first price auctions

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First-Price Auctions: Simple, Transparent, Effective

2 Minute Read |

Juan Alvarado

Juan Alvarado
General Manager of Demand

A key priority for Smaato is to simplify how programmatic bids are transacted within the digital advertising ecosystem and to create a transparent process where both publishers and advertisers can maximize their outcomes. We are announcing that from July 1, all auctions on the Smaato platform will begin to transact via a single first price by default.

The process of delivering an ad to an end-user through programmatic advertising has continued to evolve in recent years into a highly complex system. There can often be a variety of routes and parameters that need to be navigated before an ad is displayed on a user’s device. A first-price auction solution gives control back to publishers and advertisers, simplifying the process and delivering transparency of pricing.

The Benefits of First-Price Auctions

Second-price auctions were once the traditional method for transacting bids in the programmatic advertising industry. However, with the advent of real-time bidding and header bidding solutions, first-price auctions became more popular and widely adopted throughout the ecosystem. Buyers could simultaneously access vast amounts of inventory, with the benefit of added clarity for both supply and demand alike.

First-price auctions boost win rates for the buy-side and ensure transparency of an impression’s real market price. For publishers, first-price auctions ensure maximum revenue that is representative of the true value of their inventory as the value of the highest bid is the amount that they receive. Whatsmore, research from Digiday shows that 78% of publishers who transitioned to first-price auctions experienced increases in advertising revenue.

Moving to First-Price Auctions With Smaato

From July 1 2020, Smaato will be transitioned to first-price preferred auctions by default. Demand partners that are not currently experienced with bidding on first-price auctions may need to make small changes to their real-time bidding strategies. The demand partner will be able to identify the auction type by how it is flagged in the bid request (the auction type attribute will be set as “1”). No action will be required from publishers, however, first-price auction will provide more transparency regarding the market rate of your inventory.

To ensure a smooth transition with minimal adjustments our expert team will be on hand to offer further guidance, details, and resources. Reach out to your Smaato account manager for more information or contact us here.

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