Don’t try to avoid paying Yandex

Let me try to explain, in a short article, why you need to spend money on Yandex auctions first — and only then even think about “paying only for conversions”. (Yandex is Russia’s largest search ecosystem; Yandex Direct is its ads platform, similar in role to Google Ads.)

Nice to meet you — I’m Bogdan. I’m building a digital marketing team under the name The Quiet Orbit.

The problem

There’s a “clever” business out there that wants to pay Yandex “only for results”.

Yandex Direct has a feature for that. You can launch a campaign where you pay only per conversion. You set the conversion price you want — and boom, supposedly. Harvest time.

It sounds idealistic and optimistic. So many small and micro businesses want to enter the system like this and get customers.

And then reality says: nope.

The fundamentals

Success in any ad campaign, anywhere, rests on two things.

1) Your participation in an auction for ad inventory inside an RTB system (VK Ads, Yandex Direct, “banned-gram / banned-book” (Instagram/Facebook are restricted in Russia), Google Ads, TikTok Ads, etc.)

2) How sane your website interface is — how well your UX is thought through (UX/UI design).

And whether that UX is designed and researched consciously, instead of being pulled out of thin air.

In essence, it’s about whether your landing is actually fit for the traffic you’re sending. And traffic…

Auctions

In Yandex Direct there are two types of auctions. Both are second-price mechanisms.

Let’s start with the second one — it’s simpler.

GSP auction = Generalized Second Price

In plain words: a second-price auction.

Imagine four advertisers. One bids 2 rubles per click. The second bids 5. The third bids 7. The fourth bids 10.

The fourth wins. They take the first position (as shown in the image), and everyone lines up behind them.

The winner bids the highest, yet under a second-price rule they pay as if they were the second-highest bidder (that’s why it’s “second price”). The second bidder pays as if they were the third. The third pays as if they were the fourth. The fourth pays what they bid.

So the logic is simple: you need to be ahead. Your payment will be close to the advertiser you overtook — unless you’re at the very tail end. If you’re at the very tail end, you get leftovers, on a good day.

If you get anything at all.

Let’s say a keyword has 1,500 impressions per month. Then:

The 10-ruble bidder gets 1,500 impressions, yet pays 7 rubles per click.

The 7-ruble bidder gets 1,275 impressions, yet pays 5 rubles per click.

The 5-ruble bidder gets 1,125 impressions, yet pays 2 rubles per click.

And the fourth advertiser pays 2 rubles for whatever trickles down from the 5-ruble advertiser — while that advertiser tweaks targeting, turns campaigns on/off, drains or opens traffic, etc. If the 5-ruble advertiser never turns anything off and their funnel works well, then there can be no traffic left for you.

This auction, as I’m repeating, works inside YAN (Yandex Advertising Network) — in Russian it’s РСЯ: “Рекламная сеть Яндекса”. (Think: a large network of partner sites/apps that show Yandex ads.)

For example, Pikabu (a major Russian entertainment/news community site) is part of that network. If you lose hard, users of that site will not see your ads for your keyword or for the interest category that Yandex defines.

It feels… unpleasant.

VCG auction = Vickrey–Clarke–Groves

It primarily works in  search.

“Primarily” because there’s also a broader placement concept:

Roughly speaking, these are Yandex partners that are formally related to the Yandex ad network.

In the official help centre I found this:

Back to the VCG auction issue. I just wanted the terminology to be precise.

VCG is framed as “more fair” compared to a classic second-price auction.

Here the auction plays a “distributor of benefits”.

Notice how the chart includes the 4th and even the 5th advertiser. It already looks more optimistic.

The point of a VCG auction is that it first collects everyone’s bids, forms the “market”, and then prevents the top bidder from flooding the system with money and pushing the weaker advertisers out completely — a thing that can happen in a classic second-price setting.

The one who truly “suffers” is the 5th advertiser — and even they matter. They are not useless. They’re needed.

• The 5th advertiser bids 2 rubles per click — the cheapest bid that becomes the baseline for the next four advertisers. That’s their core role. Because of their low willingness to pay, the other four receive 65% of the traffic at a price slightly above this baseline.
• The 4th advertiser gets 65% of the traffic thanks to the 5th advertiser’s baseline. To do that, the 4th must bid 3 rubles per click — yet they buy it at 2 rubles.

• The 3rd advertiser gets 65% of the traffic at 2 rubles thanks to the 5th advertiser. Because the 3rd is willing to bid 5 rubles, they get +10% traffic, yet they pay 3 rubles due to the 4th advertiser’s bid.
• The 2nd advertiser, as you can guess, pays 2 rubles for 65% thanks to the 5th, plus 10% at the 4th’s level, plus another 10% because they are willing to pay  7 rubles per click — yet they pay 5 rubles thanks to the 3rd advertiser.
• The 1st advertiser gains +15% traffic (reaching 100%) by adding a couple more rubles. They bid 10 rubles per click. Then the auction sells them: 65% at 2 rubles, +10% at 3 rubles, +10% at 5 rubles, and +15% at 7 rubles, based on the 2nd advertiser.
  Because they’re willing to pay that premium for the last 15%.

Let’s take the same keyword with 1,500 impressions per month.

Here’s the table view:

Advertiser	Bid	Traffic share, %	Traffic volume, impressions	Pays	eCPC (average cost per click)
Winner	10 rubles	100%	1500	65% of traffic at 2 rubles (price set by the 5th advertiser); +10% extra traffic at 3 rubles (price set by the 4th advertiser); +10% extra traffic at 5 rubles (price set by the 3rd advertiser); +15% extra traffic at 7 rubles (price set by the 2nd advertiser).	4.25 rubles
Second	7 rubles	85%	1275	65% of traffic at 2 rubles (price set by the 5th advertiser); +10% extra traffic at 3 rubles (price set by the 4th advertiser); +10% extra traffic at 5 rubles (price set by the 3rd advertiser);	3.33 rubles
Third	5 rubles	75%	1125	65% of traffic at 2 rubles (price set by the 5th advertiser); +10% extra traffic at 3 rubles (price set by the 4th advertiser);	2.5 rubles
Fourth	3 rubles	65%	975	65% of traffic at 2 rubles (price set by the 5th advertiser);	2
Loser	2 rubles	0%		0% — yet they did their job: they stopped the auction from overheating (a literary reference in the original Russian phrasing)

What you need to understand about the difference between VCG and GSP

GSP can be “overheated” (similar to first-price auction behaviour in some systems), yet it’s slower. You’ll know you climbed into positions 1–2 when you set a wild CPC bid and still buy clicks at a tolerable price.

VCG is harder to overheat because there’s always a 5th advertiser creating a calming baseline. If you enter with aggressive bids, you still won’t pay those numbers. The 2nd and 3rd won’t pay them either. Everyone gets traffic — just in different proportions.

In practice, everyone gets traffic, with timing and volumes shifting. Competition is dynamic: someone turns campaigns on, someone turns them off. Keywords also vary wildly by search volume. As a result, even the 4th advertiser in a GSP auction and the 5th in VCG can receive traffic — thin, yet real.

Back to the “clever ones”

Now, after this mini-lecture, look at what happens when you try to pay only for conversions.

First, you must set a conversion price — and that becomes your “bid”.

Second, where are you sending traffic: YAN (РСЯ) or Search? Both?

Okay — Direct will start “inventing” a CPC for you based on your appetites and willingness to pay. A click is the base event that must happen before a conversion can happen.

Third, Direct has to estimate not only a click price, but also your position, together with auction competition, to give you some volume. While you try to be clever, someone next to you buys clicks normally — and there are other “clever” advertisers too.

Fourth, Direct ramps up slowly under these constraints. If it ramps up and conversions still don’t happen, what clicks is it supposed to sell you? You slide into 4th–5th positions in the VCG auction, at best. In GSP you might reach 3rd if luck smiles.

Fifth, imagine competitors switch off ads for a moment and you climb. You get a conversion. Direct charges you and then spreads that spend across your clicks in reporting. Then you see something like “CPC = 1 ruble 2 kopeks”. That is absurdly low. You can’t buy “top-shelf Yandex traffic” at that price, except on rare weird days. (The original joking reference was about sunny days in November in Saint Petersburg, Russia.)

Sixth, you sit without profit because you tried to outsmart the system. You waited for miracles instead of improving UX conversion, traffic strategy, and keyword work.

How to do it in a sane way

First, pay per click. Up to a point — you’ll see which point below.

Second, don’t be stingy with bids if you’re going into VCG Search: the system won’t let you massively overpay, and it won’t let others do it either.

In a GSP auction you can pay more. Still, GSP doesn’t overheat instantly. You set 50 rubles CPC, you jump into 3rd place, you get 75% of traffic, and you might pay 20 rubles because the advertiser below set that level and you overtook them, so you pay close to their price.

Third, analyse every click purchase in Yandex Metrica. (Yandex Metrica is Yandex’s analytics tool, similar in role to Google Analytics.) Did conversions happen or not? What’s the bounce rate (sessions under 15 seconds)? How long do people stay on the site? How do they move across sections? Use UTM tags to analyse the customer journey from first touch to conversion and sale, or to spot behaviour that is closest to conversion.

Metrica (and Direct) offer a huge amount of report customisation and filters for this.

Fourth, do this until your numbers align with unit economics and the traffic channel becomes profitable.

Direct will show your conversion cost when it translates click spend into CPA (Cost Per Action). If your conversion goal is a lead form submission, that’s the “Action”. If you bought 100 clicks at 25 rubles and got 1 Action, your CPA is 2,500 — not a daydream of “100 rubles per lead”.

To get the same result at 100 rubles CPA, you need either clicks at 1 ruble, or a better conversion rate.

Fifth, feed all this analysis back into UX/UI improvement. Real people visit your site. I’ve seen cases where the “conversion goal” is a completed form, yet users prefer to message via WhatsApp. If there’s a button that matches their behaviour, CPA can drop from an “imagined 2,500” to 300, 200, 100 rubles.

Sixth, this is where the “we’ll get back to it later” part returns: once you’ve calculated conversion cost, improved it, fit it into unit economics, and strengthened UX/UI — then you can test conversion-optimised campaigns (pay per conversion). Direct will derive a CPC from your target CPA, bring you higher-quality traffic, charge CPA, and repeat. After ~10 iterations it starts understanding what traffic to bring. It keeps working until trends shift and the environment changes.

To improve UX/UI, you need to buy  marketing, not only traffic. You need to know your customer — and keep learning them better. That’s why service pricing grows: because this work takes time. If you want to talk, message me: https://t.me/bo_martian

P.S.

Want a fun note? Second-price auctions show up in many optimisation modes on “banned-book” and “banned-gram” too (Facebook/Instagram; restricted in Russia). That’s one reason why it used to feel convenient there.