by George P Slefo // March 6, 2019
The update will resonate across $48 billion programmatic landscape
Google is making a change to its programmatic exchange that will likely result in marketers paying more for their ads, at least in the short term until brands adjust.
Under a plan announced Wednesday, Google Ad Manager’s Adx will move to a first-price auction, a significant shift that will resonate across the $48 billion programmatic landscape.
“By simplifying our auction in Ad Manager, we can help make it easier for publishers and app developers to manage and get fair value for their inventory,” Google stated in a blog post.
Adx previously operated on a second-price auction model, which generally speaking, is similar to winning something on eBay. For example, if the highest bidder bid $5 for an ad, and the second highest bidder bid $3 for the same ad, then the highest bidder would pay $3.01 — just a smidge more than the second highest bid. Now, however, what someone bids is what they pay. Because Google is so critical to how digital ads are bought and sold, the implications of the change will be felt across the industry.