Going Once

It's exciting to be in a room full of rapt bidders vying for a prize in a charity auction. But you know what's even more exciting? Raising a lot of cash for your cause.

cMarket is helping nonprofits fill their coffers via online auction destination BiddingForGood.com. The site, which went live about a year ago, serves as a landing page for the auctions the company is facilitating. cMarket uses regression and statistical analysis to help clients determine not only what types of items get the most interest, but what sort of e-mail reminders will drive increased bidding and when they should be sent.

The company began offering Internet auction services for schools and nonprofits about four years ago. At that time the events weren't linked to one another, says CEO Jon Carson.

Then, Carson adds, “Our head of customer support came in and said, ‘Have you ever heard of Dr. Bill? Dr. Bill has bid over a million and a half dollars across a zillion auctions.’ ”

Dr. Bill turned out to be an orthodontist in Wellesley, MA.

“His kid went to a private school that had an auction with us,” Carson continues. “He bid in that auction, saw the ‘Powered by cMarket’ logo, clicked on that and found other auctions.”

The company dug into its database and found there were thousands of similar bidders in the files. Realizing that a community was beginning to form, Carson had his team develop a basic database query to allow users to search all the auctions. BiddingForGood was created as an umbrella site, and it was relaunched this past March to put a greater emphasis on personalization.

BiddingForGood has hosted approximately 200 to 250 auctions this spring, and now has more than 15,000 items available for bid. The site has almost 80,000 members who receive twoe-mails a week promoting the various auctions. Soon those messages will be customized by geography.

“Right now the e-mails are general,” Carson says. “It would be of limited interest to someone in Boston if the Tucson Zoo had four tickets up for auction. But Red Sox tickets would be relevant.”

But even with the one-size-fits-all strategy, bids from the general member community are driving 35% of the winning bids.

As opposed to live events, online auctions have the benefit of the bidder not being distracted by other things in the room, like friends wanting to be social or cocktails, according to Carson.

Plus, if a nonprofit has 25,000 names on its mailing list and only 800 attend a gala, those other 24,200 possible bidders were lost, Carson notes. “Engaging the entire constituency by e-mail delivers value because 100% of the bidders are enabled to bid.”

cMarket's clients include Broadway Cares/Equity Fights AIDS, the New England Aquarium, The Home for Little Wanderers, Pittsburgh Community Television and the Garden State Philharmonic.

Besides creating e-mail blasts to donor files to promote the auctions, a print order system in cMarket's system allows clients to go in and order post cards preprinted with marketing copy to remind people to visit the auction site. Business cards that serve as promotion cards can be ordered as well.

cMarket worked with Harvard Business School professor Deepak Malhotra, who has a background in negotiation and game theory, to conduct regression analysis and statistical correlation. The objective: To develop 138 predictive and operational algorithms that would help nonprofits figure out the best auction strategies.

How does it work? Carson answers by noting that an auction for his child's school had just began.

“On the predictive side, by tomorrow morning at 8 a.m., the [system] will be able to tell me plus or minus 10% where we're going to end up in two weeks,” he says. “With the old model we didn't know how we did until the morning after the auction ended. This gives me two weeks to [make adjustments].”

Meanwhile, Malhotra looked at the company's e-bid alerts (which tell people when they've been outbid) and found them to be a bit bland. Messaging clusters were developed and tested on 40,000 alerts. One was charitable, urging bidders to come back to rebid and help support the cause. Another played on the competitive urge.

In testing, the bland alerts always did the worst, followed by the competitive messages. The charitable one performed best unless it was close to the end of the auction. Then it went into a sharp decline and the competitive e-mail skyrocketed. But the charitable messages were the clear winners on Sundays, at least for faith-based organizations.