It would seem that ‘Shifting’ has also become a trend as of late. Google had been shifting its attribution models and visual search options, and the most recent addition to what can only be inferred as its long list of “changes” is that Google is now also moving Google AdSense to a First-Price Auction Model. The move is said to help Google to better compete with other ad exchanges, so AdSense aficionados best keep their eyes and ears open.
To better explain what first-price bidding is, Google describes it as:
“In the early days of online display advertising, ad space was sold to advertisers in a second-price auction, where the final price paid by the winner was determined by the amount of the second-highest bid. Over time, many ad selling platforms in the display advertising ecosystem, including Google Ad Manager and Google AdMob, switched their auction to first-price. In a first-price auction, the final price reflects the winning bid.”
TL;DR: in a First-Price Auction, the final price wins.
Google further explains that as of now, AdSense bidding has the final price of each ad being 0.01c higher than the second-place bid. So, between two brands that respectively pay $1 and $2 for the same ad slot. The winning bidder pays $1.01. Under a first-price auction model, the winning bid is whatever would be the top bid, which in this case would be $2.
Simplifying Things
Google notes that it wishes to streamline its advertising processes and believes that minor transitions are necessary to bring itself in line with competitors. Other players have reportedly shifted to header bidding and, in response, Google has taken similar steps.
As explained by one of Google’s spokesperson:
“We are aligning our AdSense process with other ad selling platforms in the display advertising ecosystem, which we think will simplify the experience for buyers who can now use a single approach to bidding across AdSense, Ad Manager and AdMob, and improve advertiser spending confidence,”
Expected Affected AdSense Products:
Content
Video
Games
The company says that actual impacts will be limited, but that higher revenue for publishers is highly possible.
The Wrap
They’re the #1 most visited website in the world; one of the most widely used search engines in history; and are among the pioneers of modern paid online advertising. These are but some of the underlying reasons we can look at to see why Google is changing up one of its most successful models. Since other platforms and competitors have already made the jump, it only makes sense for Google to do the same so that it stays in line with the competition and retains its relevance and significance.
Though noted by Google itself to have minimal impacts, it would still be wise for both AdSense users and buyers to further accustom themselves to the changes this update will bring. Revisit plans, restructure bids, and carefully map out spending.
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