You’re the highest bidder, at $10, in a second-price auction for inventory within Display & Video 360. The second-highest bidder bids $6. What will you pay for these impressions as the auction winner?
- $10.00
- $6.01
- $10.01
- $6.00
In a second-price auction model, the winning bidder pays the second-highest bid amount plus a minimal increment, known as the
bid increment. The bid increment is usually one cent. In this scenario, since you are the highest bidder with a bid of $10, you will
pay slightly more than the second-highest bid, which is $6. Thus, you will pay $6.01 for these impressions as the auction winner.
This pricing mechanism encourages bidders to bid their true value for the inventory, as they only pay a marginal amount higher than
the next highest bid, promoting fair competition in the auction environment.