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Google AdSense Changes To a First Price Auction ADS

Google AdSense Changes To a First-Price Auction
Google AdSense Changes To a First-Price Auction

Google AdSense has changed to a first-price auction model, meaning that by the end of 2021 this update will be fully rolled out.

Google Adsense will be changing the way their ads payment is worked out. Moving from 2nd-page price auction to first place price auction.


First-Price Auction Model

First-price Auctions vs. Second-price Auction


Second Price Auction Explained

In a second-price auction, the final price paid by the advertiser (winner) is always selected based on the 2nd highest bid.

Meaning that if user-1 placed 2 USD as their highest bid for keyword “EXAMPLE”. And another user-2 with the same interest is bidding on the same keyword placed bid 1.50 USD Max Bid on the same “EXAMPLE” keyword.

This means that User-1 has won the higher bid, but instead of paying 2 USD, user-01 will only pay 1.51 USD as this was the 2nd highest bid.

This is how Second price auction works

First Price Auction Explained

Google’s First price auction means that whatever the advertiser decides to bid on any keywords and if they win, then this is the amount that will be paid by them.

So lets say user-1 bids 4 USD and user-2 bids 3 USD for same keywords “Example”, user-1 will win the bid, and will pay full 4 USD.

The publisher of the ads will get a better payouts in results of higher bidding, meaning there could be an increase in revenue and higher Page RPM’s.


Google has said that…

“We are aligning our AdSense process with other ad selling platforms in the display advertising ecosystem, which we think will simplify the experience for buyers who can now use a single approach to bidding across AdSense, Ad Manager and AdMob, and improve advertiser spending confidence,”

This is simply great news for everyone, more advertisers, and potentially could lead to increased RPM’s, CPC for publishers, more straight forward and transparent spending allowance and prediction for all adsense advetisers.

This is simply great news allround.

What is in for the publishers?

Google has advised that all publishers will see no significant change and will continue to generate the same/similar type of revenue from their blogs or other websites they may hold.

Googles Comment on this is listed below;

“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,” (source from google themself)

This being said…

Many Google Adsense publishers have seen their page RPM and revenue increase, the real figure is currently unknown at the moment since this update is still rolling out. But since the advertisers are now paying for what they bid, there is a lot more transparency in what is being sold, and publishers are gaining better RPMs and CPC overall.

Then again all this increase could also be linked to the fact that it’s currently a shopping festive season, and naturally, there is always an elevation in CPC and CPM’s and page RPMs. As more advertisers are advertising their seasonal Christmas and Black Friday deals.

So all we can do is wait and see where this first-page price auction will lead in 2022.

More to check out here at All-SEO-Basics!


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