Second Price Auction

Document created by pubmatic-archivist on Mar 27, 2017Last modified by catherine.racette on Jun 7, 2017
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Note: This document supports a set of APIs for older integrations.

In a typical auction, the winner pays the bid price (first price) for the auctioned item.
In a second price auction of the type PubMatic runs for its RTB Demand Partners, the winner pays the second highest bid price when it wins the auction.  This is the default pricing method that PubMatic uses for its RTB Service.
The second price is communicated to the winning Demand Partner during the creative call by replacing a SECOND PRICE MACRO supplied in the creative URL.  Although, PubMatic enables the second price as the clearance price by default, for the feature to work, the Demand Partner must supply this macro in the creative URL.  Until that macro is supplied, PubMatic will charge the Demand Partner at the bid price. 

  1. Demand Partner sends the MACRO to be used for second price.
    Example:
    ${PUBMATIC_SECOND_PRICE}
  2. Demand Partner sends the MACRO in the creative URL.
    Example:
    http://demand.partner.com/somePublisher/generatetag?size=728x90&txID =123456&clickTrackingURL= ${pubmaticURLfortracking}&sp=${PUBMATIC_SECOND_PRICE}
  3. When the Demand Partner wins the auction, PubMatic calculates the second price and embeds the second price value in the creative call to be sent to user’s browser.
    Example:
    http://demand.partner.com/somePublisher/generatetag?size=728x90&txID =123456&clickTrackingURL=<pubmatic click URL>&sp=0.75
  4. Creative is invoked from the user’s browser with the second price value embedded.
  5. Demand Partner pays PubMatic the second price instead of first bid price for the winning impressions.

Note: Currently, the second price CPM value passed back to the Demand Partner will be in USD. If the second price macro is not present, the Demand Partner will be charged the bid price for each impression it wins through the PubMatic RTB Service.

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