To bring transparency and simplicity to the much complexed programmatic ecosystem, Google Ad Manager is adopting “first price auctions” for buying display and video ads.
That complexity has made it harder for both publishers and advertisers to properly value programmatic inventory.
Further, these complex intricacy also made it very difficult, even for experts, to determine what’s going well and what needs to be improved.
With this move, a reflective of industries call for simplicity in the programmatic buying, Google Ad Manager (formerly DoubleClick), a market leader in the programmatic platform will allow buyers to compete in a single auction alongside inventory directly sold by advertisers.
In a first price auction, buyers pay the actual price they bid, which is not shared by other buyers before the auction or set the price for another buyer.
On the other hand, in a second price auction, the winner pays the amount bid by the second place competitor. The second price auction format initially formed the foundation of programmatic ad buying, which was primarily a way for publishers to fulfill their remnant inventory.
“By switching to a single first price auction, we can help reduce complexity and create a fair and transparent market for everyone,” Google said.
Here is an image of Google Ad Manager first price auction stacked:
The transition will affect display and video inventory sold through Google Ad Manager only.
It does not impact ads, auctions for AdSense for Search, Google Search, YouTube, and other Google property inventory.
Google notes, the transition of publisher inventory to a unified first price auction will begin in the next few months.
Since the change from second price auction to the first price require changes in programmatic strategies of both buyers and sellers. So, it’s giving them time to prepare during this period.
“We’ll give everyone time to prepare over the next few months before we start testing.”
Within this duration, all publishers and app developers will have time to rethink about how to make use of price floors. It will also help technology partners to adjust their bidding strategy for Google Ad Manager Inventory, Google said.
Google Ads or Display & Video 360 and advertisers do not have to take any action.
The transition to a single unified first price auction is expected to complete by year-end.