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Going Once, Going Twice: Spurring Donors to Pay More in Auctions

By Tom Watson on November 8, 2007No Comment

Today, as the fundraiser’s arsenal contains a wider array of weaponry, especially using online media, we’re intrigued to know how donors may respond differently and how they might be motivated to give more.

So new data from a study of online auctions gave us food for thought. A company specializing in these auctions, cMarket, has conducted some 3,000 auctions involving millions of bids in its four-year history.  Among the decidedly odd and random bids that have been generated are these: the most bidders for a single item, 23 people bidding for a Donald Trump autographed stapler, from the “Staples: Staplers of the Star”s auction. Oddest item put up to bid, by the Massachusetts SPCA: a vasectomy for you and your cat.                

CEO Jon Carson says its online auctions have generated more than 30 million dollars for various charities, and as their experience grows, they’ve amassed some interesting data on how online auction bidders behave. It also doesn’t hurt to have on your company’s advisory board, as cMarket does, a Harvard professor and author, Deepak Malhotra, whose research interests include behavioral aspects of decision making in a competitive environment. With regard to auctions, he’s written and spoken on how to create escalation of commitment, competitive arousal, and auction fever.

Among specific examples Carson cited in a recent interview: “Two-fers can be very lucrative if two bidders go to war over the same item. Often bidders will be driven to overshoot and pay more than they had planned to, when it comes down to one-on-one.”

Recently, Malhotra studied the impact of various messages used in “bid alerts,” in which a donor is notified every time he’s been outbid on an online auction item. Malhotra looked at these and compared their original “bland” language with another series of messages categorized as “charitable,” appealing to the donor to help advance the cause, and “competitive,” urging the bidder to act or miss out on the chance to win the item she desired. 

In the results, “bland” alerts always under performed, Carson said, but there were interesting patterns to the way the other messages worked, depending on the timing of the alerts. In the first two-thirds of the auction, charitable messages had the greatest impact. In this phase, the donor is coming to the party to support the cause. After that, the impact of charitable messages declined rapidly, and in the last third of the auction, competitive messages outperform except on Sunday, Carson said, when charitable messages always win out.

So cMarket’s system automatically sends out messages calibrated to that timing charitable at first, then competitive, unless it’s Sunday.

In a survey of 1,226 bidders, a number of attributes of male and female bidders emerged. One important statistic: women make up 74% of online bidders. And while female bidders described themselves as non-competitive, the Malhotra research found women responded to the competitive messaging as strongly as men. Carson theorized that women are competitive mentally, not physically. “In focus groups,” he said, “women told us what they preferred about online auctions vs. silent auctions is that they didn’t have to deal with the jostling of crowds gathered around auction items at an event.”

In studying what auction items appeal to the heavy hitters – those with household incomes above $200,000 – women show a strong preference for dining packages, along with health and beauty spas and travel. For male bidders, dining and travel also rank high, but the top category is sports events and memorabilia. “All kinds of data are coming out,” Carson said, “for affluent people, it’s all about having the experience.”

The possibilities have not been not lost on marketers, who began approaching cMarket to get their consumer wares up on the nonprofit auction sites. In response, cMarket created a consumer bidding portal, BiddingforGood.com, last year.  Its subscribers, some 40,000 shoppers, are both a source of donations for the nonprofit clients and a tailor-made audience for the luxury marketers’ wares.

“It gives the product the nonprofit’s sheen of trust and credibility,” said Carson.  “Plus, if you’re a marketer, and you have the opportunity to get your brand in front of donors who are passionate about that cause, that’s a bull’s eye. You gain an unfair advantage in the ecommerce economy, by having a set of consumers grouped around their affinity to a cause. A set of customers that Amazon would die for.”

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