In March, Google announced it will shift to first price auctions for Google Ad Manager, its ad server and publisher exchange, by year end. On Friday, it issued an update with some additional details on the transition.
How auctions on Ad Manager run now. Currently, there may be two different auctions run for a specific ad. A second price, real-time bidding auction runs among Authorized Buyers, which include Google Ads, Display & Video 360 and other DSPs. That’s then followed by a first price auction that compares the winning price from the second price auction with a publisher’s guaranteed and non-guaranteed advertising campaigns and bids from Exchange Bidding buyers.
Currently, Google doesn’t require Authorized Buyers to share and receive bid data, which means there is often not complete historical auction data available for publishers and buyers to inform future inventory evaluations, Jason Bigler, a director of product management at Google, wrote in the blog post.
How auctions will run after the shift. When Google Ad Manager shifts to first price auctions, it plans to require all partners to share and receive bid data, Bigler said.
There will be a unified first price auction that includes publishers’ guaranteed campaigns and all non-guaranteed bidders — Authorized Buyers and everyone else — at once. Bids from publishers’ guaranteed campaigns are compared against all other bidders. Non-authorized will have the same opportunities as authorized DSPs.
“Going forward, no price from any of a publisher’s non-guaranteed advertising sources will be shared with another buyer before they bid in the auction,”said Bigler.
Google will also no longer have a “last look” opportunity to pay just above the winning bid after an auction to win the impression. With a unified first price auction Google, like all bidders, will pay the full bid amount (minus fees).
Changes to floor price strategies and rules. Publishers’ floor (minimum) pricing strategies for second price auctions will of course no longer be relevant after the transition. Bigler advises publishers to “focus on understanding the true value of their inventory and adjust pricing based on their existing advertising deals and how buyers are valuing their inventory.”
Google released a new feature called unified pricing rules to help publishers manage floor prices for all non-guaranteed bidders. Publishers will not be able to set different floor prices for different buying platforms.
“For example, instead of setting up the same floor prices in multiple places — in the auction in Ad Manager, and with their Exchange Bidding and other non-guaranteed advertising sources — which can take a lot of time and can lead to errors, a publisher can set up a single unified pricing rule to control pricing from one place,” said Bigler.
Initially, there is a limit of 100 rules, but Bigler said Google will work with partners to understand if that limit should be increased.
Why we should care. Other major exchanges already support first price auctions. The industry has largely welcomed Google Ad Manager’s adoption of first price. As the dominant market leader, it means first priced auctions will essentially be the universal programmatic auction method.
That means greater transparency, operational simplicity and fairer and more informed bidders. Buyers will have more insights into pricing, making it easier to value publishers’ inventory.
Publishers will be able to get reporting on all bids submitted by buyers, including those from Google Ads and Display & Video 360, and Authorized Buyers and Exchange Bidding buyers will both be able to see the winning prices for auctions they participated in.
Reminder. This move will affect display and video inventory sold through Google Ad Manager only. It does not impact auctions for Search, YouTube, AdSense for Search or other Google property inventory.
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