Google First-Price Ad Auction
https://digiday.com/media/buyers-welcome-auction-standardization-as-google-finally-goes-all-in-on-first-price/
The article, “What to know about Google’s implementation of first-price ad auctions” by Jessica Davies, describes Google’s transition to first-price ad auctions from second-price as auctions and explains the benefits buyers will have with this transition. Davies informs the readers that Google finally announced their shift to first-price auctions while still keeping 3% of their inventory to second-price auctions just for experimental reasons. She expresses her excitement towards the movement by providing ways in which they improve bidding prices for Googe’s buyers. First, it will add a layer of standardization to bidding strategies. Since Google will release information on the minimum bid price that won an auction, pro analyst can analyze the data and create a dominant strategy. This can ensure that the bidders are not overvaluing their ads. Google will also release information on who participated in the ad auction. This will help the competition be less competitors and collaborate more if they both lost the auction. This will create a more fair competition overall.
This article talks about the advantages of first-price auctions compared to that of second-price auctions. In class, we consider bid-shading as a dominant strategy for first-price auctions because bidding your true value would not be a dominant strategy anymore since you would want to get a positive payoff. Davies explains that by Google releasing this information, buyers do not have to aimlessly bid lower prices than their true value because they will have data to back it up. I do however wonder why Google would release information to help the buyer bid less. I think it might be because as the price lowers, the more ads that the bidders would want to bid on, which might go into the supply-demand relationship. However, whether it will last or not, Google had to compete with their competitors by being one of the last to switch to first-price ad auctions.