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Aren't Search Ads based on a second-price auction? How can Google just raise the price? Or is it lying about the auction? The only thing I can imagine is raisi

Aren't Search Ads based on a second-price auction? How can Google just raise the price? Or is it lying about the auction? The only thing I can imagine is raising the minimum bid, but this would also result in less ads being shown (may still be overall beneficial but not a simple price increase).

pixiemaster 3y ago
well you don’t know the other bids, or if they even exist….
- kevincox 3y ago
  But that is my point. Lying about the auction would probably be fraud, which is much different than just raising the prices.
  - theGnuMe 3y ago
    Just raise the starting bid price and minimum bid size.
  - jstummbillig 3y ago
    Interesting. One way to do it might be to enter the competition and "bid" for the ad space?
  - jszymborski 3y ago
    Do they not have a base fee for themselves? Or is it entirely a percentage cut?
    - jonas21 3y ago
      Google is the seller in the auction. Their cut is 100% (for search).
      - jszymborski 3y ago
        Ah of course, I misunderstood.
  - hedora 3y ago
    Ad auction fraud is one of the allegations that landed them in court. This former executive just testified under oath that they change the auction rules without telling advertisers, and do so in ways that increase Google's revenue specifically in order to cook their quarterly SEC filing numbers and mislead investors into thinking the ad business is healthy. The executive also testified that they've fallen far behind Meta and Amazon on ad campaign quality and revenue. edit: The bottom of this article explains one of the mechanisms they use. The top bidder gets second place, and the second bidder gets top place. This increases their ad revenue on average (tricks like this get them 5-10%, they think they could take 15% because of their monopoly power): https://www.msn.com/en-us/money/companies/google-tweaks-ad-auctions-to-hit-revenue-targets-exec-says/ar-AA1gUgDH https://www.msn.com/en-us/money/companies/google-tweaks-ad-a... So... tl;dr: Their ad business is based on fraud built on top of other fraud. He didn't even talk about the pop-under / youtube fraud that was reported a few months ago. Each of the following guarantees YouTube makes to advertisers is demonstrably false: - video ads will be displayed prominently - video ads will be displayed on high-quality, reputable sites - audio will be played back - if the ad is over 5 seconds there will be a skip button that the user can click on, and the ad impression doesn't cost anything if the user skips it. (In many cases, the ads are rendered with an occluded or missing skip button.) The difference between their claims and reality is responsible for a mid double-digit percentage of YouTube's revenue.
    - cvalka 3y ago
      If your allegations are true, Google is done.
riku_iki 3y ago
I think many bids generated through Google's automation: customer sets target ROI, and google decides what and where to bid.
cavisne 3y ago
I think the other lever is ad relevance? It’s clear from Facebook for example that they have dramatically lowered the bar for what can advertise recently. Bidding against a larger pool of advertisers would increase the clearing price of the auction.
- bogdanu 3y ago
  Lowered the bar so low that I'm getting a lot of scams and fishing.
  - RobRivera 3y ago
    I got explicit sexual images on my facebook scrolling. It felt like 1999.
SpicyLemonZest 3y ago
They’re based on consideration of five factors of which the price paid in the auction is only one. Google explicitly does not promise that people who pay more will be ranked higher than those who pay less. (https://support.google.com/google-ads/answer/6366577?hl=en https://support.google.com/google-ads/answer/6366577?hl=en, https://support.google.com/google-ads/answer/142918?hl=en https://support.google.com/google-ads/answer/142918?hl=en)
keithwinstein 3y ago
No -- in 2019 Google Ad Manager announced it was moving to a first-price auction (https://blog.google/products/admanager/simplifying-programmatic-first-price-auctions-google-ad-manager/ https://blog.google/products/admanager/simplifying-programma...) and AdSense followed in 2021 (https://support.google.com/adsense/answer/10858748?hl=en https://support.google.com/adsense/answer/10858748?hl=en). (Edit: With regard to Google Ads for Search, they no longer seem to commit to any particular algorithm for deciding what price gets paid.) There are some lawsuits that allege that Google was effectively cheating before then, by sort of manufacturing a shill bidder, with privileged access to everybody's bids, that turned it into something closer to a first-price auction (https://www.wired.com/story/google-antitrust-ad-market-lawsuit/ https://www.wired.com/story/google-antitrust-ad-market-lawsu...). The quotes from within Google look pretty bad, e.g. one Googler allegedly wrote: "Doesn’t that undermine the whole idea of second price auctions? I.e., the assurance that you can bid the maximum you’re willing to pay with no negative consequence. But if the publisher manufactures a floor based on your bid to get you to pay more than the second price, this principle gets violated. It’ll transform the system into a 1st price auction where the bidder has a strong incentive to bid LESS than he’s willing to pay. (Only just enough to win.) I don’t think that’s desirable for either side in the long term." Google... disputes this (https://blog.google/outreach-initiatives/public-policy/ag-paxtons-false-claims-still-dont-add-up/ https://blog.google/outreach-initiatives/public-policy/ag-pa...). I guess we'll see.
- josefresco 3y ago
  > It’s important to note that our move to a single unified first price auction only impacts display and video inventory sold via Ad Manager. This change will have no impact on auctions for ads on Google Search, AdSense for Search, YouTube, and other Google properties, and advertisers using Google Ads or Display & Video 360 do not need to take any action. No impact on Google Search - is that still the case?
- eastbound 3y ago
  Not a googler, but it sounds important that ads compete against no-ad bids. Example: On search results, if all bids are 0.01$, then it’s worth showing no ad, because it will annoy the customer to have low-relevance ads. But what is the ceiling? 0.10$? 1.00$? Sounds reasonable to have a ghost bid which represents the weight of customer fatigue.
lesuorac 3y ago
People are saying there is a "RGSP" (Randomized Generalized Second Price) mechanism where sometimes the second-place bidder wins instead of the first-place bidder. https://threadreaderapp.com/thread/1703969874698011098.html https://threadreaderapp.com/thread/1703969874698011098.html
- mathteddybear 3y ago
  Yeah, ad campaigns have budgets, and in order to spread traffic evenly during a day, a randomized ad suppression occurs. So sometimes it is the second place bidder who will win
panarky 3y ago
The article says they changed auction rules that had the ultimate effect of increasing ad prices for some advertisers, at certain times, of between 5% and 10%. Even if that's true, it's still an auction, with real competition and bidding. And it's not only about price, it's also about the quality of the ad and the quality of the advertiser. Yes, absolutely, if the court can sort through the unfathomably complex layers of rules of real-time ad auctions and show that Google did something illegal, they should be held accountable. But isn't it bizarre how everyone's so hot and bothered by a possible 5% to 10% swindle, meanwhile: - Questcor bought the rights to Acthar Gel, which treats infantile spasms, a rare form of childhood epilepsy. Questcor raised the price of a vial from $40 to $23,000. - Valeant bought diabetes drug Glumetza and raised the price from $800 for a 90-day supply to over $10,000. Here's an industry that routinely runs 1000% arbitrary price increases, with no competition, while holding people's lives hostage. Seems like we should be far more outraged about that than an unproven, speculative, 5% to 10% issue.
- pixl97 3y ago
  >But isn't it bizarre how everyone's so hot and bothered by a possible 5% to 10% swindle, meanwhile: No it is not bizarre at all. Honestly with this reply my response would be "How much is Google paying you to say this", but sadly it is likely you are shilling for them for free. Now, maybe you are only able to focus on one thing at a time, but I do believe the average person can hold multiple opinions over multiple subjects at the same time, and while on a site about technical issues, complain about the technology companies implementing bad policies.
- alangibson 3y ago
  This is Whataboutism. All of the above are bad.
- ipaddr 3y ago
  Sounds horrible but Glumetza is just metformin with something extra to stay in the stomach longer. Acthar Gel is prednisone with a claim of less side effects. Interesting it got approved in the early 1960s and was grandfathered in and didn't need to provide trials so many questions exist around if it's any different from prednisone anyways. Either way patents have expired and a generic maker can make this. You can be mad at both, either or none. But companies being shielded by patents doesn't really apply here so it's hard to generate outrage

pixiemaster 3y ago

well you don’t know the other bids, or if they even exist….

kevincox 3y ago
But that is my point. Lying about the auction would probably be fraud, which is much different than just raising the prices.
- theGnuMe 3y ago
  Just raise the starting bid price and minimum bid size.
- jstummbillig 3y ago
  Interesting. One way to do it might be to enter the competition and "bid" for the ad space?
- jszymborski 3y ago
  Do they not have a base fee for themselves? Or is it entirely a percentage cut?
  - jonas21 3y ago
    Google is the seller in the auction. Their cut is 100% (for search).
    - jszymborski 3y ago
      Ah of course, I misunderstood.
- hedora 3y ago
  Ad auction fraud is one of the allegations that landed them in court. This former executive just testified under oath that they change the auction rules without telling advertisers, and do so in ways that increase Google's revenue specifically in order to cook their quarterly SEC filing numbers and mislead investors into thinking the ad business is healthy. The executive also testified that they've fallen far behind Meta and Amazon on ad campaign quality and revenue. edit: The bottom of this article explains one of the mechanisms they use. The top bidder gets second place, and the second bidder gets top place. This increases their ad revenue on average (tricks like this get them 5-10%, they think they could take 15% because of their monopoly power): https://www.msn.com/en-us/money/companies/google-tweaks-ad-auctions-to-hit-revenue-targets-exec-says/ar-AA1gUgDH https://www.msn.com/en-us/money/companies/google-tweaks-ad-a... So... tl;dr: Their ad business is based on fraud built on top of other fraud. He didn't even talk about the pop-under / youtube fraud that was reported a few months ago. Each of the following guarantees YouTube makes to advertisers is demonstrably false: - video ads will be displayed prominently - video ads will be displayed on high-quality, reputable sites - audio will be played back - if the ad is over 5 seconds there will be a skip button that the user can click on, and the ad impression doesn't cost anything if the user skips it. (In many cases, the ads are rendered with an occluded or missing skip button.) The difference between their claims and reality is responsible for a mid double-digit percentage of YouTube's revenue.
  - cvalka 3y ago
    If your allegations are true, Google is done.

riku_iki 3y ago

I think many bids generated through Google's automation: customer sets target ROI, and google decides what and where to bid.

cavisne 3y ago

I think the other lever is ad relevance? It’s clear from Facebook for example that they have dramatically lowered the bar for what can advertise recently. Bidding against a larger pool of advertisers would increase the clearing price of the auction.

bogdanu 3y ago
Lowered the bar so low that I'm getting a lot of scams and fishing.
- RobRivera 3y ago
  I got explicit sexual images on my facebook scrolling. It felt like 1999.

SpicyLemonZest 3y ago

They’re based on consideration of five factors of which the price paid in the auction is only one. Google explicitly does not promise that people who pay more will be ranked higher than those who pay less. (https://support.google.com/google-ads/answer/6366577?hl=en https://support.google.com/google-ads/answer/6366577?hl=en, https://support.google.com/google-ads/answer/142918?hl=en https://support.google.com/google-ads/answer/142918?hl=en)

keithwinstein 3y ago

No -- in 2019 Google Ad Manager announced it was moving to a first-price auction (https://blog.google/products/admanager/simplifying-programmatic-first-price-auctions-google-ad-manager/ https://blog.google/products/admanager/simplifying-programma...) and AdSense followed in 2021 (https://support.google.com/adsense/answer/10858748?hl=en https://support.google.com/adsense/answer/10858748?hl=en). (Edit: With regard to Google Ads for Search, they no longer seem to commit to any particular algorithm for deciding what price gets paid.) There are some lawsuits that allege that Google was effectively cheating before then, by sort of manufacturing a shill bidder, with privileged access to everybody's bids, that turned it into something closer to a first-price auction (https://www.wired.com/story/google-antitrust-ad-market-lawsuit/ https://www.wired.com/story/google-antitrust-ad-market-lawsu...). The quotes from within Google look pretty bad, e.g. one Googler allegedly wrote: "Doesn’t that undermine the whole idea of second price auctions? I.e., the assurance that you can bid the maximum you’re willing to pay with no negative consequence. But if the publisher manufactures a floor based on your bid to get you to pay more than the second price, this principle gets violated. It’ll transform the system into a 1st price auction where the bidder has a strong incentive to bid LESS than he’s willing to pay. (Only just enough to win.) I don’t think that’s desirable for either side in the long term." Google... disputes this (https://blog.google/outreach-initiatives/public-policy/ag-paxtons-false-claims-still-dont-add-up/ https://blog.google/outreach-initiatives/public-policy/ag-pa...). I guess we'll see.

josefresco 3y ago
> It’s important to note that our move to a single unified first price auction only impacts display and video inventory sold via Ad Manager. This change will have no impact on auctions for ads on Google Search, AdSense for Search, YouTube, and other Google properties, and advertisers using Google Ads or Display & Video 360 do not need to take any action. No impact on Google Search - is that still the case?
eastbound 3y ago
Not a googler, but it sounds important that ads compete against no-ad bids. Example: On search results, if all bids are 0.01$, then it’s worth showing no ad, because it will annoy the customer to have low-relevance ads. But what is the ceiling? 0.10$? 1.00$? Sounds reasonable to have a ghost bid which represents the weight of customer fatigue.

lesuorac 3y ago

People are saying there is a "RGSP" (Randomized Generalized Second Price) mechanism where sometimes the second-place bidder wins instead of the first-place bidder. https://threadreaderapp.com/thread/1703969874698011098.html https://threadreaderapp.com/thread/1703969874698011098.html

mathteddybear 3y ago
Yeah, ad campaigns have budgets, and in order to spread traffic evenly during a day, a randomized ad suppression occurs. So sometimes it is the second place bidder who will win

panarky 3y ago

The article says they changed auction rules that had the ultimate effect of increasing ad prices for some advertisers, at certain times, of between 5% and 10%. Even if that's true, it's still an auction, with real competition and bidding. And it's not only about price, it's also about the quality of the ad and the quality of the advertiser. Yes, absolutely, if the court can sort through the unfathomably complex layers of rules of real-time ad auctions and show that Google did something illegal, they should be held accountable. But isn't it bizarre how everyone's so hot and bothered by a possible 5% to 10% swindle, meanwhile: - Questcor bought the rights to Acthar Gel, which treats infantile spasms, a rare form of childhood epilepsy. Questcor raised the price of a vial from $40 to $23,000. - Valeant bought diabetes drug Glumetza and raised the price from $800 for a 90-day supply to over $10,000. Here's an industry that routinely runs 1000% arbitrary price increases, with no competition, while holding people's lives hostage. Seems like we should be far more outraged about that than an unproven, speculative, 5% to 10% issue.

pixl97 3y ago
>But isn't it bizarre how everyone's so hot and bothered by a possible 5% to 10% swindle, meanwhile: No it is not bizarre at all. Honestly with this reply my response would be "How much is Google paying you to say this", but sadly it is likely you are shilling for them for free. Now, maybe you are only able to focus on one thing at a time, but I do believe the average person can hold multiple opinions over multiple subjects at the same time, and while on a site about technical issues, complain about the technology companies implementing bad policies.
alangibson 3y ago
This is Whataboutism. All of the above are bad.
ipaddr 3y ago
Sounds horrible but Glumetza is just metformin with something extra to stay in the stomach longer. Acthar Gel is prednisone with a claim of less side effects. Interesting it got approved in the early 1960s and was grandfathered in and didn't need to provide trials so many questions exist around if it's any different from prednisone anyways. Either way patents have expired and a generic maker can make this. You can be mad at both, either or none. But companies being shielded by patents doesn't really apply here so it's hard to generate outrage