ProSpeak: The Advantages of Moving Silent Auctions Online

Much as iTunes is making the traditional music store obsolete, the Internet and e-commerce wave is a catalyst for the death of the silent fundraising auction and its inevitable migration to the Web.

The 100-year-old silent-auction model suffers from seven inefficiencies that cumulatively result in a less effective outcome. This is the primary reason that thousands of silent auctions are moving online. Nonprofit fundraisers, who have traditionally raised billions of dollars annually through silent auctions at live events and galas, increasingly are moving to or supplementing them with online auctions to reach more bidders, have a stronger value proposition to item donors, and to create a more competitive bidding environment. This is eliminating inherent inefficiencies and inviting a new audience of cause-minded consumers to participate and continue growing this $16 billion marketplace.

The seven core inefficiencies of silent auctions are:

1. Non-attendees, typically 70 percent of a constituency, can't (and don’t) bid.
2. Suppressed competition — clipboards don’t exactly follow you around a room when you have been outbid.
3. The ending of the auction can be awkward. Many bidders are reluctant to be aggressive enough to fight it to the bitter end, thus, leaving money on the table.
4. Social distractions suppress bidding. Would a professional auctioneer hold an auction in the middle of a party? Most galas effectively stop the party for the “live” auction. Why? Because they know a non-distracted bidder equals more bidding equals more dollars.
5. Many attendees are put off by being forced to “fight the crowd,” which suppresses bidding. In focus groups, women are especially vocal on this topic.
6. Item performance data are not tracked and stored so that next year’s committee has a solid handle on what items to obtain. Losing bidders' contact information is not kept.
7. The minimal (unmeasured) marketing value to item donors may mean fewer items in a increasingly competitive item-acquisition environment.

One of the key behavioral drivers of auctions is “competitive arousal.” This win-at-all-costs attitude is alive and well in a live auction, but suppressed in the silent-auction format. Fighting the crowd, the awkward ending, social distractions — these all serve to suppress bidding competition.