Glossary
What is First-price auction?
Also called: first price auction, 1st-price auction
In a first-price auction the highest bid wins and pays exactly what it bid. Google Ad Manager has run one since 2019.
हिंदी में पढ़ेंIn a first-price auction, the winning bidder pays its own bid. That is simpler than the older second-price model, where the winner paid just above the runner-up. Google Ad Manager moved to a unified first-price auction in 2019, and by 16 December 2019 all Ad Exchange traffic used it.
First price changes how buyers behave. Bidding your full value means overpaying, so DSPs use bid shading: they learn what usually wins on a site and bid just enough. So lower bids do not always mean weaker demand.
Floors change role too. In second price, a floor between the top two bids could set the price paid; in first price it mainly filters out low bids. What pushes shaded bids back up is more real competition and floors close to what buyers really value. Judge any floor change on revenue and fill, not CPM alone.
Example
Three DSPs bid $1.80, $2.10 and $2.40. In a first-price auction the $2.40 bid wins and pays $2.40, so that one impression earns about $0.0024 before fees.
Why it matters to publishers
Most programmatic exchanges now run first-price auctions, so competition and floors, not auction rules, decide the price you get.