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Google Is Moving To First-Price, But Big Questions Remain | AdExchanger

Google’s move to create unified, first-price auctions for publishers using Google Ad Manager doesn’t just change the auction type. It impacts pricing, header bidding, publisher floors and how publishers see AdWords demand.

Under the new rules, all exchanges will bid for an impression at the same time, and Google will lose the “last look” it reserved for itself to outbid its fellow exchanges via a second-price auction.

“How exactly this will impact the ecosystem is dependent on which constituent was benefitting most from this advantage – publishers with higher closing prices, buyers with better ROI or Google themselves,” said Rajeev Goel, CEO of PubMatic.

Buyers will need to use bid shading algorithms to bid effectively, and publishers must adjust floors and learn the nuances of the new auction mechanics.

Most of the sources AdExchanger spoke with – buyers, sellers and vendors – predicted that prices will rise temporarily, then stabilize or even fall in the long-term.

At least that’s what happened when the rest of the ecosystem standardized on first-price auctions before Google. While CPMs initially rose, they’ve dipped in recent quarters as buyers started aggressively bid shading – a fact confirmed by many publishers and borne out in Rubicon Project’s earnings. Eventually, CPMs likely stabilize and find an equilibrium as both sides adapt.

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Google Is Moving To First-Price, But Big Questions Remain | AdExchanger.