Change in Bidding Method Increases Ad Prices
http://https://www.emarketer.com/content/first-price-auctions-are-driving-up-ad-prices
The following article post discusses the framework surrounding the advertisement market. Traditionally, advertisement bids were run on a second price bid in which the winning bidder takes home the winning prize but pays the price of the second. In recent times, however, there has been a shift to first price bidding in which the bid winner pays his own price. Much of this change-over was due to the rise of header bidding, a method in which publishers offer their inventory on many different ad exchange platforms. Given this rise in mixed bidding methods, studies/trends have shown a gradual increase in bid prices overall. While this change-over was supposed to create a higher level of transparency around the bid process, it created more of a burden for those on the buy-side.
This article and its accompanying insights draw on many of the concepts that we learned about in class regarding auctions and the differences between first-price and second-price auctions. This article truly speaks on the real world applications of these types of auctions, as there is a clear discrepancy between the effects of employing a first-price bid and a second-price bid. This article expands beyond just the types of bidding but how they actually affect a market exchange. There were also a number of concepts introduced in the article that are supplemented by ideas we learned in class. For example, we learned about how in a first-price sealed bid auction, the best option is to price shade since your bid price directly affects the end price you pay. In the same vein, this article discusses how the prices when bid shading practices were in place were slightly lower, showing that might be a dominant strategy in this case.
Overall, this article expanded on the topics of auctions but mentioned important concepts that were supplemented by my prior understanding of first and second price auctions.