In last weeks, Google announced that by the end of the year will introduce the first price auction model. Why did they decided to do this right now?
What the first price auction is?
Before the first price model has launched we have only the second price auction model. It consisted in the fact that the winner has to bought placement for one cent more than the second highest offer.
Today we use mainly the first price auctions in which the winners pay as much as he actually offered – the highest price. Thus, the second price offer does not affect the final amount in any way.
First price auction in Google
Most DSP and SSP vendors switched to first price auctions much earlier than Google. Industry experts have wondered when this moment will come. This was extremely important due to the fact that the Google advertising ecosystem has globally the largest share in the programmatic market. From the information provided by Sam Cox – Google Product Group Manager, it results that the previous combination of the first and second price model was the reason for many difficulties in the buying process.
Market reaction
In the official informations, Google announced that this modification will take several months and experts will do this best to make it easy for partners. The industry has been waiting for this movement for a long time, but there are many theories for which it happened so late. One of the most common is that Google has been delaying it for observing the process of their adaptation in other companies.
Anyone who observes the movements of this global giant knows that its experts are skeptically about any change. Who knows, maybe it could help them build the power, which today is the most important player in the programmatic market?
One thing is certain, for the next few months we will be a witness of hudge transaction which we should watch closely.
