This episode covers:
- The development from the waterfall to an environment where everyone is bidding in parallel
- The differences between a first-price and a second-price auction
- The outcomes for both buyers and sellers, when moving to a first-price auction
- Where the buyer surplus is increased and the seller surplus shrinks
- Where the seller surplus is increased and the buyer surplus shrinks
- What this means for advertiser ROI versus publisher yield
- Buyer bidding strategies in first-price versus second-price
- Why moving to a first-price auction will increase buyer 'bid shading' and reduce publisher visibility and, conversely, why it will mean the DSP is making decisions with less information
- Who wins from a first-price auction
In the second episode, Goel will discuss how auction dynamics will evolve from here.