The Programmatic Glossary
A practical glossary designed to help marketers, advertisers and ad-tech professionals understand the terminology that powers programmatic advertising
Programmatic
First-Price Auction
An auction model where the winning bidder pays exactly the price they bid, just like a regular auction. If you bid $3.00 and win, you pay $3.00. This replaced the second-price auction as the dominant model in programmatic advertising from around 2019.
HOW IT WORKS
All bids above the floor price are collected. The highest bid wins and the buyer pays their exact bid amount. Because buyers know they will pay their full bid, they tend to bid more strategically, bidding what an impression is genuinely worth to them rather than overbidding speculatively.
EXAMPLE
Three advertisers bid $2.10, $3.40 and $4 for the same impression. The $4 bid wins and pays $4 . Under the old second-price model, they would have only paid $3.41, just above the second-highest bid. First-price means publishers earn more per impression.
RELATED TERMS
RTB (Real-Time Bidding) | Bid Floor | Open Auction | CPM | Supply Path Optimisation (SPO)
