Several retailers use a third-party retail media network (RMN) to manage advertising and sponsored item bids. For those retailers, Sponsored Listings offers the ability to marry that campaign information with the power of Constructor’s ranking algorithms. We call this our mediation layer.

Key benefits

• Balanced revenue optimization
  • By mediating sponsored listings, the mediation layer can better balance ad revenue and organic sales. This ensures that sponsored products do not detract from the overall shopping experience, maintaining or even enhancing organic sales while still generating ad revenue.
• Improved relevance and personalization
  • The mediation layer can leverage advanced algorithms to decide which sponsored items to display and their positions, enhancing personalization. This leads to higher engagement rates and a better user experience.
• Simplified integration and operations
  • Managing integration with third-party vendors can be complex. The mediation layer simplifies this process by leveraging a company’s existing Constructor integration to reduce their operational burden, allowing them to focus on core business activities.
• Improved customer experience and ad placement
  • The mediation layer can filter out ads that are irrelevant to the user’s query, ensuring personalized and attractive results intended to convert.

How the mediation layer works

1. A shopper enters a search query on a retailer’s website or mobile app (or, alternatively, visits a browse category or collection page).
2. Constructor’s ranking algorithm determines the best organic results to display on the page.
3. At the same time, Constructor queries its own sponsored campaigns or the third-party RMN (or both) to identify relevant sponsored items.
4. Constructor then re-ranks identified items, using personalization and relevance to determine item placement.

How the mediation layer maximizes overall revenue

Where other platforms might be encouraged to maximize ad revenue, Constructor places the item that delivers the highest overall revenue in a sponsored position.

Let’s look at an example.

Below is Maya, a customer of a popular online retailer. She’s browsing the New Arrivals collection on the retailer’s website and the meditation layer is tasked with presenting either a sponsored item or an organically ranked item in the #3 position on the page.

There are four options, one of which is an organically ranked item and three of which are sponsored items identified in the third-party RMN.

Constructor calculates the excepted ad revenue and expected organic revenue for each of these items using the cost per click bid (CPC bid), item performance metrics, and the chance of click and the chance of purchase by Maya (based on past search, browse, and purchase behaviors)

Of the four items, the item with the highest expected ad revenue is the Moisturizer Duo ($.09), and the item with the highest expected organic revenue is, again, the Moisturizer Duo ($.9). It’s total expected overall revenue is $.99.

Using these calculations, the mediation layer determines whether it’s best to show a sponsored item or an organically ranked item in the #3 position. Remember, the goal is to select the item with the highest expected overall revenue. In the example above, that item is one of the sponsored items, Moisturizer Duo.