When Google launched its ad program, AdSense, it came with a second-price auctioning system. This is a mechanism which allows advertisers to submit sealed bids for an ad space, with the winner only paying the amount of the second-highest bid for each click received. This is the current mechanism followed as well. However, Google has now announced that is transitioning from second-price to first-price auction systems.
This change is being made to align with other ad platforms such as Google Ad Manager and AdMob, which already follow first-price auctioning. Google further went on to say that:
By streamlining the auction model across AdSense, Ad Manager, and AdMob, we are aligning our process with other ad selling platforms in the display advertising ecosystem. We believe this will help grow advertiser spending confidence in digital advertising and an increase in spending confidence over time will benefit publishers.
Google has emphasized that no action is required from publishers and advertisers since this backend change will be implemented automatically. The transition is expected to be complete by the end of this year. It will be applicable across the entire AdSense program and Google hopes that this will simplify the process of ad space transactions for both buyers and sellers.