Reformed Creative

Hearts & Science Calls To Replace First-Price Auction With Reformed Second-Price Model

A Hearts & Science study argues that the shift to first-price auctions in programmatic advertising has raised buyer costs. In tests across millions of impressions, CPMs were 59% higher in first-price auctions than in second-price auctions, and a separate group using bid shading with an auto-bidder saw CPMs 54% higher than second-price. The agency says it does not advocate returning to the old second-price model but recommends a 'clean' second-price auction with third-party auditing to prevent artificial price inflation and to address inefficiencies created by header bidding. Proposed reforms include passing all bids to publishers so they can conduct a true second-price auction, and using bid conduits rather than signaling from DSP/SSP only. As a stopgap, brands should invest in second-price auctions where possible and negotiate private marketplaces with key publishers. Hearts & Science emphasizes transparency and market fairness to improve marketer outcomes.