Previously, Google Ad Manager (the company formerly known as Ad Exchange or Adx) operated on a second-price auction model – which essentially meant that a winning bidder would pay only incrementally more than the next highest bid, rather than the value of the bid itself.
For example, if a company was to bid $1 for an ad and another company was to bid $2 for the same ad, under second-price auction rules the latter company would only have to pay $1.10. Under first-price auction rules, however, the latter company would be paying its committed $2.
According to Sam Cox, group product manager for Google Ad Manager, the transition to first-price auctioning is expected to be completed by the end of the year. “By switching to a single first price auction, we can help reduce complexity and create a fair and transparent market for everyone,” wrote Cox on the topic.
“With this change, every offer from programmatic buyers will compete in the same unified auction, alongside inventory which is directly negotiated with advertisers.”
The shift in maintaining a new model means that Google’s auctioning system will now align with its peers ad markets, with OpenX, Rubicon Project and Index Exchange transitioning to first-price auction systems.
The modern programmatic ecosystem, according to Cox, has evolved into an overly complex system, with single ads passing through a variety of auctions with different sets of rules.
Cox also went on to explain, “This complexity has made it difficult for advertisers and agencies to properly value programmatic inventory and it has driven our publishers and app developers to implement increasingly complicated ad monetisation strategies, reducing transparency across the industry.
“Further, the increasing intricacy of programmatic has made it operationally very difficult, even for experts, to determine what’s going well and what needs to be improved.”
The shift is expected to have a significant impact on the programmatic landscape, with many demand-side platforms not optimise to operate on first-price auction rules.
Michael Connolly, CEO of adtech platform Sonobi (used exclusively by publishers) told AdAge, “The challenge here is the demand side is not set up to bid this way.
“Demand side platforms have invested a lot of money in algorithms and machine learning to figure out bidding strategies that fit in a second price environment. To switch it to first price will require some adjustment.”
Late last year, Google also announced a number of new Google Ads features for consumers to potentially utilise in 2020.
This year, Google set out to combine the intent of search with a more interactive and visual ad format. Gallery ads allow advertisers to combine compelling images and copy to serve prospects their offering on the search network.
Like Discovery ads, Gallery ads exist in the carousel format and allow consumers to seamlessly swipe through your image creative. Unlike Discovery ads, they sit at the top of the search results page. That means advertisers now have the ability to not only show ads to prospects at the precise moment they’re searching for keywords related to their products or services; but show those same prospects the kind of legitimately immersive image creative that is going to induce clicks. As for the specs, Gallery ads let advertisers feature:
- Between 4 and 8 images
- A 70-character tagline with each image
- Up to 3 headlines (for CTA experimentation!)
On average, campaigns that leverage Gallery ads have experienced an increase in user interactions of up to 25%.