Making online auctions work

The traditional fundraising-auction market is closed and inefficient, says Jon Carson of cMarket, but online auctions can widen a nonprofit’s bidding universe and optimize returns.

Jon Carson
Jon Carson

Jon Carson

Why online auctions?

There are four advantages of online auctions.

  • If you think of an auction from a supply-and-demand perspective, online auctions enable you to create more demand by opening bidding to a wide universe of available bidders over a period of say two weeks, versus physically gathering a limited number of people for one evening.
  • On the supply side, having online auctions allows you to deliver substantial marketing opportunities to donors, thereby transforming what used to be a charitable ‘ask’ for items into a more attractive business offer.

cMarket recently released the results of a survey of 255 auction managers on how the faltering economy is affecting their auctions. Two in three said it’s much more competitive getting items from local merchants and 40 percent said that corporate sponsors are getting more demanding in asking for marketing and promotion benefits.

  • The third advantage of online auctions is data. It’s almost impossible to analyze the traditional auction because information is not captured on the winning items or bidders, let alone any number of “losing” bidders.

With online auctions, you can see which item categories get the most traffic, when bids come in and the optimal starting-bid price for a given category of item. This allows you to optimize and improve your returns next year.

  • Lastly, an online auction allows the organization to benefit from “competitive arousal,” a bidding behavior encouraged by a live auctioneer to win by out-bidding another person. Social interactions, crowds and other distractions can prevent people from making bids at a live or silent event and can suppress competitive arousal, resulting in less then maximum returns.

Online, people bid at their leisure, get alerts when they are out-bid and easily can change their bid if desired.

Who is best served?

Nonprofits best served by the online-auction movement are those that already run traditional fundraising auctions, because they have an installed base of item donors and know that the bigger the auction catalogue, the bigger the funds raised.

Within that group, arts organizations, schools, hospitals and healthcare or disease-advocacy groups do well because they tend to have many volunteers who can access more donations.

Getting started

Start the process of building your online auction as early as possible for maximum results.

First, you need to build the auction website, which can be done in about 30 minutes after you’ve gone through the host of training sessions available.

Next, start getting items to auction. Use your email list to ask for donations of professional services, gift certificates, use of vacation homes, etc.

Be creative. There are many no cost, “up close and personal” items that sell very well, such as a reserved parking spot, principal for a day, lunch with a local politician or celebrity or a private coaching lesson.

Next, promote the auction.  While you’re building your catalogue, send a “Coming Soon” email asking sponsors, volunteers and merchants to pass the message on to their contacts. Call your local media outlets and suggest they write a story featuring the organization, the worthy cause and the cool items available.

Opt in to, which opens your auction to an estimated 81,000 registered bidders. Once the auction opens, send another email alert and consider adding new items periodically to give people the incentive to come back.

Don’t be surprised to find the majority of bids come in the first 48 hours and the last 48 hours.

This is where competitive arousal comes into play and popular items incite bidding wars – which should be music to your ears and money in the bank.

Jon Carson is CEO of Cambridge, Mass.-based cMarket, which helps nonprofits raise money through online auctions.

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