Glossary
What is Second-price auction?
Also called: second price auction, Vickrey auction
In a second-price auction the highest bid wins but pays just above the runner-up's bid, or the floor if that is higher.
हिंदी में पढ़ेंIn a second-price auction, the highest bid wins, but the price is set by the second-highest bid: the winner pays just above it, typically by one cent. If the floor is above the runner-up’s bid, the winner pays the floor instead.
The appeal for buyers was that they could bid their true value without overpaying. A buyer that valued an impression at $5.00, against a $3.00 runner-up, paid about $3.01. For publishers, a floor placed between the top two bids could lift the price paid on auctions with one strong bidder.
Programmatic advertising has largely moved away from this model. Google Ad Manager switched to a unified first-price auction in 2019, and most exchanges now run first price. Second price still matters as background, because it explains older reports and why buyers started shading their bids after the switch. It is also why the floor’s role has changed from setting prices to filtering bids.
Example
Bids of $5.00 and $3.00 compete with a $2.00 floor. The $5.00 bid wins and pays about $3.01. With a $4.00 floor instead, it would pay $4.00.
Why it matters to publishers
Knowing how second price worked helps you read older reports and understand why bids and floors behave differently today.