Training guide

Auction model

Transition of Ad Exchange inventory to a unified first-price auction complete

As of September 25, 2019, Ad Exchange traffic has transitioned to a first-price auction, where the closing price is determined by the highest net bid in the auction.

If you still rely on the Bid Translation Service to bid in the First Price auction, we strongly encourage you to start developing the capability to bid in the First Price auction yourself since we will be deprecating the Bid Translation Service in May 2020.

AdSense will remain on a second-price auction and will continue to follow the standard second-price auction logic.

Note the following changes that occurred with this transition:

  • The auction closing price is now determined by the highest net bid in the auction
  • The auction type is already indicated, but bidders should use this to determine whether it's a first or second-price auction (using the standard at signal in OpenRTB and auction_type signal in Google protocol). Bidders are encouraged to adopt and log this to help with the transition to the first-price auction.
  • minimum_bid_to_win signal has been added to BidResponseFeedback to improve auction transparency.
    • Winning bidders are passed the minimum amount they could have bid in order to clear floors and outbid any competitors.
    • Ads that have been outbid are passed the minimum amount the bidder would have had to bid in order to clear floors and outbid/tie with the winning ad (if available)
    • minimum_bid_to_win signal will be null when the auction is won by a deal. A new creative status has been added to this case: "195. Creative lost to a Private Auction, Preferred Deal, or Programmatic Guaranteed Deal"
    • minimum_bid_to_win will not be populated for bid responses that include use_bid_translation_service or if the bid was filtered prior to the auction.
    • All Authorized Buyers first price auctions will opt all bidders (both Google and third-party) into this transparent model. All auction participants are eligible to receive this data. Note this is enabled by default with no option to opt out. Bidders must be opted into real-time feedback to receive minimum_bid_to_win.

The ad auction is used to select the ads that will appear on a publisher’s sites and determine how much they earn from those ads. All ads pay different amounts of money, depending on factors such as how much an advertiser has bid for the ad. The ad that wins is the one that the user sees on the publisher's website.

Ad Manager uses the following auction model for the Open Auction and Private Auction:

  • Ad Manager determines the winning bidder based on the highest net bid submitted. Note that the net bid reflects any adjustments Ad Manager may, at its discretion, have made to the bid submitted by the buyer for the purpose of optimizing the auction.

    Regardless of whether any adjustments are made, the winning buyer will never be charged more than the bid it submits. If the respective amounts of the net bids submitted are the same, the winner among those bids may be randomly chosen.
  • To optimize the auction, Google may choose to close an auction at a price lower than the reserve price that would have otherwise been applied. In such cases, the winning buyer may pay a price below the reserve and therefore receive a discount on its bid. A buyer that has received discount(s) on its bid(s) may face higher reserve prices in subsequent transactions to offset such discount(s).
  • Subject to the terms governing their use of Google's auction, sellers are paid the closing price, net of Google's revenue share, but will receive no less than the min CPM they specified for the auction. In the case that the Average revenue share setting is disabled by a Seller, auction optimizations may result in an auction closing at a price lower than the reserve price that would have otherwise been applied. Because the Seller will always be paid at least its specified min CPM, the Seller may receive more than its contracted revenue share on the transaction. In subsequent transactions, the Seller’s revenue share may then be reduced to offset the prior earnings in excess of the contracted revenue share, but the Seller will always receive at least its contracted revenue share across all its Authorized Buyers transactions in a given month.
  • Impressions eligible for the Open Auction may, when run through a Preferred Deal or Private Auction either (i) compete directly with the Open Auction, or (ii) compete in the Open Auction after Preferred Deals and/or Private Auctions do not fill.
  • Ad Manager may run limited experiments designed to optimize the auction. These experiments may include modifying the standard auction model or mechanics; simulating ad calls and auctions; modifying the min CPM set by the publisher for an impression or otherwise adjusting publisher settings; or discounting certain bids submitted by buyers or otherwise modifying the priority of the bids submitted by buyers, in an effort to optimize the auction. Buyer’s ad targeting settings will not be modified.
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