Google Programmatic Changes in a Couple Months
Google Programmatic ad auction prices will change, probably rising, within the next couple of months and first-price auctions will be the norm in Google Ad Manager by the end of the year, reads a product update post from the tech company.
Sam Cox, group product manager with Google Ad Manager, writes on March 6 in a Google Ad Manager post:
“It’s important to note that our move to a single unified first price auction only impacts display and video inventory sold via Ad Manager. This change will have no impact on auctions for ads on Google Search, AdSense for Search, YouTube and other Google properties, and advertisers using Google Ads or Display & Video 360 do not need to take any action.”
Google Programmatic Price Increase, Then a Leveling Out
On Friday, Digiday’s Tim Peterson and Seb Joseph sought industry analysis:
“I think there will be a short-term rise in CPMs [followed by] a steady decrease toward stabilization, and then maybe it will rise again,” said Jeremy Fass, head of programmatic at New York Media. As the market moves to a first-price model, publishers, such as New York Media, will need to reevaluate how they set the price floors, or minimum sale price, for their inventory. “It is very much going to be a big change for us,” said Fass, who plans to do a lot of testing to see how the publisher should adjust its price floors.
Google will introduce a testing phase for advertisers soon.
Cox writes that Google will begin the transition in a couple of months:
“By switching to a single first price auction, we can help reduce complexity and create a fair and transparent market for everyone.”
Google Is One of the Last to Change to First-Price
Digiday says Google is actually making the change to remain competitive.
“It’s a more straightforward setup than the traditional second-price model, in which that advertiser would only pay a penny more than the runner-up bid,” Peterson and Joseph write for Digiday.
But because first-price auctions are the norm, the sellers and buyers know how to play the game.
Bid-Shading in Programmatic Advertising
In 2018, a shady practice emerged. Bid shading, that is.
As eMarketer’s Ross Benes writes in September 2018:
“Most SSPs have shifted to first-price auctions, which is where the highest bid determines what the buyer pays. This has given rise to bid shading, which splits the difference between first-price and second-price winning bids.”
Adam Soroca, head of the global buyer team at Rubicon Project, told eMarketer bid shading was good for advertisers, because they could keep their costs down, and good for publishers, because they would see steady demand.
“The industry grew up on the second-price concept and their bidding strategies were based on that. In the move to first-price, those buyers had to be retrained and learn the new game theory of how to bid into a first-price world.”
What do you think, marketers?
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Related story: A Google Ads Change on Oct. 30: What You Need to Know