Second-price auction

A second-price auction is an auction in which the highest bidder wins but pays the second-highest bid, usually plus a small step such as $0.01, rather than its own bid.

Second-price rules were standard in early real-time bidding. In theory they let a bidder bid its true value, because the competition, not the winner, sets the price. OpenRTB still encodes the rule: an at value of 2 means "second price plus" (IAB Tech Lab, OpenRTB 2.6).

In practice, trust broke down. The UK CMA found that publishers studied their bid data and raised floor prices when clearing prices ran well below the top bids. Some used soft floors, which made an auction clear at first price when bids fell below the floor. Header bidding added a second problem, because a second-price result from one exchange had to compete with first-price bids from others. Exchanges moved to first-price auctions, and Google's exchange switched in 2019 (CMA, Appendix M, paragraphs 38 to 41, 1 July 2020).

The idea still matters for reading older contracts, logs and research. OpenRTB 2.6 documents how its price macros behave under both auction types.

Example: OpenRTB 2.6 works through this case. With a floor of $0.85 and bids of $1.00, $0.90 and $0.80, a second-price auction that adds $0.01 charges the winner $0.91. Under first price, the same winner pays $1.00 (IAB Tech Lab, OpenRTB 2.6, section 4.4.1).

Related terms: first-price auction, bid shading, floor price, ad exchange, bid-landscape data.

Authoritative source: IAB Tech Lab, OpenRTB 2.6, sections 3.2.1 and 4.4.1 (accessed 9 November 2026).