Market Insight: CTV is Moving to First-Price Auctions

With its premium content, scale, and addressability, CTV presents a not-to-be-missed opportunity for digital advertisers in 2021. CTV’s growth is converging with programmatic buying, giving buyers more efficient ways to purchase this highly sought after inventory. 

From Magnite’s vantage point, we’ve observed that premium CTV publishers are increasingly making a move from second-price to first-price auctions over the last several quarters. 

Currently over 40% of publishers and over 60% of auctions on the Magnite CTV platform operate as first-price. Looking ahead, we’re expecting this to happen across the board and this shift in auction dynamics is something buyers need to be aware of. 

Having seen the shift to first-price auctions years ago with non-CTV inventory, Magnite can help agency and brand leaders understand the implications of the shift to first-price auctions.

Implications of programmatic CTV moving to first-price auctions 

Under the second-price auction system, the winning buyer pays a small amount over the second-highest bid. Under the first-price dynamic, buyers pay exactly the amount they bid. This means transactions are more efficient, transparent and clear for both buyers and sellers. 

To be fully competitive in programmatic CTV, buyers need to be aware when publishers have adopted the first-price auction model. First-price auctions are transparent, efficient, and can help CTV buyers win more inventory. Here’s how:

• FIRST PRICE IS TRANSPARENT 

In a first-price auction, buyers pay what they bid. Magnite can provide buyers with access to detailed reporting and transaction-level data feeds.

• FIRST PRICE ≠ OVERPAYING 

When first price auctions first came onto the programmatic scene in 2017, buyers adapted their bidding methods and algorithms. The same concept applies to CTV inventory.

• FIRST PRICE MAXIMIZES WINNING FINAL AUCTIONS 

When bidding into environments with sequential auctions, first price returns the maximum bid to the final auction.

From here on out, the market should operate with the expectation that CTV is becoming a first-price world. Buyers should review their bidding strategies, engage with their publisher partners and take care not to assume a second-price auction as the default. As a trusted partner of advertisers, and their agencies, looking to take advantage of the premium content, reach, and addressability of CTV, Magnite is here to help bridge the gap. 

To learn more about opportunities in CTV, reach out at contact@magnite.com.