Target Roundel Adopts Second-Price Auction: What it Means for Advertisers
Roundel Media Studio™, Target’s newly launched self-service advertising platform, has already shown strong benefits for both budgets and visibility. It’s the most cost-effective way to run Target Product Ads, helping advertisers enhance both budget efficiency and campaign impact through benefits such as prioritized inventory access, cost savings, and partnerships with leading tech firms.
Roundel’s campaign management capabilities kicked off with the launch of sponsored product ads, known as Target Product Ads by Roundel™. Now, less than a year after launching these capabilities, Roundel Media Studio is updating its auction model, bringing new opportunities for advertisers.
Roundel Media Studio moved to a second-price auction model for Target Product Ads officially on February 4, 2025. The retailer’s transition from a first-price auction to a second-price auction offers advertisers a smarter way to bid and maximize their media investments.
What is a Second-Price Auction?
In first-price auctions, advertisers place their highest bid—the maximum amount they’re willing to pay for an ad impression—without knowing what others are bidding at the same time. If they win, they pay the exact amount of their bid, regardless of how much lower the next-highest bid was.
In second-price auctions, the highest bidder wins the auction but pays just over the price of the second-highest bid. This model promotes fairness and ensures advertisers only pay slightly more than necessary to win, rather than their maximum bid. It fosters competitive, efficient bidding while avoiding overpaying for media placements.
The second-price auction model offers three key advantages: cost-efficiency, as advertisers secure optimal placements without overspending, maximizing their return on ad spend (ROAS); transparency, by providing clear insights into pricing dynamics and ad spend; and fair competition, allowing smaller advertisers to compete effectively for placements, knowing they will not pay more than necessary to reach Target’s engaged shoppers.
How Will Second-Price Auction Bidding Change Target-Roundel Advertising?
When advertisers win an auction for Target Sponsored Ad space, they will automatically pay the price of the next-highest bid, plus one cent. The most obvious outcome of this change is that advertisers should see a drop in cost-per-click (CPC). This auction model naturally regulates bid inflation, ensuring that the final price more accurately reflects what other brands are bidding in the space.
With lower CPCs, budgets will stretch further, allowing brands to reinvest the savings into their campaigns to expand coverage. Following this shift, advertisers should optimize their bidding strategies to align with the true market value of placements on Target.
When Walmart transitioned to second-price auction in 2022, advertisers saw significant shifts in performance. While spend only increased 4% quarter over quarter, clicks increased 134% and CPCs saw a decrease of 55%.
Roundel’s shift to a second price auction is a win for everyone. For advertisers, it means no longer having to guess what other competitors are bidding and investing those additional dollars to scale performance while improving ROAS. The transition elevates Roundel Media Studio to the level of other channels in the retail media space and reaches the distinguished audience of Target shoppers.
Sofia Montes, Senior Specialist, Commerce Media at Tinuiti
What’s Next for Roundel Media Studio™ in 2025?
Roundel™ has been gearing up the features of its platform to match the energy of its competitors, including: advanced reporting techniques, search relevancy enhancements; and of course, the switch to a second-price auction model. We expect to see Roundel Media Studio™ expand its offering to other ad types beyond Sponsored Products in the future.
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