Image: Google

With the aim of simplifying programmatic buying, Google Ad Manager will start transitioning publisher inventory to a first price auction format.

As the market leader in programmatic, Google Ad Manager’s (formerly DoubleClick) move will have broad implications for the industry, which has been pushing toward first price auctions.

Why you should care

In a first price auction, buyers pay the actual price they bid. Whereas in a second price auction, the winner pays the amount bid by the second place competitor. The second price auction format initially formed the foundation of programmatic ad buying, which was primarily a way for publishers to fulfill their remnant inventory.

Programmatic has since become increasingly complex as the industry and ad tech ecosystem has grown more sophisticated. That complexity has meant it’s harder to for both publishers and advertisers to properly value inventory.

Google is not the first to shift to a first price auction, but its position in the market means it will make the biggest wave throughout the ecosystem as sell-side and demand-side platforms respond to the change.

“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.

In a first price auction, all programmatic buyers will compete in one auction, alongside direct-sold advertisers. Bids will not be shared with other buyers before the auction or set the price for another buyer.

More on the news

  • The 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. Display & Video 360 advertisers don’t have to take any action.
  • Google said it will start to transition publisher inventory to the unified first price model in the coming month and expects the transition to complete by year-end.
  • Programmatic is expected to account for 86 percent of US digital display media buying by 2020, according to eMarketer.

This story first appeared on MarTech Today. For more on marketing technology, click here.

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