Moving AdSense to a first-price auction

[SweetPotato]

[blog.google...]

Change.
We don't like it (Probably because we always end with the short stick).

What's this about? In auctions, advertisers used to pay the price of the second bidder? And now will pay the price of the 1st bidder?

What was the sense of that? I don't know.

[yaashul]

Finally. Google Ad manager moved to first price auction 2-3 years back. Adsense took way too long. Almost all network is on firstprice auction model. Basically unified bidding.

[NickMNS]

Change.
We don't like it (Probably because we always end with the short stick).

No. You don't like it, because you have no idea what it really is and how it impacts you.

What is this about?

Briefly:
In a second price auction the bidders, place a bid based on the highest amount that they are willing to, but the price paid is the is one increment (a penny) greater than the next lowest priced bid. Example: Bidder-1 bids $100 , Bidder-2 bids $50 the auction winner is Bidder-1 at $50.01.

In a first price auction the auction is won by the simply highest bid. So naively I will reuse the previous example:
Bidder-1 bids $100 , Bidder-2 bids $50 the auction winner is Bidder-1 at $100.

Wow! that means the seller gets an additional 49$. Why didn't switch sooner.

But wait.... The bidders are not idiots, they know what type of an auction they are dealing with. Bidder-1 knows that he she bids $100 she'll certainly have to pay $100, so she reduces here bid to most likely price say $50 (after all last it the auction closed at $50). Bidder-2 wants to low bid, so bid tries $45. and the result is $50, just like before.

Basically given that the auction market is efficient and the bidders have good information about market price, there really shouldn't be any difference in terms of price. The only thing that will change is that buyers will need to adjust there pricing models/tools, so in the near term there may be a benefit but in the long the market price is the market price and the type of auction shouldn't impact it.

[yaashul]

In second-price auctions setting price floors on inventory was one of the main tools publishers implemented to combat the general reduction of bids. Floor prices are traditionally used by publishers to increase the closing price of their auctions.

When publishers notice that their auction closing prices are significantly lower than their highest bids, oftentimes publishers proactively raise their floor prices to increase their short term revenue.

In a first-price auction, setting a floor can’t manipulate the clearing price, as the bid submitted by the buyer either wins or loses without reduction. The shift to first-price auctions instead requires publishers to rethink how they use floor prices.

When approaching floor strategy, publishers should switch focus and adapt their price floors against an expected aggressive bidding strategy from buyers.
source: [geoedge.com...]

[NickMNS]

@Yashuul

When approaching floor strategy, publishers should switch focus and adapt their price floors against an expected aggressive bidding strategy from buyers.

There is no means of setting floor prices in Adsense,so this doesn't apply in this case.

Just to note, that the risk with setting a high floor price is that your ads go unfilled. So it's a balancing act, low price high fill, high price low fill and somewhere there is an optimal point where price and fill maximize profits. I doubt that anyone here has the time and resource to spend on finding that optimal point as most are using, good old, set and forget it, plain vanilla, AdSense.

[bwnbwn]

Jeeze this is what PPC did before there was a Google. 1999 2000 same type of bidding
This is gonna suck your account dry VERY FAST

[Niresh12495]

There hasn't been an update to this

[Niresh12495]

On: November 17, 2021 AdSense completes its transition to a first-price auction.
What The?

[support.google.com...]

[NickMNS]

On: November 17, 2021 AdSense completes its transition to a first-price auction.
What The?

And as predicted, nobody even noticed as it makes absolutely no difference to publishers.

[Niresh12495]

I will wait until end of Jan for a better comparison & bid adaption.

[phranque]

this could explain a few things:

But what if Google was the one gaming the system?

That’s the accusation made in an antitrust lawsuit brought by a coalition of states led by Texas attorney general Ken Paxton. On Friday morning, a federal judge released an unredacted version of the most recent complaint in the case, which was first filed in 2020. The document provides unprecedented insight into how Google allegedly misled advertisers and publishers for years by manipulating auctions in its own favor using inside information.

from this Wired article:
Google's Alleged Scheme to Corner the Online Ad Market [wired.com]

[morele3223]

We have to do manual or automatic moving by adsense

[NickMNS]

We have to do manual or automatic moving by adsense

As a publisher you do not have to do anything.