Second Price Auction

In programmatic advertising, advertisers (or buyers) purchase inventories from publishers (or sellers) through bidding. The most commonly practiced bidding in this scenario is the second-price auction.

A second-price auction is an auction process in which the highest bid wins, but the winner pays only one cent more than the second-highest bid.

This model encourages advertisers to bid their true value, knowing that they won't have to pay the entire amount they offered.

How it works

  • Several advertisers place bids on an advertising slot.
  • The highest bid wins, but pays slightly more than the second-highest bid, rather than the entire amount they initially offered.