Google Unified Pricing Rules – The Next Steps For Publishers

As you’re here, we are going to assume that you know Google’s shift to the first-price auction from the second-price auction. Google Ad Manager, the most-used ad server completed its transition by the end of July 2019. In case you need more info, we’ve discussed it in our weekly roundups here and here. Now, let’s get right into your question – What are Google Unified Pricing Rules (Google UPR), and how you can set up Google UPR to increase your ad revenue (and to prevent any revenue drop)?   

Table of Contents

• Common Auction Scenario Today
• Google Ad Manager and its pricing rules
• Google Unified Pricing Rules
• How to create Google UPR?
• Limitations of Google UPR
• When do you need Google UPR in place?
• Factors to be considered while creating Google Unified Pricing Rules
• Your Next Steps

Understanding the Current Scenario

Source: Google

Google Ad Manager and its pricing rules

Before we get into UPR, we need to step back and understand the existing (or soon-to-be-gone) pricing rules in Google Ad Manager (GAM). 

Till April 2019  – Second-price Auctions

Google Ad Manager allows publishers to create pricing rules to prevent buyers from procuring the impressions for subpar CPMs. If you set a pricing rule, bids below the floor price are ignored or not considered in the auction. 

For instance, if bidder A returns $5 CPM and bidder B responds with $2 for the impression, without any pricing rule (floor price), the winning bidder will pay $2.01 and serve the ad to the user. Let’s assume you have a price floor of $4, then it would close the auction at $4.01. 

Quick refresh: In a second-price auction, the highest bidder has to pay just a cent (0.01) more than the second-highest bid, as opposed to paying the actual bid price. Google believes it is time to move towards the first-price auction as it simplifies the ecosystem and improves transparency. 

A publisher can get better CPM with floors. That being said, there’s a chance for you to miss out on all the bids with higher floor prices. Your fill rate would be low, neutralizing the CPM lift. Hence, you are supposed to maintain an optimal floor price to prevent underselling the impressions and increase your revenue at the same time. 

If you are a Google Ad Manager user, you can set pricing rules for Google Ad Exchange, first look auctions, and remnant line items (Network, bulk, price priority) separately. 

– For Google Ad Exchange 

You can use ‘open auction pricing rules’ to add targeting (basically, the inventory you want to set pricing rules for), specify buyers, brands, or advertisers (if you want to set a price floor for any specific brand/buyer), and set floor prices (either you can enter a fixed CPM or go with target CPM*). 

*Target CPMs: Target CPM is a feature of Google Ad Manager, which promises to earn more revenue for publishers by adjusting the CPM to match more bids. The average CPM for the inventory will be equal to or higher than the target CPM. 

– For First Look Auctions

Google Ad Manager’s first look enables you to provide preferred access for specific ad buyers in Ad Exchange. You can create pricing rules for ‘first look auctions’ to ensure the buyers are buying the right inventory and paying the right price. 

Similar to how you created open auctions pricing rules, you are required to a) exclude the inventory which you don’t want buyers to access via ‘first look’ and b) add inventory (targeting), specify buyers/advertisers/brands you want to give ‘first look’ to and set floor prices (fixed CPM or target CPM).

– Remnant Line Items

On top of these, you are allowed to set floor prices for network/bulk/price-priority line items while creating the line items. 

Apparently, publishers are allowed to create hundreds of open auction pricing rules for Google ad exchange, first look auctions, and remnant line items separately. The more complex your setup is, the more rules you’ll need, to ensure price consistency and competitive exclusion. 

Well, Google’s latest first-price auction update changes the way you create and handle floor prices. Shifting from a second-price auction to a first-price auction cuts down the most important use case of floor prices, that is, ensuring the closing price of the auction is better (refer to the example we shared above). 

According to Google, this means publishers don’t need to set up hundreds of pricing rules (floor prices). Besides the true unified auction (Google is updating the way it conducts auction – from fragmented to unified and the auction type – from second-price to first-price) puts everyone in the same position, so the pricing rules shouldn’t be as important as it was before the update. We’ll leave the argument for later and let’s focus on unified pricing rules. 

Google Unified Pricing Rules

As a part of its unified auction update, Google is taking away the existing pricing rule options and introduces the new pricing rule feature, dubbed as ‘unified pricing rule’. The idea is to set a common pricing rule to Ad Exchange, Exchange Bidding, Network, Bulk, and Price Priority line items. Technically, you can create a pricing rule which then applies to all the eligible line items – excluding sponsored, and standard.

To put it simply, all the indirect demand will have the same pricing rules, hence the name ‘unified pricing’. 

As per the company’s support page, a unified pricing rule will be applied to, 

– The Open Auction via Authorized Buyers (formerly known as Ad Exchange Buyers)   

– Private Auctions (both optimized and non-optimized)

– First Look demand

– Third-party exchanges that participate in Exchange Bidding

– Remnant line item types Price Priority, Network, and Bulk (aka header bidding line items)

– Ad Exchange linked accounts

Unified pricing rule won’t be applied to, 

– Programmatic direct campaigns including programmatic guaranteed (standard and sponsorship) and preferred deal line items. 

– AdSense backfill.

– House line items.

– Line items with a zero rate and no Value CPM set.  

Another noticeable change in UPR is how it prioritizes overlapping pricing rules. Unlike the traditional pricing rules, UPR will prioritize the rule with higher floor prices or target CPM. For instance, if any two rules (be it two unified pricing rules or one first look pricing rule and one unified pricing rule or one open auction pricing rule and one unified pricing rule), the pricing rule with higher floor price will be applied to the line items. 

Sidenote: The last two pricing rule combinations we’ve mentioned above wouldn’t exist next month. From next month, Google will completely get rid of other pricing rules. 

How to create Google UPR?

You can navigate to Inventory > Pricing rules to create a new unified pricing rule. The rest all is pretty much the same. You select the inventory to apply the rules for, set floor prices or target CPMs and then, save. 

You can also specify pricing for selected advertisers/buyers/brands optionally while creating a UPR. 

Limitations of Google UPR

At first, Google UPR may seem to help publishers by cutting down the pricing rules needed. But publishers have already expressed several concerns:

No. of Google UPR: 

Google initially restricted the number of UPR to 100 per network, which is now extended to 200 after pressure from publishers. Publishers with a huge amount of traffic typically come up with hundreds of pricing rules. 

Per-buyer/Per-bidder floor prices:

You cannot set per-buyer or per-bidder floor prices using Google UPR. In other words, all the buying platforms will have the same floor prices. Publishers would usually set a higher floor for the AdWords platform as it buys inventory for lower prices by leveraging its data, but now it is not possible. 

Targeting and blocking:

You can only target advertiser and brand, but not a buyer using UPR. And, they only apply to Google AdX demand and exchange bidding. 

Anonymous pricing: 

No anonymous pricing is available – only branded and semi-transparent. 

Priority Management:

Again, you can’t set priority for pricing rules anymore. The rule with higher floor price precedes. 

When do you need Google UPR in place?

Now comes the question, when you need to create the unified pricing rules and when it should be in place? 

Ideally, you should have created the pricing rules by the time you read the post. Google released the transition period, a while back. 

In a matter of weeks, 100% of your Ad Exchange traffic will be running on the first-price auction and only UPR are applicable for the auction. 

Factors to be considered while creating Google Unified Pricing Rules

Inventory Coverage

Ensure you’ve considered the whole inventory while creating UPR. Without any pricing rule, buyers will be able to get your impressions for the lower CPMs. 

Overlapping

The UPR with a higher floor price wins and it means you can’t define more than one pricing rule for the same inventory. Even if you did, it is of no use.

Dynamic Floors

You still need to continually set, test, and optimize floor prices based on demand, the value of your inventory, seasons, etc. Though the first-price auction reduces the impact of floors, it serves a purpose. Especially, with bid shading gaining traction among buy-side platforms, you can’t take the ‘set and go’ approach. 

Bid Shading

Speaking of bid shading, we have recently discussed how bid shading has evolved into more than a price-optimizing algorithm. Buyers have started to weigh the value of the impressions more thoroughly. You need to assume the worst to be on the safe side. Work diligently to understand your inventory and then come up with unified pricing rules. That being said, it’s safe to stay close to your existing floor prices. 

SPO 

One of the subtle effects of Google Ad Manager’s pricing change will be SPO. Google can communicate the floor prices of UPR to AdX demand and EB SSPs within bid requests. Header bidding partners (who won’t get the UPR floors) won’t be able to quickly adapt as EB partners. So, it is better to see whether you can replicate the same floor prices (floor prices of UPR) on the header bidding partners using their console or ensure price-priority line items of HB partners in Google Ad Manager are in line with the UPR. 

Furthermore, brand-specific floor prices can only be applied to Google AdX and EB SSPs. So, a brand can still get your inventory for lower prices using HB partners if you didn’t replicate the floor prices of the brand on HB partners. 

To simplify it, your UPR shouldn’t value your inventory differently for buyers (bidding via Google AdX, EB SSPs, or any other header bidding partner). 

Anonymous/Branded Floor Price

Publishers who are using both anonymous and branding floor types have to go with the floor price that takes both of them into consideration. If you notice that buyers are bidding majorly via branding, you can stick close to the branding floor price. On the other hand, if buyers are buying via anonymous branding type, you can place your floor price close to the anonymous floor. 

Generally speaking, it shouldn’t matter as buyers who are willing to bid for your impressions without seeing the URL, would probably be willing to continue bidding (maybe higher) with the URL in the bid request.  

In case you need more info, Google published its own guide to help you create optimal unified pricing rules. Access it here. 

Your Next Steps

We hope you have a clear idea about pricing rules and specifically, Google unified pricing rules (Google UPR). While it is necessary to prepare and work towards creating the best rules for your inventory, you should never overlook data. 

“After the transition to unified first-price auction is complete, we are planning to give you full visibility on all bids from all programmatic buyers (including bids from Google Ads and Display & Video 360)”

– Google.

You need to subscribe to bid-level data transfer to get the bid-level insights report. Carefully analyze the data and see how bidders are bidding for your impressions via different platforms and change floor prices to reflect your revenue goals. 

Did we miss anything or do you have a question in mind? Let us know in the comments.