Probing first-price floors recovered $0.40 CPM the auction was hiding

Probing first-price floors recovered $0.40 CPM the auction was hiding

When exchanges moved to first-price auctions (highest bid pays exactly what it bid, no second-price discount), one buyer suspected they were overbidding into soft floors.

1. They selected one high-volume placement and ran a descending bid ladder: bidding $5.00, then $4.50, $4.00, $3.50 on rotating slices of identical traffic.
2. They charted win rate at each level.
— $5.00 to $4.00 held a flat 34% win rate.
— Win rate only fell at $3.50, dropping to 19%.
3. The flat region revealed the true clearing zone sat near $4.00; everything above was pure overpayment in a first-price setting.

Evidence: setting the bid at $4.05 held 33% win rate while cutting paid CPM from $4.70 to $4.18, a $0.40-plus saving per thousand with negligible volume loss. In second-price this discovery wouldn't matter; in first-price, the gap between your bid and the runner-up is money you keep.

Why it matters: first-price auctions reward bid discovery. A descending ladder maps the win-rate plateau, and the bottom edge of that plateau is the bid you actually need.