[bertil]

Google selling ad placement in an margin with n slots.

[woadwarrior01]

Although famously Google started with VCG auctions and a number of other internet advertising companies also use it as the auction mechanism for selling their ad inventory, Google is now moving to simpler and the more intuitive first-price auctions[1].

[1]: https://www.blog.google/products/admanager/simplifying-progr...

[alexhutcheson]

This isn't accurate. Google's search ad auction started as a generalized second-price (GSP) auction[1][2], which is not the same as VCG. In particular, GSP is not truthful, while VCG is.

The display ads auction (formerly DoubleClick Ad Exchange, now Google Ad Manager) has always been separate, and it used to use an Optional Second Price (OSP) auction[1]. It's transitioning to a first-price auction for the reasons mentioned in the blog post you linked to. As stated in the blog post: "This change will have no impact on auctions for ads on Google Search, AdSense for Search, YouTube, and other Google properties".

[1] https://en.wikipedia.org/wiki/Generalized_second-price_aucti...

[2] https://www.benedelman.org/publications/gsp-060801.pdf

[3] https://arxiv.org/pdf/1204.0535.pdf

[manigandham]

Buyers and Google prefer 2nd-price. 1st-price is happening because the industry forced it with publishers doing header bidding to create a unified auction. The only way to compare multiple separate auctions is if the original bids carried through. Now all the complexity has shifted to buy-side platforms with "bid shading" and other algorithms.

[Y_Y]

Imagine a world where Google optimises for "social benefit" rather than revenue (as this algorithm does).

[debatem1]

This is a significant misreading of the phrase "social benefit" in the context of auction design.

[Footpost]

Which of the many possible, highly contentious, and mututally incompatible notions of "social benefit" do you recommend Google adopt, and why?

[paulgb]

There's a certain logic to using an "honest" mechanism even if it is not theoretically revenue optimal: non-honest mechanisms put the cost of optimizing bids on the buyers, which ultimately reduces the budget they could spend on ads. (The only honest mechanisms for this type of auction are not revenue-maximizing.)