In March, Google announced that it is switching to first-price auctions for inventory on Google Ad Manager, the last major exchange to make that transition.
Second-price auctions are the most profitable for sellers, Bender said. And Google shows its commitment to second-price theory with its own properties – YouTube, Gmail, AdSense and Google Search.
But the second-price model only works best when there’s a single auction, and the reality is that inventory now goes through a range of bidding options.
For instance, publishers with large direct sales businesses, such as The New York Times, Condé Nast or The Weather Company, have hundreds of different rules within their auctions, because direct-sold deals often include guaranteed pricing. Publishers also set different pricing floors for specific buyers, the most popular example being higher floors for Google’s DSP, Display & Video 360 (DV360).
Google’s contentious recent auction changes, collectively called “unified pricing,” limit the number of rules publishers can set and disable publishers from targeting certain buyers with higher price floors.
But the move has created significant friction with publishers. At a meeting last month, some top US publishers strongly pushed back against Google’s unified pricing, particularly because the product tweak benefits DV360.
Bender played down the heightened tension between publishers and Google, calling it a “spirited discussion” with those media companies and adding that Google is still in a testing period with the changes.
Ad server choice
Publishers “always have a choice” in how they serve ads, Bender said.
In Europe, some large publishers, including Axel Springer, the largest European news company, left Google’s supply-side technology over product changes made after GDPR went into effect.
Google is also adding carrots for publishers, Bender said, such as access to DV360 bid prices that previously weren’t passed to sellers. Google is also giving up its “last look,” a major advantage it gave itself by letting its DSP buyers bid a penny more than the winning price from other bidders.
Bender said Google goes through expansive beta testing for product changes like these and will be able to demonstrate value from unified pricing.
“As we roll it out, we do have ability to make shifts to make sure it works for everyone,” he said. “But we’re trying to balance the complexity with creating a fair and transparent market.”
The cookie crumbles
Cookies have seemingly been on a farewell tour for years, but Google is taking new steps away from the historical web-tracking technology.
The Google Chrome browser has already incorporated some ad-blocking features and given users more controls to erase or disable cookies, Bender said.
“What’s driving this change is users and what users want,” he said.
And the ecosystem could benefit long term by easing its reliance on cookies, he said. People own multiple connected devices now and constantly jump between web browsers, mobile apps and connected television apps. Browser users also have more control over data collection, which limits cookies.
“There are going to be various ways in which there’s pressure on cookies, from regulators, Chrome and other browsers,“ he said. “As marketers, we’ll have to think about how we can do more with less.”