Google AdWords, now known as Google Ads, is an online advertising platform by Google. It allows businesses to display ads on Google search results, YouTube, and other sites. Advertisers bid on keywords and pay each time their ad is clicked, using various ad formats like text, display, video, shopping, and app promotion ads.

Bidding Before December 2023

Maximum CPC (Cost-Per-Click) Bid: Advertisers set a max amount for each click.

Ad Rank: Determined by bid amount, ad quality score (relevance, expected click-through rate, landing page experience), and ad extensions.

Automated Bidding Strategies:

• Target CPA: Bids for cost per acquisition.
• Target ROAS: Bids for return on ad spend.
• Maximize Clicks: Aims for most clicks within budget.
• Maximize Conversions: Aims for most conversions within budget.

Changes After December 2023

Enhanced Machine Learning: Improved algorithms predict clicks and conversions better.

Adding new Bidding Options:

• Maximize Conversion Value with Target ROAS: Aims to maximize total conversion value while meeting ROAS targets.
• Seasonality Adjustments: Allows bid optimization for expected seasonal changes.

Refined Quality Score Components: Provides detailed feedback on ad relevance, click-through rate, and landing page experience.

Real-Time Bidding Adjustments: More precise bid adjustments based on user behavior and intent.

Improved Integration with First-Party Data: Better use of advertisers’ data for personalized ad targeting.

These updates enhance bidding efficiency, transparency, and alignment with business goals using advanced machine learning.

What did we observe?

We observed that the exact date for rolling out these changes was 8th December 2023. We wanted to find out how these changes affected the performance characteristics of different publishers. To do that, we analyzed the performance changes in early December across three different inventories:

Case #1: A big news publisher, one of the local market leaders,

Case #2: Another big news publisher, one of the local market leaders,

Case #3: A big global publisher, no Prebid implemented.

On the first glimpse, not much has changed in AdWords’ shares

In all three cases, the share of AdWords in both revenue and impressions remained relatively flat. However, what is more interesting are the changes in its average eCPM.

Side note:

On all eCPM charts, to make the data easier to compare and to protect our clients’ privacy, December 1st is always indexed to 1.0. The following days are then compared to this index. For example, if the eCPM on a given day is 1.2, it means it was 20% higher than on December 1st.

Case #1

We saw a slight increase of AdWords share both total revenue and impressions, however to be completely honest, the change was rather marginal. These fluctuations (especially in revenue) can be however explained by volatile eCPM which noted two peaks in that period:

Case #2

Case #2 showed a similar situation; however, here we saw that eCPM decreases after the 8th of December. We do not show this data here, but in 2024 eCPM started to increase again. But as you most likely all well know, we shall not compare the early new year’s performance to the first weeks of December (or, frankly speaking, rely on period-to-period comparisons unless the change is super evident).

Case #3

This case is quite an eye-opener. Since AdWords is dominating the open market (this publisher is not using Prebid at all), we expected the changes to be most visible on that inventory. However, what we saw exceeded our expectations – the eCPM after December 8th dropped by almost 50%!

Let’s get deeper!

On the first glimpse, if Adwords is not basically the entire Open Market (like in cases #1 and #2) the changes are not very visible. But maybe something changed deeper underneath? To understand that, we verified if AdWords changed the way it reacts to changing the floor prices.

What did we do?

On the same inventories at the same time, we checked AdWords total revenue and impressions on four parts of the traffic that differed in floor price applied. Essentially, we were A/B/C/D testing four different hard floor price levels (each price handled the same percentage of the traffic). This allowed us to see what happened with AdWords bidding on December 8th in terms of two metrics: revenue and impressions.

Side note:
On all charts, to make the data easier to compare and to protect our clients’ privacy, no price applied is always indexed to 100. The higher price levels are then compared to this index. For example, if the revenue on a given day is 80, it means it was 20% lower than on no price applied.

Case #1

The change introduced on December 8th has drastically impacted AdWords’ sensitivity to price changes. Before December 8th, increasing the floor price resulted in higher revenues (even 20% higher than when no price was applied). However, after that day, a higher price led to a loss in revenues. If we compare the high price revenue vs no price applied revenue, we can see that it used to be ~20%, but after the change, it dropped to ~-15%!

This drop in revenue is caused by a decreasing number of ad impressions at higher prices.

Revenues:

Impressions:

Case #2

Case #2 is basically Case #1 “on steroids”. The change introduced on December 8th resulted in a drastic change in AdWords’ reaction to different price changes. Here, the revenue uplift of high price vs. no price applied dropped from +60% to -30%!

Similar to Case #1, the number of AdWords impressions at higher prices decreased, which was the primary cause of dropping revenues.

Revenue:

Impressions:

Case #3

Case #3 confirms that the changes observed in the previous two cases are not by chance. The same mechanics changed, and AdWords’ sensitivity to price changes was similarly affected (here the high price revenue uplift vs. no price applied dropped from ~15% to ~-20%.

Revenue:

Impressions:

So, what’s the conclusion?

To conclude, we must consider our analysis as a whole. It pointed out that after December 8th:

• The share of AdWords in total revenue and impressions remained stable.
• Average eCPMs slightly decreased.
• Revenue began to negatively react to floor price increases.
• AdWords started purchasing more impressions at lower prices.

These changes suggest AdWords began selecting ad requests more carefully and buying cheaper impressions, thereby increasing profitability. It appears AdWords shifted from targeting specific users to buying in bulk, leveraging a better understanding of user behavior to maintain profitability without higher prices.

What should you do as a Publisher?

If you manage your pricing manually, be sure to revise it. Decreasing the price often leads to higher overall revenues (not always, but as a rule of thumb). This might be a good time to automate the price management process to be prepared for similar unexpected changes in the future.

The post How did Adwords change bidding at the end of 2023? (performance analysis) first appeared on Yieldbird - Research Hub.

Join us on this journey and discover what will happen in the near future regarding cookies and the consequences of these changes. Furthermore, gain insights from Yieldbird’s experts on strategies for publishers to thrive in the evolving terrain.

Chrome’s Deprecation of Third-Party Cookies – Key Consequences

Even though we know that third-party cookies will be gone soon, many companies are not aware of the real consequences of this event. What actually will we be facing?  

1. Limited Tracking and Targeting 

Advertisers will have less detailed information about how users behave online without third-party cookies. This makes it harder to follow users’ online paths and show them ads based on what they’ve looked at before. Figuring out how well ads are doing, where they come from, and the return on investment (ROI) will be tougher. Marketers will have to find new ways to measure and use advanced analytics to see how their campaigns are working.

2. Shift Toward First-Party Data and Walled Gardens

Advertisers will depend more on the information they get directly from users on their websites. This info can cover user sign-ups, what users like, and how they interact with the website. Making good use of this ‘first-party data’ will be super important for showing ads that fit each user. Big tech companies like Google, Facebook, and Amazon, who already have a lot of this kind of data, will likely get even stronger in the ad world. Advertisers might have to put more of their money into these platforms.

3. Risk of Lower Revenues as User Match Rates May Drop By 30-40%

Users’ choices (whether they agree to their data being used for advertising) have already made it harder to reach them with ads. And when third-party cookies go away, especially on popular browsers like Chrome, it’ll make it even tougher to find and connect with users.

4. Emerging Privacy-Focused Ad Technologies

Companies in the advertising tech industry are working on privacy-friendly technologies to help advertisers connect with their desired audience without using third-party cookies. These solutions include Universal IDs, Privacy Sandbox APIs, and Seller Defined Audiences.

Timeline of Cookieless Chrome

So, what should we expect in the upcoming months? In Q3, we bid farewell the final Origin Trials for Sandbox proposals and usher in the General Availability phase. During this period, Chrome allows developers to carry out real-time testing as they gear up for the shift away from third-party cookies. No major API alterations are on the horizon before the cookie phase-out. There will be two parts of the process.

Mode A

In Q4 2023, APIs are available. Chrome will not disable cookies just yet, but developers can simulate third-party cookie deprecation for a chosen percentage of their user base, enabling controlled testing.

Mode B

Then, in Q1 2024, Google intends to phase out third-party cookies for one percent of Chrome users. This allows for real-world testing of products coping without cookies.

Google encourages industry-wide engagement on the Privacy Sandbox and invites developers to adopt and test the APIs as part of end-to-end solutions. They will provide more details and guidance on testing metrics and methodologies in the coming months. They express their commitment to working with the industry to improve privacy on the web as they approach the final stages of third-party cookie deprecation in Chrome.

What’s new in Privacy Sandbox?

Protected Audience API – Google’s Retargeting Alternative

The new name for FLEDGE marks its move from an experiment to a practical feature. It’s built to manage interest-based ad auctions while safeguarding user privacy. It works by making specific ad decisions right within the user’s browser instead of on a server. This means user interest data doesn’t have to be sent to external servers, which boosts privacy.

Privacy Sandbox Demos

A new website showcasing demos of different Privacy Sandbox APIs could feature interactive examples or simulations demonstrating how these technologies work in real-life scenarios. This resource is a valuable tool for developers, advertisers, and other interested parties to grasp the functionality of the Privacy Sandbox and learn how to align their advertising strategies with these emerging standards.

What’s new in GAM?

Alongside Audience and PPIDs, Google Ad Manager has enabled two beta features:

• Publisher-provided signals – Google has implemented IAB’s Seller Defined Audiences.
• Publishers can use standardized taxonomies to communicate first-party audience attributes (behavioral and interest-based data) or contextual data.
• Two signal types are available corresponding to two IAB taxonomies: Audience and Context. Each has slightly different parameters that can be used to match publishers’ data to match the IAB category.
• Audience categories will only be passed on requests that allow for ad personalization.
• Contextual publisher-provided signals can be passed on all ad requests, making it a great way to uplift the value of this hard-to-monitize no-consent traffic.

Secure signals – Universal ID’s blind tunnel through GAM

• Google’s response to Universal ID rising significance for Authorised Buyers
• Publishers can share secure signals on RTB requests with third-party bidders
• Publisher can decide what Signals and which Bidders can receive it
• Universal ID scripts can be deployed by the publisher, Google, or Prebid ID module
• Signals can be passed only to Authorised buyers and Open Bidders
• All signals must be obfuscated/encrypted before passing to Google (which usually is by default on most ID providers – hashed emails, encoded IDs etc.)

Adapting to a Cookieless Future: Expert Advice from Yieldbird for Publishers

If you want to be fully prepared, here are a few pieces of advice from our experts that help you adapt to a new cookieless reality. 

1. Evaluate current data practices. Understand how third-party cookies are used for advertising on your website and what data you rely on for advertising, analytics, user experience, and engagement
2. Invest in collecting and leveraging first-party data from your website visitors. Encourage users to create accounts and subscribe to newsletters, allowing you to build a robust first-party data ecosystem.
3. Educate your team. Especially those responsible for data handling and advertising operations are well-informed about the implications of third-party cookies deprecation and are trained in new privacy-centric practices.
4. Collaborate and build relationships with advertisers. Gather expectations of the audience needed. Create data segments that match your direct sales expectations. Start selling products based on 1st data.
5. Implement consent mechanisms. Ensure that you have a robust Google-certified CMP. Remember that GAM offers integrated privacy and messaging tools that can be used to test, measure consent, opt-out etc., across sites. 
6. Consider re-exploring contextual advertising. Understand the context of your content and offer advertisers opportunities to align their messaging accordingly. Try SDA and Google’s PPS.
7. Adopt privacy-focused technologies. Stay informed about and try privacy-focused technologies like those developed under the Privacy Sandbox initiative, IAB, or various Universal ID providers 
8. Test. Experiment with advertising tech and data strategies to find what works best for your audience and niche. Be agile and willing to adjust your approach based on results. 

We hope you’re ready for the upcoming changes. And if you need more expertise, our AdOps Experts will be happy to help, so don’t hesitate to contact us. 

The post Cookieless Future: Q3 2023 Update by Yieldbird first appeared on Yieldbird - Research Hub.

Key Findings from the IAB Europe AdEx Benchmark 2022

• European online advertising expenditures increased by 9.8% year-on-year, with the surveyed markets reaching a record-breaking €86 billion.
• The European digital advertising market demonstrated remarkable resilience, adding €7.7 billion in 2022.
• The report predicts a promising future for digital advertising in Europe, with an expected 4.8% increase in ad spend, reaching an overall valuation of €90.1 billion in 2023.
• Among the European markets surveyed, Turkey achieved the most substantial total growth, an impressive figure of 93.3%.
• Video advertising also experienced significant growth, with a 13.6% increase, accounting for investments totaling €18.3 billion.
• Digital audio saw the most extensive growth across all formats in 2022, with a remarkable 22.1% increase to €0.7 billion.
• Connected TV spending experienced an exponential increase of 46.6%.
• Display advertising grew by 9.5% to €40.1 billion, while search advertising saw a 10.7% increase to €37.4 billion.

The report welcomed new entrants from the Baltic region, including Estonia, Lithuania, and Latvia, while Russia and Belarus were excluded.

Programmatic Ads’ Impact

As a company delivering software to manage programmatic ad inventory, we had to pay more attention to this topic. According to the report, programmatic advertising, excluding social media, accounted for over half (57.9%) of display advertising expenses, representing 13.9% growth. Additionally, the video was a driving force behind programmatic ad spending, representing 52.8% of investments. 

Despite this positive trend, there are notable disparities in programmatic adoption across different markets, indicating untapped growth potential. Key markets like France, Germany, Italy, and Sweden continue to display relatively lower levels of automation in their advertising processes compared to the UK.

The slowdown in the programmatic market has had a visible impact on publishers' revenues, particularly evident in the open auction. Many revenue streams have experienced declines compared to the previous year, and the quality metrics in 2022 are now approaching levels similar to those seen in 2020, before the significant post-pandemic growth. Market trends in both 2022 and now in 2023 are showing a flatter pattern, with typical uplifts observed in previous years, like during the last months of the quarter (especially June) or Black Friday-type events, now significantly lower.
The outbreak of the war in Ukraine has led to a surge in articles covering the topic, resulting in an influx of new users. However, monetizing such traffic has proven challenging due to the sensitive nature of the content. Another complicating factor in 2022 was inflation and the looming possibility of a recession. As a result, some budgets shifted towards sales channels like Programmatic Guaranteed, driven by the desire for greater transparency in inventory quality and pricing. Ad agencies we consulted confirmed that they did not anticipate the reduction of ad budgets, but the focus on quality metrics has become more stringent. Hence the increased interest in PMP (Private Marketplace) deals.
Despite initially predicting modest growth of 4.8% for 2023, the current results confirm this outlook. The second half of Q2 briefly raised hopes for a market improvement, but unfortunately, the upward trend was short-lived.
~ Oliwia Gruszewska, Customer Performance Expert at Yieldbird

The Future of Advertising in Europe

IAB Europe’s AdEx Benchmark 2022 report exemplifies the European digital advertising market’s resilience and growth despite economic and geopolitical challenges. Notably, impressive performances from video and audio formats showcase the industry’s adaptability to evolving consumer behaviors and technological advancements. Programmatic advertising also emerges as a vital driver of display ad impressions, promising prospects for further growth. With digital advertising solidifying its place as a dominant media category, the report underscores its importance, accounting for over 60% of total media ad spending. The future looks promising for the European digital advertising landscape, with advertisers poised to seize emerging opportunities and optimize strategies to engage consumers effectively.

You can access the full report here for a comprehensive understanding of the European digital advertising landscape.

LET’S GET IN TOUCH!

Bartłomiej Oprządek
Regional Growth Director
publishers@yieldbird.com

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The post IAB Europe’s AdEx Benchmark 2022: Yieldbird Insights on European Digital Advertising first appeared on Yieldbird - Research Hub.