352: How to Know What Your Auction Advertising Budget Should Be
Click on any of the illustrations below to enlarge them.
If you read business news, you run into the term “big data” on a regular basis. I used to associate it with corporations mining our transactional histories to extract scary quantities of data for creepily-predictive advertising.
After teaching part of the Auction Marketing Management course for a couple years, though, I get inspired to help small businesses use the same processes with the information they already have.
Auction companies, in particular, have some incredible, free knowledge. With a few minutes’ worth of work, that knowledge can become predictive power; and that power can help you convince more and better sellers that you are their best option. It just takes asking a few questions and recording those answers.
How many buyers did you have in your latest auction?
Along with that, how many bidders did you have in that auction?
Divide the number of bidders by the number of buyers. This will tell you how many bidders you needed to get to each buyer.
Divide this number by the number of lots in your auction. This will tell you the average of how many lots per buyer you needed to get everything sold.
How much did you spend in advertising on this auction?
Divide this number by the number of bidders at the auction. This will tell you the average cost per bidder.
Of course, it’s easy to then compute your average cost per buyer.
How many unique visitors did this auction’s page on your website generate?
Divide this number by the number of bidders. This will tell you how many unique visitors to your website it takes to get a bidder.
A quick formula will compute how many website visitors it takes to get a buyer, too.
If you’re curious, you can divide your advertising expense by the number of unique visitors to see what your cost per website visitor was.
Now, keep track of these fields for every auction this year. (It should take only five or ten minutes per auction to fill in the blanks.) To make it more accurate for predictive value, I would keep separate spreadsheets for each asset category. If you operate in multiple states, you might find value in an extra column for that notation, too.
Maybe at the end of the year, all you’ll have is something to pique your curiosity. There’s a decent chance, though, that you’ll have actionable data from seeing patterns.
Like one of my friends, you might be able to tell the auction manager approximately how many bidders to expect based on your Google Analytics numbers the morning an auction closes. Or you’ll be able to tell that the bidder registrations were an anomaly. If there’s post-auction seller discussions, you can show them their results versus your typical results.
When a potential seller asks why you picked the budget figure you did, you can explain, “For the asset type or the number of lots you have, we’ll need to get roughly [x] number of buyers. To get that many buyers, we’ll need to attract about [x] number of bidders, which cost us on average $[x] each.”
If you don’t think that would be valuable information, skip these questions and recommendations. If you think there’s merit to them, I can send you the formula-driven Excel sheet I used to create the illustration above. Just click here to email me, and I’ll send you a free copy.
Stock photo purchased from iStockPhoto.com