Google is making a change to its programmatic ad exchange that could cause ripples across the industry.
On Wednesday, Google said that it would change the structure of Google Ad Manager’s Adx, its ad exchange and server that powers ads on hundreds of publishers’ websites. By the end of the year, Adx will switch from being a second-price to a first-price auction for display and video ads.
Observers said the shift could cause higher prices for advertisers. They also said the move raises new questions about how Google’s so-called “ad-tech tax” compares to other ad-tech firms. According to research firm eMarketer, programmatic advertising is expected to generate $57 billion in US spend this year.
“Whenever you have just a large market participant like Adx make changes, there will be ripple effects,” said Will Doherty, EVP of global marketplace development at Index Exchange. Index Exchange is a supply-side partner (SSP) that connects publishers’ programmatic ad inventory with advertisers.
Programmatic advertising has two types of auctions: First-price and second-price auctions. Marketers generally prefer first-price auctions because they’re more straightforward and transparent.