Strengths of Internet bidding

Image representing TiVo as depicted in CrunchBase
Image via CrunchBase

There is a device for your TV called a Slingbox. This device does what is called place-shifting, allowing you to watch your cable TV – that for which you’ve paid and normally watch at your home – on your mobile devices like your iPhone.

There is a device much more popular than the Slingbox – a device that has become so ubiquitous that its name has become a verb – called a TiVo. The TiVo, as we all know, does what is called time-shifting, allowing you to watch your programs on your schedule so that you’re not required to be in front of the TV when the show is initially aired.

There is a company in the Kansas City area called Public Auto Auction that is using a fairly unique Internet bidding model. It is essentially a real-time Internet only auction that is designed to emulate a live event. Their pre-auction bidding actually closes before the event and then bidders log in for a “lightning round” to establish the final price. Here’s the description of the mechanics from their website.

Each new bid will appear in the bid window. Click on one of the Set Bid Amount buttons to set your bid price, then click the Place Bid button. The High Bid button will turn green if you are the winner, and red if you have been outbid. When there are no bids for 5 seconds, the program will start a countdown. If there are new bids, the clock starts over.

Once the countdown reaches zero, a winner is declared, and the next vehicle is brought up for auction. These auctions continue as long as there is bid activity, so no one can place a bid at the last second.

Elsewhere on the site they write, “Place a prebid if you wish.” It’s clear that the majority of the activity is expected to occur during the lightning round. We have no firsthand knowledge of how successful this approach is, and we certainly aren’t criticizing such an interesting system, but we can’t help but notice the effort that went in to trying to simulate a live auction.

One of the biggest problems with a live auction is that someone is forced to pay attention at a specific time. All Internet bidding obviously takes care of place-shifting, so it doesn’t necessarily matter where you are, but for real-time Internet bidding it still matters when you are.

The specious defense often used is that pre-auction bidding is always available. However, buyers will understand that the real action occurs during a specific event like a live auction or a lightning round of bidding and won’t make their best bids until that time. We can never completely eliminate time from the equation, and the use of automatic extensions is a great way to ensure that time is less of a variable at the end of the auction, but Internet only auction that simply begins to end at a set time will reduce the perceived importance of an event and cause bidders to place greater trust – and greater bids – throughout the entire course of bidding.

This isn’t an article advocating Internet only auctions over live auctions. There are decisions we all must make based on the best interests of our sellers that will govern the choice between a live auction or an Internet only auction. However, when the selection has been made in favor of an Internet only event, we need to remember that our customers will get the benefits of both place-shifting AND time-shifting. When we try to create an artificial event to create excitement, we actually take away from the benefits of time-shifting and our bidders get fewer benefits and our sellers get less value.

Any system that forces or appears to force customer participation at a specific time will, in our opinion, ultimately lose out to systems that don’t offer an advantage based on the time of participation. Why is the TiVo much more popular than the Slingbox? Being at a specific place isn’t nearly as difficult as being somewhere at a specific time.

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Aaron Traffas, CAI, ATS, CES

twitter.com/traffas | aarontraffas.com | aarontraffasband.com

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.
  • I read this sentence several times, but never seemed to get it –

    “We can never completely eliminate time from the equation, and the use of automatic extensions is a great way to ensure that time is less of a variable at the end of the auction, but Internet only auction that simply begins to end at a set time will reduce the perceived importance of an event and cause bidders to place greater trust – and greater bids – throughout the entire course of bidding.”

  • I read this sentence several times, but never seemed to get it –

    “We can never completely eliminate time from the equation, and the use of automatic extensions is a great way to ensure that time is less of a variable at the end of the auction, but Internet only auction that simply begins to end at a set time will reduce the perceived importance of an event and cause bidders to place greater trust – and greater bids – throughout the entire course of bidding.”

  • The goal is to encourage bidders to bid when they see the listing, not wait until the auction is about to end. We use automatic extension to eliminate sniping and to make it clear that there isn’t an incentive to bid at the end as opposed to the beginning. If they realize there isn’t a benefit to waiting until the end, the chances are greater that they will bid earlier.

  • The goal is to encourage bidders to bid when they see the listing, not wait until the auction is about to end. We use automatic extension to eliminate sniping and to make it clear that there isn’t an incentive to bid at the end as opposed to the beginning. If they realize there isn’t a benefit to waiting until the end, the chances are greater that they will bid earlier.