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Google Announces That AdSense Will Move to First-Price Auction

If you’re an AdSense advertiser, this should make things easier for you, but…is it also to increase Google’s profits?

Yesterday, I got an email from Google Adsense. The subject line was, 

Evolving the Adsense Ecosystem: Our Move to a First-Price Auction

(I used to be an active AdSense publisher, and I’m still on the notification list for Google’s Adsense program.)

The subject line seemed interesting, so I opened it.

The email basically said that, in the coming months, AdSense would be moving from a second-price to a first-price auctioning model. 

There’s nothing that publishers have to do. 

The email linked to a Google AdSense Help page, titled, FAQs About Adsense Moving to a First-Price Auction.

What Are First-Price and Second-Price?

So, the Google AdSense program is one where advertisers pay for traffic on a per-click basis. 

From my understanding, there’s a sort-of auctioning process that goes on in the background. It’s not a live auction that one has to consistently monitor. 

In a second-price auctioning model, the price that the winner pays is based on the price of the second-highest bid.

And, as you probably guessed, in a first-price model…

…yes, the final price, as it says in FAQs About Adsense Moving to a First-Price Auction, “reflects the winning bid” (or, in other words, the highest price someone was willing to pay).

Why The Move?

Google says it’s doing this to make things a bit easier for advertisers. Ad Manager, AdMob, and other platforms have moved to this model, so it seems to make sense for AdSense to be moved to it, as well.

How Will This Affect AdSense Publishers and Advertisers?

For publishers, Google is unsure about the ultimate impact this will have.

Google says that, from past experience with moving other platforms to price-first, the impact to publishers may be a neutral to slight earnings increase. 

On the other hand, one thing I’m wondering about is that since this model is moving to the first-price one, and since first-price is based on the winning bid (instead of the second-highest bid), it makes sense to me that publishers’ earnings will increase.

But that’s just my opinion. 

But…does that mean that advertisers will end up paying more? 

For the same reason listed above (move to highest bid rather than based off of second-highest), I would think so. 

Is This Really to Help Line Google’s Pockets/Increase Their Profits?

Well, I don’t know if Google has other motives. Of course, as with any business, Google wants to make profits, but I’m not sure what lengths they’ll go to to achieve that. 

Yes, they may say that this is easier for advertisers, and even if advertisers didn’t have to pay more per click, the fact that they’re trying to make things easier may compel advertisers to spend more with them, thus resulting in more profits for Google.

What Should Publishers and Advertisers Do? 

Publishers don’t need to do anything. As for advertisers, there’s nothing I saw on the help page that indicated that advertisers needed to do anything. (Although granted, that help page may be more for publishers.)

Source: Google Adsense Help