SmartyAds Dual Auction: Soft Transition towards First-Price Auctions
From October 2017, SmartyAds will join Rubicon Project initiative to support first-price programmatic auctions. We strongly believe that first-price auctions create a fairer and more transparent programmatic ecosystem, increase bidder’s reliability and empower a more trustworthy environment for demand and supply partners. Read more detail about SmartyAds dual auction technology!
SmartyAds decided that a transition towards first-price auctions must go smooth. For this reason, we give our partners a time to adjust to the new auction strategy and choose an auction model that works best for them. As a part transition stage, we will offer SmartyAds dual auction® empowered by machine learning that will cater both first- and second-price auctions.
"SmartyAds will offer both auction models to its clients. Best-performing ads, premium placements, and top ad formats would be presented at first-price auctions, and the rest of inventory will go to the old-school second-price auctions", says Ivan Guzenko, SmartyAds CEO. "We don’t want to rush our clients to shift to a new auction model. We let them see how both models work, compare and make conclusions. AI will be a huge part of this transition, and we want our clients to get used to the machines making decisions."
What is SECOND-PRICE auction?
Let’s imagine there is an RTB auction (more information you can find here). One ad impression becomes available. There are three buyers participating in that auction. The buyer X bids $1, the buyer Y bids $2 and the buyer Z bids $3 for that impression. The winner of the auction is the buyer Z because it offered the highest price for the inventory. However, according to the rules of the second-price auction, the buyer Z would pay $2.01, one cent above the second-highest bid, instead of the initial $3.
What is FIRST-PRICE auction?
With first-price auctions, things are much easier and clearer. If the buyer X bids $1, the buyer Y bids $2 and the buyer Z bids $3, the impression will still go to the “highest price offered” aka bidder Z. However, in a first-price auction scenario, the buyer Z would have to pay the exact price that was in the bid response: $3.
What is SmartyAds DUAL AUCTION®?
SmartyAds Dual Auction® is an auction model that involves both first-price and second-price auctions options. From October 2017, SmartyAds will signal to all bidders what kind of auction they participate in their bid price – either first-price or second-price auction. SmartyAds Dual Action® is a great compromise and does not force bidders to participate in default first-price auctions only, but rather have a freedom to choose. We now suggest our clients to test three types of RTB auctions: first-price, second-price and dual-price. When trying different auction models, advertisers and publishers can better understand which approach brings higher revenues and more value to their businesses.
If you would like to know more about benefits of SmartyAds Dual Auction®, please request info sheet here: firstname.lastname@example.org. We will be happy to clarify all questions you have!
IRINA KOVALENKO, CMO OF SMARTYADS