{"id":12705,"date":"2019-06-07T09:10:24","date_gmt":"2019-06-07T07:10:24","guid":{"rendered":"https:\/\/yieldbird.com\/?p=12705"},"modified":"2024-07-22T19:27:14","modified_gmt":"2024-07-22T17:27:14","slug":"12-opinions-of-programmatic-market-experts","status":"publish","type":"post","link":"https:\/\/yieldbird.com\/research-hub\/12-opinions-of-programmatic-market-experts\/","title":{"rendered":"12 Programmatic Market Experts Comment Google’s Switch to First-Price Auction"},"content":{"rendered":"\n

As a publishers\u2019 revenue-optimization company, we asked a few publishers, media agencies and Ad Tech providers one general question:

How do you think Google\u2019s switch to a first-price auction model<\/strong><\/a> will influence the programmatic market?<\/p>\n\n\n\n

We received many answers, and you might be surprised at the range of responses. Some expressed concerns due to the switch. Others are looking enthusiastically into the future. <\/p>\n\n\n\n

Yieldbird is looking forward to the future with enthusiasm and positivity. Although many things will change in programmatic this year, we are confident that there is a lot to be gained after the initial frenzy calms down. Those who gain knowledge and prepare themselves early enough are the ones who will sustain their position in the market.

Yieldbird has shared its expertise and insights into what the programmatic reality will look like after Google\u2019s switch to the first-price auction. There\u2019s much to be learned.<\/strong><\/a> <\/p>\n\n\n\n

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I think it’s going to be a little messy the first couple of months. I expect inflated CPM for a while, but it shouldn’t be a long-term effect. On the other hand, there’s potential this change will bring a negative impact (like bid shading). It is a massive change, and everyone has to be ready to control this incoming ball of fire, as it’s too easy to get burnt.<\/p>\n\n\n\n

That said, I\u2019m always very curious to see how the industry reacts to a change of such scale. There’s going to be a lot of coverage, ‘best practices’, and guides, therefore it is essential to have a trustworthy partner during this process. Otherwise, it’ll be too easy to get lost in the sea of information.<\/p>\n\n\n\n

Arnas Levickas<\/em><\/strong><\/h2>\n

Product Owner<\/em><\/strong><\/h2>\n\n\n\n
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I expect a rise in CPMs similar to previous shifts to first-price bidding. Demand-side bid shading may counteract this a bit in some form or another, but I have my doubts about that practice being universally adopted.<\/p>\n\n\n\n

This will probably not be noticeable at a glance before Google is towards the end of its transition, committing a larger proportion of its applicable traffic to a first-price auction. <\/p>\n\n\n\n

Dependent on timing, this might partially counteract summer-season discounting (irrespective of lowered floors on the publisher’s side). Later on in the year, I expect CPMs of affected inventory to stabilize at new levels that should describe the perceived market value of these impressions.<\/p>\n\n\n\n

Jordy Hofhuis<\/em><\/strong><\/h2>\n

Programmatic Solutions Specialist<\/em><\/strong><\/h2>\n\n\n\n
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I expect that Google\u2019s move to first-price auctions, paired with privacy changes in the Chrome browser, will result in a sharp increase in the share of advertising transactions going through Google\u2019s pipes.<\/p>\n\n\n\n

The Google Ad Manager (GAM) change to first-price auctions will result in less client-side header-bidding activity, since real-time bids will no longer be needed to provide competition in the GAM second-price auction and because client-side header-bidding requests add page latency. 
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This may result in the merging of non-Google exchanges and some of the smaller exchanges leaving the industry.  Google\u2019s changes to the privacy rules in the number one browser, Chrome, will make the entire industry more dependent on the Google cookie<\/a><\/strong>, which is first-party and more stable than an individual brand\u2019s cookie since Google touches the user far more often.   
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These changes should help Google consolidate its buy-side market share. It\u2019s unclear if these changes will be positive for the sell-side, both near-term and long-term.
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Matt Kyme<\/em><\/strong><\/h2>\n

Senior Manager, Ad Operations <\/em><\/strong><\/h2>\n\n\n\n
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I believe that this change will cause only positive effects. As we know, most of the SSP tech providers already function in the first-price model. Google, as a hegemon against the rules of open competition, claimed the right to the so-called last look.<\/p>\n\n\n\n

Unification of principles for all market participants should bring a raise, as well as a realignment, of inventory prices on the whole open market. As a publisher\u2019s representative, I\u2019m truly excited about it. The possibility of the biggest advertisers beating their smaller competitors with high prices will disappear now. Finally, the whole market will start to function with rules equal for everyone taking part.
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Krzysztof Lechowicz<\/em><\/strong><\/h2>\n

Head of Programmatic<\/em><\/strong><\/h2>\n\n\n\n
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Implementation of the first-price auction is a step towards clarity and realignment of prices on the programmatic market. Advertisers\u2019 bids will finally reflect real demand on the market, as well as an actual price the advertisers are willing to pay for an impression. This solution will enable better comparisons to other sales channels, like preferred deals.<\/p>\n\n\n\n

On the other hand, first-price auctions will make it impossible to buy for the price lower than declared in the buyer\u2019s bid, like in Vickrey\u2019s model. This way of bidding surely will force advertisers to greater caution when this model is put into place; however, it won\u2019t last longer than a couple of weeks because the change of the auction model has been announced early enough. It gives users of the system a lot of time to adjust their buying strategies.
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Kamil Mo\u0144ko<\/em><\/strong><\/h2>\n

Sales Manager<\/em><\/strong><\/h2>\n\n\n\n
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In an ever-evolving ecosystem as programmatic advertising, transparency and efficiency are not only expected, they are constantly challenged cross-industry. As a main player in the market, we believe that the first-price auction move will bring clearer and simpler steps into place that in the long-term will contribute to increasing the industry\u2019s sustainability.<\/p>\n\n\n\n

N\u00eanci Obregon<\/em><\/strong><\/h2>\n

Digital Ad Operations & Programmatic<\/em><\/strong><\/h2>\n\n\n\n
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First-price auctions by Google will definitely help to unite auction models across platforms. This will give publishers a clear picture of their position on the market. While revenue and eCPM may temporarily decrease, we believe the overall impact will be positive in the long run. We also believe that YieldBird, as our trusted partner, is the right choice for this complex change management.<\/p>\n\n\n\n

Franti\u0161ek Kos\u00edr<\/em><\/strong><\/h2>\n

Yield management specialist<\/em><\/strong><\/h2>\n\n\n\n
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We see Google\u2019s shift to first-price as a positive, as it makes the market a lot more uniform and is a validation of the changes we started to make towards the end of 2017. <\/p>\n\n\n\n

Both buyers and publishers alike benefit, as it drives competition in the marketplace, helps consolidate, and makes the supply chain more transparent. First-price auctions are truly the only way to make auctions transparent to buyers in a header-bidding environment, and we\u2019re thrilled the majority of the market has made the shift.<\/p>\n\n\n\n

Joerg Vogelsang<\/em><\/strong><\/h2>\n

Managing Director – DACH, Central & Eastern Europe (CEE)<\/em><\/strong><\/h2>\n\n\n\n
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Google\u2019s shift to the first-price auction may be problematic from the buyers\u2019 perspective. Since implementing this change, advertisers will have to radically modify their approach to bidding and planning. Buyers who won\u2019t react quickly enough will overpay for their impressions. <\/p>\n\n\n\n

However, there are two factors that will ease the effects of the first-price auction switch.<\/p>\n\n\n\n

  1. Many DSPs were already testing alternative solutions (e.g. header bidding). This was done in order to maximize their effectiveness and to increase their competitiveness. It caused rapprochement of bids to the second-price auction rates.<\/li>
  2. An increased number of auctions and competition created by header bidding caused a rise in CPM rates. It may have led to a situation when the two highest bidders had similar rates.<\/li><\/ol>\n\n\n\n

    In the long run, we expect first-price to turn out valuable for the programmatic market. It will increase clarity as well as eliminate possibilities of manipulating auctions. <\/p>\n\n\n\n

    As MediaCom, we are not afraid of Google\u2019s shift to first-price auctions. We focus mostly on emission with the usage of deals with publishers that mostly operate on preferred deals with fixed rates. Private auction deals are not foreign to us, due to monitoring and day-by-day optimization.\n\n<\/p>\n\n\n\n

    Krzysztof Szymanczak<\/em><\/strong><\/h2>\n

    Programmatic Supervisor<\/em><\/strong><\/h2>\n\n\n\n
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    When Google announced that it would switch to first-price auctions, everybody on the market braced themselves.<\/p>\n\n\n\n

    However, first-price was set up by other AdTech companies not so long ago, and DV 360 is the latest to turn down this path.<\/p>\n\n\n\n

    In fact, nobody is as affected as harshly as forecasts predicted. Of course, like every change, we need to adapt to a new environment and face slightly larger prices and competition – that’s a fact. But looking to the future, first-price auctions give us more opportunities than threats. First-price auction:<\/p>\n\n\n\n