Today we’re readin’ the auction dictionary.
One point of confusion voiced by my clients’ stems around the definitions of two features often discussed in mobile bidding devices: Max Bidding and Extended Bidding.
Each feature impacts your auction in a different way, though some planners are led to believe that if you have one feature — namely, Max Bidding — then that is “good enough.”
It’s not good enough.
I’ll argue that Extended Bidding is more important than Max Bidding.
Maximum / Max Bidding
Max bidding allows a bidder to input his highest bid into the software system. The system will then bid on his behalf up to that amount.
Assume bidder John is willing to bid $300 on that bottle of wine in your silent auction. He’s currently the high bidder at $240, but sets his max bid at $300.
This means that when another guest raises the bid to $250, the system automatically bids on John’s behalf, up to his max bid of $300.
Now let’s assume another guest has ALSO decided to use the max bid feature. He sets his max bid at $350.
The system immediately starts to raise the bids, using the max bid feature set by both bidders.
The system will quickly run up the two max bids — $260 to John … $270 to the other guest… $280 to John .. $290 to the other guest … $300 to John … $310 to the other guest … and stop.
The system remembers that John is not willing to go higher than $300 and stops bidding on his behalf.
(Of course, a third bidder might enter the process and bid $320. Or John himself might notice that he’s been outbid and re-enter a new max bid. But only if there’s time to do so.)
The Max Bid feature is a convenient tool for the bidder (not the nonprofit). A guest can place his Max Bid and – if he desires – ignore the bidding for the rest of the auction.
Yet it doesn’t work, because most of us bidders will never REALLY put in our max bid. (More on that in tomorrow’s post.)
Remarkably few mobile bidding vendors (or online auction vendors, for that matter…) offer extended bidding.
But let’s begin by describing the feature.
If a bid is placed on an item in the final minutes of the silent auction, the bidding on that item only will be extended for an additional amount of time set by the nonprofit (let’s say five minutes). Bidding concludes when no new bid has been placed within that five minute time frame.
Other items in the auction will close at the advertised time. But the most popular items will continue to accept bids, pushing the sale price higher and higher.
Unlike Max Bidding, which is a convenient tool for the bidder, Extended Bidding is a convenient tool for the nonprofit.
At this time, most vendors run their bidding platforms similar to online sites like eBay. If an auction is scheduled to end at 8 PM, the auction ends when the clock strikes 8 PM. There is no Extended Bidding.
Bidders aren’t dumb, so they adapt their behavior to take advantage of this rule.
Bidders place their bids in the final moments of the auction, hoping to be the last bid accepted by the system before the auction closes at 8 PM.
Friends, that’s not an auction; it’s a game about timing.
Systems that don’t use Extended Bidding are not rewarding the highest bidder; they are rewarding the last bidder in the final moments of some arbitrarily chosen cut-off time.
The runner-up bidder might have be willing to bid again. But unless Extended Bidding is also a feature of the system, we’ll never know.
In a real auction — a live auction — bidders are encouraged to bid back-and-forth until only one bidder is willing to pay the price. That’s not true in the scenario outlined.
Do you see how a client would have made MORE money using Extended Bidding and forgetting about “Max Bid?”
Extended Bidding raises more money for nonprofits. It’s a shame most benefit auction mobile bidding vendors haven’t figured that out.
Are you beginning to sense how much there is to know when it comes to auction technology?
Here are two ideas to save your sanity.
- Review my store of auction education. At times I’ve offered various webinars on auction technology, like the one on the right (no longer available).
- Second, if you want more personalized help deciding which is the best vendor for your auction, schedule a consultation with me. I’ve helped many nonprofits figure out their technology needs .. and not just for mobile bidding! Common topics are software, payment services, and registration needs.