Best Events Magazine  -INSIGHTS, IDEAS AND TRENDS

Written by: Rachel Gary

Silent and live auctions have long been a go-to means of raising money at events. The formula is straightforward: the winner simultaneously gains a coveted item while donating money to support an organization. Popping up at golf tournaments, benefit luncheons and fundraising galas, auctions have become an event element attendees have come to expect and, executed properly, can result in large profits in short order as bidders fight it out over sports tickets, vacation packages and gift certificates for services. But what is it about the auction atmosphere that so often drives bids far above the actual value of the items? Deepak Malhotra, assistant professor at Harvard Business School says, simply, it is the concept of “competitive arousal.” Also known as “auction fever,” the phenomenon consists of a few basic stimuli that increase a bidder’s drive to win: rivalry, social pressures, time pressures and hype. These elements combine in a perfect ratio during a live auction; the public arena in which the competition goes down, the pressure to win in front of peers, the auctioneer egging on the fight.

The auction format also creates the feeling of commitment to an item. Says Malhorta, if the bidders “have invested a lot of time, effort or money in trying to acquire the item, they may continue to bid past their initially set limit.” With the potential addition of alcohol to the mix at, say, a gala dinner, relaxing bidders’ judgments and internal financial restrictions, the possibility for prices to skyrocket increases. All of these elements add up to big bucks for nonprofits, and a successful fundraising event. That is, when the economy isn’t in the crapper. Unfortunately, an economic recession throws a big stick in the spokes of that “auction fever” mentality planners count on. Suddenly, the pressure to be, or appear, fiscally conservative outweighs the pressure to win at any cost. Even those that can still afford to bid high of big ticket items are exercising restraint, in an effort to avoid flaunting an implied wealth during a time that so many have lost so much.

Jon Carson, CEO of cMarket/bidding for good, sees a trend in a need for bidders to maintain a low profile when bidding high on items. “Ninety percent of our bidders register names that are anonymous,” Carson says. The traditional silent auction was once thought to be a solution for the public bidding wars of the live auction that some may be to shy to engage in, but also have the potential to become less anonymous than intended. “If you’re in the heat of the race, in the final minute, in many cases you almost have to grab the pen out of someone’s hand. That’s a small percentage of the population that will be that aggressive,” says Carson.

Alex Durant, founder of Durant Consulting and a fundraising auction specialist, used cMarket/bidding for good to auction larger, high-priced items at the recent Food Network South Beach Wine and Food Festival for exactly that reason. “Users can place absentee bids anonymously, online, from the comfort of their own homes,” says Durant. “And a lot of the time, the absentee bids end up winning.” She explains that online auctions allow those who want to support a nonprofit organization by bidding on a high-ticket item, and can afford it, to do so without fear of judgment or public scrutiny. For the festival, the high-priced items auctioned online went for higher than their estimated values, and Durant believes it resulted in a more successful fundraising effort than an in-eventsilent or live auction would have.