Google AdSense moves to a first-price auction model

Google will move AdSense from a second-price auction model to a first-price auction by the end of 2021, the company announced Thursday. There is no action for advertisers or publishers to take and these changes will occur automatically.

First-price vs. second-price auctions. In a second-price auction, the final price paid by the winner is determined by the second-highest bid. In a first-price auction, the final price is the same as the winning bid.

This will simplify things for advertisers, Google says. “On display ad selling platforms, a first-price auction simplifies the buying experience for advertisers because the final price reflects the winner’s bid,” Google said on its FAQ page about AdSense moving to a first-price auction.

Which AdSense products are affected. The transition to a first-price auction only affects AdSense for Content, AdSense for Video and AdSense for Games. It does not affect AdSense for Search or AdSense for Shopping.

Why we care. Transitioning to a first-price auction aligns AdSense with Ad Manager and AdMob, both of which are already operating under that model. Making the winning bid the actual price advertisers pay may make it easier for some advertisers to plan their spending.

However, a first-price auction means that the final price the winning advertiser pays will typically be higher than it was under a second-price model. Campaign managers should inform stakeholders of this change as it may affect their budget.

Google also said that publishers will likely not see a change in their earnings as a result of this transition: “Due to the dynamic auction environment, we cannot predict how specific AdSense publishers will be impacted. But, on average we expect the impact to AdSense publishers’ earnings overall from the move to a first-price auction to be neutral. When Ad Manager moved to a first-price auction, there was a neutral to slightly positive impact to publisher earnings on average,” the company said.