Manuel is a seller running a Sponsored Brands campaign for his smartwatch. His CPC bid is $0.85. He is the highest bidder in the auction, with the second highest bid being $0.78. Which of the following is Manuel likely to pay in this instance?

Sponsored Brands uses a second-price auction model. In this model, the winner pays one cent more than the second-highest bid. Manuel's bid is $0.85, and the second-highest bid is $0.78. Therefore, Manuel will likely pay $0.78 + $0.01 = $0.79. He will not pay his full bid of $0.85 unless the second-highest bid was $0.84 or higher. Paying $0.77 would mean he paid less than the second-highest bidder, which is incorrect for a second-price auction. Paying $0.86 would be more than his own bid, which also doesn't happen.