New Hybrid Auction Model by Smaato Increases Yields for Publishers and Flexibility for Buyers

Posted on December 18th, 2018

Smaato’s Hybrid Solution Fulfills Market Need in the Transition From Second- to First-Price Auctions

(San Francisco, CA) December 18, 2018 – Smaato, the leading global real-time advertising platform for mobile publishers and app developers, today announced a new hybrid auction model that provides a more flexible and profitable programmatic environment for both publishers and media buyers. With its unique auction mechanics, the hybrid auction model ensures the highest and most competitive eCPM for publishers by comparing bids across both first- and second-price bidders. Meanwhile, media buyers are empowered to choose which type of auction they want to participate in for each bid request.

“With Smaato’s hybrid auction model, media buyers can bid according to their preferred auction model, giving them the insight needed to fully optimize their bidding strategies,” said Arndt Groth, President at Smaato. “This technology provides buyers with complete transparency and control over the type of auction in which they compete, and offers publishers increased yields and higher revenues.”

As header bidding continues to increase in popularity, the industry has seen a dramatic shift from the previous second-price standard to first-price, which is necessary to compete in header bidding auctions. eMarketer reports that first-price auctions have grown from accounting for less than 10 percent of total digital ad impressions in December 2017 to accounting for 43 percent in March 2018. This shift is highly beneficial to publishers, as first-price auctions tend to raise eCPMs and provide a clearer view of an impression’s true market value. First-price has also become more popular with buyers as it provides them with more transparency and control. Now that the industry has seen the benefits of both second- and first-price auctions, a hybrid model is the fairest solution for all players.

This highly-anticipated platform release delivers enhanced transparency to the auction process for buyers and sellers. In a hybrid auction, demand partners can bid according to their preferred auction model when responding to a bid request. Smaato then holds two separate but simultaneous auctions — one for first-price bidders and one for second-price bidders. The winning bids of these two pools are compared and the final winner is decided according to which result will provide the best yield for the publisher. This ensures that not only do buyers see improved win rates, but that sellers increase their revenue by always receiving the highest possible yield for their inventory.

“We believe that the market works best when exchanges are transparent about their auction mechanics, and to our knowledge, we are the first exchange to offer a truly hybrid solution that maximizes opportunities for buyers and revenue for sellers,” said Freddy Friedman, Chief Product Officer at Smaato. “This technical advancement will benefit all partners in the industry, and offering this flexibility and transparency for our partners is an important step towards providing a header bidding solution in the near future.”