A GSP auction is a classic second-price auction used by Yandex.Direct to determine the cost-per-click for ads on the second search page, YAN and external networks.

GSP auction – SEO WIKI

GSP auction is a classic second-price auction used by Yandex.Direct to determine the debited price of one click, which is determined by the bid of the nearest competitor.

Yandex uses the GSP auction in several ad units:

in dynamic impressions (i.e. from the second page of search results);
on the page “All ads”;
on thematic resources of the Yandex Advertising Network;
on external network sites.

VCG and GSP auctions differ in pricing mechanics. In both cases, the advertiser pays for the traffic, but if for VCG not only the main traffic is paid, but also the additional traffic (which the competitors have not received), then in the case of GSP only the main traffic is paid at the second maximum price.

With the same CTR and quality factors, the bid for the advertiser is set at the bid of the competitor who occupies the next position after him. Suppose that 4 ads compete with each other for 3 places in the block of dynamic impressions, their bids for the keyword are 5, 4, 3, 2 pounds. respectively, and the quality factors and forecasts of CTR ads are the same. Then the results of the GSP auction will be as follows:

Position

Rate

Traffic volume

(% of total traffic)

What value is debited

one

5 pounds

one hundred %

100% traffic for 4 pounds. (bid is determined by the 2nd competitor)

2

4 pounds

85%

85% of traffic for 3 pounds. (3rd competitor determines the bid)

3

3 pounds

75%

75% of traffic for 2 pounds. (4th competitor determines the bid)