Overview

Equativ's Kamino systems use a bidding and scoring mechanism to determine which products appear on a retailer's website. This article explains how the second-price auction and product scoring work to optimize ad delivery.

Second-price auction system

Kamino systems use a second-price auction model for cost-per-click (CPC) advertising. In this model, the winning advertiser pays a small increment (typically €0.01) above the second-highest bid, rather than their own maximum bid.

This system encourages you to bid your true maximum value while maintaining fair pricing and transparency. It balances revenue for the platform with competitive costs for advertisers.

Auction example

Consider two advertisers competing for a single ad placement:

• Advertiser A bids €2.00.
• Advertiser B bids €1.20.

If Advertiser A wins the auction, they pay €1.21 (the second-highest bid of €1.20 plus the €0.01 increment).

Product score weighting

To prioritize high-performing products, the system weights bids using a product score. This score adjusts the bid to favor products with a higher likelihood of engagement. However, the adjusted bid never exceeds your specified maximum bid.

Calculations

The system uses the score to calculate the auction rank. While a high score favors your product, the product score can also influence the final price, potentially bringing it down to the floor price set by the retailer for that specific context.

The product score is calculated based on three parameters:

• Organic sales of the product
• Organic "add-to-cart" actions
• The product's click-through rate (CTR) within the specific campaign

Product election process

Each sponsored product display results from an auction at the creative level. For every available ad placement, eligible products compete based on their rank.

The system determines the winner using the following formula:

Rank = Max Bid × Product Score

Products with the highest rank win the first auctions. Subsequent auctions for remaining placements on the same page use the same pool of eligible products, excluding those that have already won a slot on that specific ad request.

The following illustration presents the bidding process for Products A, B, and C, finalized with product selection.

Out-of-stock management

Product selection on the retailer's website

Each sponsored product display results from an auction at the creative level. This means that for each ad placement, all eligible products compete and the winner fills the slot.

Products with the highest combination of max bid × product score win the first auctions. Each subsequent auction, usually for placements further down the page, involves the same product pool, excluding products that already won a placement in the same ad request.

No-show optimization feature

If a creative triggers a no-show for a specific store_id dimension, the ad server retains this information for one hour.

During that time, the ad server doesn't serve that creative, allowing other eligible products to take its place. This mechanism helps reduce no-show occurrences and optimizes campaign delivery.