Online fundraising auctions work.
With the help of the Internet, online auctions break the barriers of time and geography and allow organizations to reach a broader audience. Online auctions also offer a more quantifiable value proposition to donors and sponsors. They also dramatically expand the marketing reach for organizations, creating a greater awareness of the cause and a greater fundraising capability.
Add it up and you get more money being raised and deeper donor engagement. The benefits are too significant to ignore.
Why Fundraising Auctions Work, and Why They Don’t
First, it’s important to look at the current fundraising auction model to understand why it works and where there are flaws. Today roughly 200,000 – 300,000 fundraising auctions are held each year, which raise $14.6 billion (source: National Auctioneers Association).
But ask any fundraising chair at any local charity about fundraising auctions and you’ll most likely hear “can’t live with them, and can’t live without them”. Why? Because they take a lot of work, and can be quite inept. On the flip side, they engage donors and raise significant money.
- Demand Inefficiencies: Auctions have two key drivers: supply and demand. On the demand side, bidding is limited by 2 key variables - the number of folks purchasing a ticket to the event, and the time frame of the event (often less than 4 hours). Moreover, an auction competes with the socialization objectives of the event, which are to be sure that when Mr. and Mrs. Smith go home they feel connected to the organization and more ready to make a (bigger) contribution for the new capital campaign or annual fund.
- Supply Inefficiencies: On the supply side, the typical auction offers little to commercial item donors in the way of marketing value. And it’s getting competitive out there. The number of new non-profit organizations incorporating every year is growing at almost twice the rate of giving. Most organizations offer a small quarter page ad in the event program which has a limited distribution and in which few item donors see much value.
Few organizations have a system to capture all the information around bidding activity and item popularity, and if they do, it’s often a shoebox of paper records. This results in little institutional learning to optimize future auctions around best and worst practices, best categories, trends, optimal bid levels, bid increments, and overall catalogue size.
Despite all this, auctions work and have overwhelmingly redeeming virtues. They can raise significant money, and they are highly entertaining for participants. They are one of the few truly “pleasurable” ways to give. Lastly, they are one of the primary ways non-profits have to tap household spending budgets (in size and 66% of GNP).
The Power of Online
When you hold your fundraising auction online, you leverage strengths and reduce inefficiencies. It doesn’t matter whether you hold a purely virtual event, or pair it with a physical event, you will enhance both supply and demand as well as create a deeper connection with your constituency. Moreover, unlike the real world, where there are many choices for how to fundraise with special events, in the virtual world there is only one way to hold a special event fundraiser: online auction.
An online auction has 3 big advantages. First, it removes the barrier of geography. Donors can live far away and still participate. Second, it removes the barrier of time. Online auctions run 24/7 so if donors have a conflict or would rather just stay home the night of the event, they can still participate. Lastly, online auctions are highly measurable, producing valuable information about what item categories get bids, etc. That information provides a map for improving your next auction.
- Increased Bidding:
Bidding is enhanced when you use email lists and current website traffic to drive it. This expands the bidding pool to a much broader audience. Moreover, for those worried about email spam pushback, open rates have been quite high for auctions and constituent blowback is almost non-existent. One cMarket client sent over 3,000 emails for their auction over a span of 4 weeks. Only 3 recipients asked to be removed from their mailing list.
- Increased Supply:
Item solicitation has also improved in a number of ways because the organization has a better value proposition to take to commercial entities. For starters, the organization can give every donor a clickable link and logo, which enables them to quantify click through and bidding activity.
This is also true for sponsors who now see a sizeable number of guaranteed impressions among an important demographic - donors who care about a particular cause. For both donors and sponsors, an online auction is a powerful cause marketing platform. Moreover, the organization can send an item solicitation email to their donor list. cMarket auctions average 9 incremental items from this method. Some organizations get up to 25% of their total catalogue this way.
- Bigger Marketing Footprint:
Our data show the typical online fundraising auction performs best when it runs 1-3 weeks. This greatly expands the marketing footprint of an event from hours to weeks, making a big impact on the donor base. This is not to be overlooked in a world where the number of new non-profit incorporations is growing faster than the rate of charitable giving.
- Attracting Women:
In cMarket’s 2006 bidder survey we found an overwhelming majority (71%) of bidders are women; this demographic is often underrepresented in bidding at a live event. Focus groups reveal that women don’t enjoy the competitive, high testosterone bidding environment at the live event and are more comfortable browsing and bidding from home. Online auctions are an excellent way to draw in female donors.
Summing It Up
It’s a prudent bet that most auctions in the future will have an online component. Auctions work. The sooner you begin, the sooner you will gain a competitive advantage and take your auction strategy to a whole new level.
