<b>Second-price residue: why some of your auctions still aren't first-price</b>

<b>Second-price residue: why some of your auctions still aren't first-price</b>

The market 'moved to first-price' around 2017–2019, but that was never universal, and the residue matters because your shading logic assumes an auction type that may be wrong.

1. Plenty of inventory still clears in second-price or hybrid auctions — certain private deals, some ad servers, and exchanges that kept second-price for specific paths.
2. If your DSP shades a bid assuming first-price (lowering it toward expected clearing), but the auction is actually second-price, you've shaded a bid that would have been protected by the second-price mechanism anyway — needlessly lowering your win probability for no price benefit.
3. Conversely, treating a first-price auction as second-price means bidding true value and systematically overpaying.

The DSP has to detect or be told the auction type per path. Exchanges signal it in the bid request (an auction-type field), but the signal isn't always present or honest, and 'audit your auction discrepancies' became a real discipline precisely because the declared type and the observed clearing behavior didn't always match.

<b>Why it matters:</b> shading is only correct when the auction type is known. Mismatches cost you both ways — lost winnable impressions or silent overpayment. Audit the auction-type field against observed clearing prices per path; where they disagree, your shading is solving the wrong problem and your CPMs are paying for it.