Why first-place bidding is catching on in programmatic: two views

If there's one thing we've learned following P&G CMO Marc Pritchard's rant about the 'murky digital supply chain', it's that advertisers want more transparency in programmatic advertising.

This includes the world of auction dynamics. While most auctions are still run as second-price auctions, where the winner pays an amount based on the second-price bid, many advertisers want more clarity on how exactly the price they pay is arrived at. Are they paying hidden fees? Has the floor set by the publishers suddenly shifted on them? 

The failure to get clear answers has created a growing appetite to test the waters with first-price auctions, where advertisers end up paying exactly the price of their bid.

While both DSPs and SSPs agree there's been increased attention on first-price auctions, it's unclear just how far they go in addressing advertiser concerns.

We at Campaign Asia-Pacific have two perspectives to share with you.

On the DSP side, MediaMath Asia VP Zachary King writes that first-price auctions can bring more trust and transparency if the buy and sell sides cooperate with one another. He argues it can help break what is in effect a 'prisoner's dilemma' for advertisers currently. 

See: "First-price bidding can bring some much-needed trust"

On the SSP side, Smaato APAC managing director Alex Khan notes we can expect more demand-side platforms to take up first-price auctions, but to support this, a few key conditions, like clear flagging from SSPs, have to be in place. 

See: "To support first-price auctions some basic factors must be in place"