Google Ad Manager adopting first price auctions for programmatic display, video

With the aim of simplifying programmatic buying, Google Ad Manager will start transitioningpublisher 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.