In a recent post from Sam Cox, Group Product Manager, Google Ad Manager Published Mar 6, 2019, Google will use First Price Auction Model, Google Ad Manager which is launched in June 2018 and Which consists of two former services, including DoubleClick for Publishers and DoubleClick Ad Exchange.

Currently, Google is using a second price auction model which means Winning buyer have to pay second bid amount for the inventory.

For Example Buyer A bid on 2$ for an inventory and Buyer B bid on 1.5$, Winning bid CPM here is 2$ coming from Buyer A, However, the Buyer A will pay 1.5$ which is second price auction.

In Simple Terms. The buyer that wins the auction pays the price they bid

In Google Ad Exchange it’s often referred to as Close CPM (Actual CPM on which transaction has happened.)

How It will impact Buyers (Advertiser) and Seller (Publishers)

From the Publisher point of view, it will help the publisher generate a good amount of revenue. It has been observed that Buyer Often bid high to win the inventory whose average CPM is low.

It can easily find out if you run Bid Landscape Report in Google Ad Exchange, Number of bids between Certain range CPM will be high, However, the Revenue generated from it is very low.

Please note that the First Price auction Method only impacts display and video inventory sold via Ad Manager.
This change will have no impact on auctions for ads on Google Search, AdSense for Search, YouTube, and other Google properties, and advertisers using Google Ads(Google AdWords) or Display & Video 360 (DBM) do not need to take any action.

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