Google Ad Manager - formerly known as DoubleClick - is now adopting first price auctions as means of simplifying programmatic buying and making it more transparent.
What are first price auctions, you say? It's when the buyers pay the actual price they bid - so gone are the days where you could bid a ridiculously large amount and then end up paying half of that because the second competitor isn't as crazy as you (but still, thanks for driving up the average bid). While the old second price auction create date foundation of programatic buying (which also conveniently allowed publishers to fulfill their remaining inventory), this new method allows for Programmatic's increasing complexity to be addressed and make it easier for the publishers and advertisers to properly value their inventory.
While Google wasn't the first one to adopt this, as a market leader, it is sure to create the biggest wave, so it'll be interesting to note how the ecosystem responds to this.
“Since the change from second to first price will require both buyers and sellers to make changes in their programmatic strategies, we’ll give everyone time to prepare over the next few months before we start testing. During this time, publishers and app developers will need to rethink how they use price floors and technology partners will need to adjust how they bid for Google Ad Manager Inventory,” Google said.
Programmatic is expected to account for 86 percent of US digital display media buying by 2020, according to eMarketer, so this move is only for display and video inventory sold though Google Ad Manager. Search, YT, Adsense are still untouched - for now.
