Technically Speaking: The buzz behind bid shading
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Agencies and marketers will have to make a few adjustments when Google adopts first-price auction mechanics, a move happening soon, if gradually. The upshot: Marketers are expected to pay more for ads, while publishers pocket the extra change. Industry experts, meanwhile, seem conflicted about whether the implications will be short-lived or have a long-lasting impact.
Until now, Google used second-price auction mechanics, which is similar to buying something on eBay. For example: If the highest bidder bid $10 for an ad, and the second-highest bidder bid $3, the winner would pay $3.01, or just a penny more than the second-highest offer.
The broader programmatic landscape had been moving toward first-price auctions for some time, but Google had remained on the sidelines, perhaps waiting to see how things unfolded. Because almost all publishers and marketers use Google’s tools to buy and sell ads, its decision to use first-price auction mechanics will likely be far-reaching.
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