you're willing to pay for every click on your ad.
The score is calculated with the following formula:
Auction score = Relevance × Expected CTR × Conversion rate × Bid price
Summary: what do you pay attention to with the Sponsored Products algorithm?
Pay attention mainly to four things: the ideal base product, your CTR, your conversion rate and the balance between your bid and your product relevance. Anyone who understands the algorithm can set up their advertising strategy on bol more precisely: identify the ideal base products, improve your CTR and your conversion rate, and find the balance between your bid and the relevance of your product.
Want to know more about Sponsored Products and how to use them? Read what Sponsored Products are and when to use them. Want to learn how to bid successfully in the auction, we have a separate article on that. To determine the right keywords for your campaigns, read how to find relevant keywords. And if you want to go a level deeper into the auction itself, check out how bol's advertising system really works.