Google Ads uses a second-price auction, also known as a Vickrey auction, for its online advertising platform. In this model, businesses bid on keywords and the highest bid wins the auction but pay the price of the second-highest bid plus a small incremental amount. As an example, if the highest bid is $3 and the second highest bid is $2.5, the highest bidder will pay $2.5 + $0.1 = $2.6