A hidden 'soft floor' was turning second-price into first-price on 30% of wins

A hidden 'soft floor' was turning second-price into first-price on 30% of wins

A buyer on a nominally second-price exchange noticed they often paid close to their full bid. Log-level data exposed why.

Second-price (winner pays one cent above the runner-up bid). Soft floor (a publisher minimum that, when no bid clears it cleanly, makes the winner pay their own bid instead).

1. They computed, per win, the ratio of price paid to bid submitted.
— On 30% of wins the ratio exceeded 0.95, meaning they paid nearly their full bid.
2. Those wins shared one trait: no competing bid cleared the publisher's undisclosed soft floor.
3. With no valid runner-up, the auction fell back to charging the winner's bid, effectively first-price.

Evidence: lowering bids by 8% on those specific placements cut paid CPM 11% while win rate held at 26%, because the bids still cleared the soft floor with room to spare.

Why it matters: 'second-price' describes the rule, not the outcome. When thin competition leaves no clearing runner-up, soft floors convert the auction to first-price and you pay your bid. Measure price-to-bid ratio to find where that is happening.