In this Marketing Daily article, MediaPost highlighted the news about how we are one of nine Tier III auto marketing agencies to receive Oracle Data Cloud’s Elite Data Marketer designation. The Oracle program provides us advanced data training, marketing and cutting-edge tools so we can help dealers achieve even more successful digital marketing campaign results as well as grow their market share.
If you have ever bought anything on eBay, you are probably familiar with the second-price auction, where the winner pays the second highest bid rather than their own. For years, programmatic ad buying ran in a second-price auction format with the whole transaction happening in milliseconds. However, there has been a recent shift among many publishers to a first-price auction model, where what you bid is what you pay if you win the impression.
Bidding in a first-price auction with a second-price strategy can get expensive quickly. Yet, nearly half of buyers are still in the dark on the basic differences of the first-price versus second-price auction according to The Drum. Without a clear understanding of the mechanics in play for each auction, how can you know the right price to pay to get the best value from your media?
Let’s start with clearing up a few quick terms:
- First-Price Auction – Digital buying model where if your bid wins, you pay exactly what you bid. This maximizes revenue potential for the seller.
- Second-Price Auction – Digital buying model where if your bid wins, you pay $0.01 above the second highest bid in the auction. In this type of auction, it is in your best interest to bid the highest amount you are willing to pay, knowing that often you will end up paying less than that amount.
- Header Bidding – A popular type of first-price auction where publishers place a piece of code on their webpage headers that allows a limited number of advertisers to bid on inventory outside of their primary ad server. This lets advertisers compete for premium, reserved inventory prior to or in lieu of the second-price auction.
- Price Floor – The minimum price a publisher will accept for its inventory. Publishers ignore all bids below that price. This, in effect, turns a second-price auction into a type of first-price auction.
- Clearing Price – The final price paid for an impression.
How It Works
Here’s a quick example of what happens when you place a bid in a first-price versus second-price auction:
3 Strategies to Maximize Spend Across Auctions
- Look for machine learning technologies built for the new environment that can identify first-price auctions, predict price floors and adjust your bids accordingly.
- Find a DSP that operates effectively in both auctions and can handle the increase in bid density.
- Rather than concentrating solely on the data from bids won, regularly evaluate lost impression data as well to improve your bidding strategy.
Now that you know bidding basics, are you ready to find out if you are getting the most value from your media? Reach out to us to learn more.
In his AdExchanger Data-Driven Thinking article, our COO Jay Friedman explains how he feels the digital media industry and marketers can truly advance: They must accept programmatic is not cheap and also agree to an amnesty day, where the industry can agree to full transparency moving forward if marketers can forgive the past and let go of the notions of cheap CPMs, CPAs and agency fees; accurate last-click attribution; and scale.
Laura Taylor, one of our principal media traders, was featured in this AdExchanger article about how data providers are selling data as a percent of media rather than transacting on CPMs. She said, “Identifying percent-of-media buying opportunities is a huge focus internally because it allows the agency to return savings and incrementally increase ROAS for a campaign.”