After Months of Preparation, Google Set to Roll Out First-Price Auctions

Search giant introduces tools to address publisher concerns

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Google is changing how its ad auctions work.
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Google has announced the full rollout of first-price auctions on Google Ad Manager beginning next week, a move it claims will help boost publisher yield despite earlier claims it will limit media owners’ monetization options.

Earlier this year Google announced plans for first-price auctions on its sell-side ad stack, a significant departure from its earlier second-price offering, in a move that emulated the pricing options offered by rival independent ad exchanges.

The earlier second-price model meant advertisers buying media on the ad exchange–a repository where publishers historically monetized otherwise unsold inventory but increasingly employ as a go-to option–would pay a fraction above the price offered by the next-highest bidder in an auction.

However, the new model means winning media buyers will have to pay the price they promised to publishers auctioning inventory on Google Ad Manager, a move the online ad behemoth claims will usher in more transparency.

In a blog post published today, Jason Bigler, director of product management at Google, described some of the lessons learned during testing in recent months, namely how “first-price auctions will have a neutral-to-positive impact a publishers’ total revenue … compared to second-price auctions.”

Bigler went on to explain industry feedback from tests in recent months, not all of which has been positive, according to media reports. One of the chief complaints was that earlier terms proposed by Google would limit publishers’ ability to offer multi-tiered pricing levels. Such feedback has led (in part) to Google extending its test period and offering more options.

Google will also provide publishers with a bid data transfer file to help them better assess how media buyers value their different inventory types.

“For publishers, we’ll start a new beta that provides data from all the bids submitted to your auctions,” he wrote. “This information will help you evaluate the value of your inventory and better understand the bidding behavior of buyers.”

Per Bigler, the launch of this feature means publishers won’t be able to join bid data transfer files with other Ad Manager data transfer files, as a means of protecting personal information—a move that is in keeping with the current privacy drive across Google’s operations.

“Buyers will receive the minimum bid price to win after the auction closes,” he wrote. “This feedback will help you understand when to bid higher to win valuable inventory.”

Additionally, in a bid to make the changes more palatable for media buyers, first-price auctions on Google Ad Manager will also involve incentives for buyers, which Bigler maintained would help them hone their bidding strategies on the ad exchange.

“This dialogue led to changes such as increasing the maximum number of price rules and extending the length of the test period,” concluded Bigler, maintaining that these changes will help bring about a more sustainable media ecosystem.

In the immediate aftermath of the first announcement of first-price auctions in Google Ad Manager, some industry observers had speculated it was an attempt to kill off header bidding, a means of monetizing media in a way that Google had voiced opposition to some years back. However, Bigler told Adweek in July, this was not the company’s intention.

“I think you might have had an argument for that had we not eliminated last look,” he said, referring to publishers getting a chance to accept or reject a bid.

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