cMarket Says Silent Auctions are Fast Losing Ground to Online Fundraising Auctions

. January 16, 2008

Much as “video killed the radio star” with the advent of MTV, the Internet is today’s catalyst for the death of the silent fundraising auction, as nonprofits eschew hours of volunteer organizing, venue procurement and hors d’oeuvre selection in favor of the web-based host. Nonprofit fundraisers, who have traditionally raised billions of dollars annually through silent auctions at live events and galas, are increasingly replacing or supplementing them with auctions held online, as a way to eliminate additional billions in inherent inefficiencies and invite an entirely new audience of cause-minded consumers to participate, according to cMarket, the leading provider of online auctions for nonprofit organizations.

The company, which has seen the volume of its online auctions at least double every year since its 2003 founding, expects the number of these fundraising events to surpass 3,000 in 2008, as organizations such as the United Way, Junior Achievement, the JCC Association, and Muscular Dystrophy Association, as well as thousands of schools and local community based organizations lead the charge in casting ballots for the Internet.

Consumers are convinced, too. BiddingForGood.com, a single site aggregating all cMarket powered fundraising auctions under one umbrella, now boasts over 50,000 members. A recent Susan G. Komen Breast Cancer Foundation auction received over 40% of its bids from BiddingForGood.

Why has the Internet disrupted silent auctions so dramatically?

“The silent auction model has literally not changed in over 70 years,” said Jon Carson, CEO of cMarket and BiddingForGood. “It suffers from any number of inefficiencies that include bidding limitations, heavy logistics requirements, suppressed ‘competitive arousal,’ limitations on marketing value for item donors and sponsors, and a lack of any kind of aggregated best practices data. Online auctions address these challenges and put nonprofits in the driver’s seat to raise more dollars.”

Silent auctions can inadvertently put a damper on bidding. For starters, the attendees in the room are distracted by friends, canapés, and entertainment. Moreover, clusters of people around clipboards can deter bidders unwilling to fight the crowd. Then there are the inevitable schedule conflicts; typically, only 10-30 percent of an organization’s constituents are able to attend these in-person events. “It’s really not an ideal environment,” noted Alex Durant, a well- known special events consultant who oversees dozens of marquee fundraising auctions every year. “I’m moving many of my clients online,” she added.

The Internet offers some uniquely beneficial properties that address these issues. When an auction is put online, time and geography barriers are removed. Non-attendees can bid over a stretch of several days or weeks, while nonprofits reach new constituents who care about their causes, and may become repeat bidders.

“Our silent auction was becoming logistically complicated and it wasn’t available to everyone, which limited bidding. Going online solved both problems,” said Marie Lehman, who has run the annual auction for the prestigious Menlo School in Atherton, Calif. “The Internet allowed us to open up the bidding to alums and parents who couldn’t attend the gala while significantly reducing the logistics work that was just brutal.”

Logistical issues inherent to the silent auction model can be overwhelming. “Try managing 15 silent auction volunteers, lugging 150 items into a room, setting them up, taking unsold items back to the office late at night, and dealing with long checkout lines–it isn’t easy,” said Judi Elkin, a seasoned fundraiser and former Executive Director of the New England chapter of the American Liver Foundation. By holding an online silent auction for one to two weeks surrounding the live auction event, an organization reduces the workload for the “big day.”

“We closed out 100% of our silent auction items online–it was such a saving of time, energy, and expense not to have to set up the room,” noted Laura Cavallaro of the New York Mercantile Exchange Foundation.

Online auctions successfully trigger competitive arousal in ways that silent auctions can’t. “We recognized that clipboards don’t exactly jump off the table and follow you around the room when you’ve been outbid, and that bid alerts are an important lever,” Carson noted. Deepak Malhotra, a professor of game theory at the Harvard Business School, noted, “The online environment has a number of attributes that may stimulate competitive arousal (e.g., instant bid alerts) that in-room silent auctions simply don’t have.”

cMarket recently launched “Intelligent Bid Alerts” that change messaging based on various timing factors to optimize competitive arousal and re-bid response rates. To date, cMarket has built over 130 algorithms from its unique database of thousands of completed auctions to enable its clients to manage better auction outcomes.

In addition, online auctions with their inherent measurability are tailor-made for sponsorships. cMarket recently expanded the capability of its system to enable its clients to create dozens of sponsorship opportunities to sell or barter. One nonprofit organization recently enabled over 70 sponsorship positions, which it monetized for over $50,000. The system also allows fundraisers to conduct virtual item acquisition campaigns, and to access a virtual catalogue of over 1,000 consignment items and a limited number of free items from marketers seeking product placement distribution.

“In the years ahead, nonprofit fundraisers will need the very best fundraising toolbox possible and an online auction fundraiser will increasingly be a must-have tool in that toolbox,” said Carson.

About cMarket

cMarket is the leading online auction platform solely for organizations engaged in fundraising for nonprofit causes. With more than 2,000 customers, online auctions powered by cMarket have generated measurable successes by allowing organizations, both large and small, to identify new sources of income and, at the same time, build mission awareness and heightened caring for the cause.

cMarket services national nonprofit organizations such as the United Way, Muscular Dystrophy Association, JCC Association, Junior Achievement, National PTA, and hundreds of local schools, among others. cMarket also works with companies including Ford, Deloitte & Touche, Kimberly-Clark and General Electric to raise funds for their nonprofit causes. You can experience cMarket at www.BiddingForGood.com, its consumer website that aggregates all the company’s auction clients under one powerful umbrella for cause-minded bidders.

cMarket, which was incorporated in 2003, has headquarters in Cambridge, Mass. For more information, visit www.cmarket.com.

Category: Auction News

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