Acceptance of real-time Internet bids

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Real-time Internet bidding is a process that allows an auctioneer to accept Internet bids during an auction. A bidder downloads client software, usually either Flash- or Java-based, and can hear the auctioneer and place bids until each individual item is declared sold. There are several prominent real-time bidding service providers competing in this space, each with its own software and feature set.

One of the important features of any real-time bidding provider is the way bids are accepted by the software. There are two ways bids can be handled and today we’re going to look at the good and the bad of each. The players in this discussion are the Internet bidder, the auctioneer, and the auction staff member who represents the Internet bids and conveys the auction action to the Internet bidder – known as the bid implementer. Also relevant is the client software used by the Internet bidder, and the auctioneer interface used by the bid implementer.

Automatic acceptance
Internet bids can be accepted automatically by the software. An Internet bidder places a bid and the software automatically updates the current price and winning bidder, with the expectation that the bid implementer will let the auctioneer know that the price has changed due to a placed bid.

Manual acceptance
With manual acceptance, the Internet bids wait in a queue until they’re specifically accepted by the bid implementer, presumably once the auctioneer has acknowledged the bid.

There are problems with both methods. With manual acceptance, the Internet bidders perceive a delay in the action or a problem with the software or auction staff when their bids aren’t immediately impacting the event. With automatic acceptance, an Internet bidder may believe he’s the current winning bidder because the software reflects this status, while in actuality the auctioneer is currently recognizing a live bidder at the same increment.

Automatic acceptance is better for newer auctioneers with less-established buyer bases. Because their starting pre-auction bids are lower, perhaps less than 50% of the final sales price, the chances are higher that a couple Internet bidders will create a bidding war between them that is faster than the auctioneer and bid implementer can accurately represent. Automatic acceptance removes the human limitation in the speed of the bidding. Internet bidders are able to immediately see the results of their bids and they feel like they are taking part directly in the auction. The problem for more experienced auctioneers with larger buyer bases and more realistic starting bids is that the real-time Internet bids are both fewer and closer to the final sales price, increasing the chance that an auctioneer will take a bid from the crowd at the same time an Internet bidder is placing a bid. The resulting price collision could result in legal action being taken against the auctioneer, especially if the item is sold before resolving the collision.

Manual acceptance is perhaps a more accurate representation of a live auction. At a live auction, many ringpersons can signal to the auctioneer that a bid has been placed, but only the auctioneer decides which one individual bid is accepted at any increment. In the case of bid collisions, only the bid recognized by the auctioneer is legally valid. The problem with manual acceptance for the auctioneer is that it requires much more vigilance on the part of the auction staff. Internet bidders can only bid as fast as the bid implementer can accept bids, and an inexperienced auctioneer or bid implementer may have a hard time running the system with such a high level of maintenance. The problem with manual acceptance for the bidder, as mentioned earlier, is that it’s easy to perceive a problem with the software or the auction system as a whole. When bids aren’t immediately accepted, the frustration can lead to complaints or even bidders who refuse to participate in auctions conducted by the auctioneer or the bidding platform.

We’re currently in a time that could be described as the wild west of Internet bidding. Real-time Internet bidding is but one of three ways auctioneers accept Internet bids. There are several providers who specialize in this service, and they all continue to innovate and iterate. It’s our belief that there is room for all kinds of bidding. As the industry and products mature, we’ll eventually see some standardized practices fall into place by themselves, unless patents or lawsuits force faster, more immediate changes to real-time Internet bidding.

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Aaron Traffas, CAI, ATS, CES

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Aaron Traffas, CAI, AMM, CES, is an auctioneer from Medicine Lodge, Kansas. He is currently community evangelist for Purple Wave in Manhattan, Kansas. Aaron serves as the current president elect for the Kansas Auctioneers Association and in the past has served on the National Auctioneers Association Education Institute Board of Trustees. He is a past instructor at CAI and co-wrote and instructed the ATS designation course from NAA. He currently instructs the Internet Auction Methods course offered by the NAA. During the summer, Aaron operates a farm in south central Kansas. Aaron is an active singer and songwriter and the Aaron Traffas Band's latest release, Enter: The Wind, can be found at iTunes, Amazon and Spotify.
  • Aaron, excellent post. Personally, I believe the legal consequences of auto acceptance and retraction of bids on the fly when a bid is awarded to an onsite bidder outweigh the benefits. Not to mention the consequences when an auctioneer announces sold, an online bid comes in, and the online bid is then retracted. My duties as agent to the seller are compromised, and could result in legal action from an online bidder (high bid was greater than selling price), and a seller (selling price was less than actual high bid).