Google will switch AdSense from a second-price auction model to a first-price auction by the end of 2021, the company announced on Thursday. Advertisers or publishers don’t need to do anything, and these changes are made automatically.
First price vs. second price auctions. In a second price auction, the final price of the winner is determined by the second highest bid. In the case of a first price auction, the final price corresponds to the knockdown.
This will make things easier for advertisers, says Google. “On sales platforms for display ads, a first-price auction simplifies the buying experience for advertisers because the final price reflects the bid of the winner,” said Google on its FAQ page about the switch from AdSense to a first price auction.
Which AdSense products are affected? The transition to a first price auction only affects AdSense for content, AdSense for videos and AdSense for games. AdSense for search results pages or AdSense for shopping are not affected.
Why we care. The transition to a first price auction adapts AdSense to Ad Manager and AdMob, both of which already work on this model. If the winning bid matches the actual price that advertisers will pay, it may be easier for some advertisers to plan their spending.
However, a first-price auction means that the final price that the winning advertiser pays is usually higher than that of a second-price model. Campaign managers should inform stakeholders about this change as it can affect their budget.
Google also said that this move is unlikely to change publisher earnings: “Because of the dynamic auction environment, we cannot predict how certain AdSense publishers will perform. On average, however, we expect the impact of switching to a first-price auction on AdSense publishers’ earnings to be neutral overall. When Ad Manager switched to a first price auction, this had a neutral to slightly positive effect on publisher income on average, ”says the company.
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George Nguyen is an editor at Search Engine Land and specializes in organic search, podcasting, and e-commerce. His background is journalism and content marketing. Before entering the industry, he worked as a radio personality, writer, podcast host, and public school teacher.