Auction fever!

By: Charles Geraci

Since The Topeka (Kan.) Capital-Journal ran an online auction in 2002, the first of its kind in the United States, these moneymakers have become increasingly popular at newspapers. More than 175 papers have held auctions since, with the Fort Worth Star-Telegram and The Dallas Morning News two of the latest to do so, in a highly successful joint initiative, in April. Newsday in Melville, N.Y., followed with its own auction in May.

CityXpress of Vancouver, British Columbia, supplied the technology for these auctions, as it has many others. “One of the main reasons for our success is we followed the proven model outlined by CityXpress,” Brad Hagstrom, retail advertising director for the Star-Telegram, notes. “Sometimes our industry tends to think we can do things better. But this is a case where we took their instructions to heart.” The Texas papers sponsored a 11-day auction, with some 500 companies listing more than 1,500 items ranging from a heart scan to six months of Swedish massages.

In a smaller venue, the Duluth News Tribune, which also completed a CityXpress auction in April, sold 88% of 525 available items, including a modular home that went for more than $84,000. The paper achieved a $200,000 net profit.

Newsday listed 800 items in a 60-page

catalog distributed to almost every household in Long Island and Queens, N.Y. It was the first Tribune Co. paper to do an auction with CityXpress.

“Print costs were definitely our largest investment, and one of the biggest factors in making the auction successful,” says Mark Kim, business development manager for Newsdsay Interactive. “The catalog is what drives the traffic ? both online and in-store.”

The News & Observer of Raleigh, N.C., sold 74% of its items last October and 71% this April. “We were sort of the poster child for CityXpress,” observes Mark Williams, sales technology manager for the paper. “After our auction, I got calls from papers all over the country.” Conducting an auction is a lot of work and a long process, requiring much data entry. It is also an “accounting nightmare,” Williams explains, trying to distinguish between the net and gross figures. “But it’s a win-win-win situation,” he adds. “The papers get additional revenue. The advertisers get discounts. And the readers get some tremendous values for items.”

Even if a product does not sell, there are several additional benefits to advertisers for participating, including in-store traffic and free publicity. “The stores that advertise are inundated with people wanting to see the products before they bid,” Kim says. “These auctions give us the opportunity to remove any significant barriers in obtaining advertising.”

Founded in 1997, CityXpress began conducting auctions in 2001 and has since helped generate more than $46 million for newspapers. “There’s a lot of enthusiasm here and a huge commitment to make every auction successful,” boasts Phil Dubois, its president and CEO. “It’s very exciting to see the ones that stick to the formula do well.”

Auction Media and edeal, both based in Ontario, also conduct auctions for newspapers. But CityXpress “has dominated among the metro newspapers,” says Mark Stone, president/CEO of Auction Media.

The recent Texas auction was the first where papers owned by different parent companies united in such a venture. “Our net profit from this auction pleasantly exceeded our expectations,” says Hagstrom. “Each paper benefited significantly by tapping into the other’s readership base.”

Together the Texas papers put about $3.5 million in retail value up for auction and sold $2.2 million. Of 3,504 items available for purchase, more than 2,100 sold.

What makes for a good auction? Denise Holman, vice president of sales for the St. Louis Post-Dispatch, advises papers to “allot enough time for planning, training the sales staff, and monitoring the results.”

Newsday’s Kim cautions that once the auction ends, the buyer has no obligation to pay for the product. He hopes CityXpress can improve the fulfillment process. “I wish there were a way to get the credit card up front,” Kim says.

Dubois claims that a newspaper’s product mix is crucial to its auction success. “No amount of promotion will overcome poor product selection,” he points out. “We spend a lot of time working with the papers ? showing them what the hot products are.”

The News & Observer has focused on listing items that are not necessarily expensive, but will sell. “We’ve had everything from Volkswagen Beetles to Botox,” Williams says. The paper even listed a day’s helicopter trip to any of North Carolina’s beaches and back for $1,300.

The Kansas City Star listed a replica of a full-sized suit of armor from a home furnishing shop. “It looked like something a knight would wear,” says Bill Gaier, the Star’s director of retail territories. The Texas papers offered lunch with a Texas Rangers baseball player.

Several papers have offered bonuses to their sales reps as an incentive. The Commercial Appeal of Memphis gave 2% of the selling price to the rep. And the Duluth News Tribune divided a pool of $5,000 in cash among its reps since the paper exceeded its financial goal. “You have to get your sales staff excited and put money on the table,” asserts Don Federico, online sales manager for the Commercial Appeal.

Several papers, including the Star-Telegram, emphasized that working on the auctions has been a lot of fun. “The staff was more engaged on this project than anything we’ve done in the last couple years,” Hagstrom reports. “They understood it, could explain it, and their enthusiasm transferred to the customer.”

This fall CityXpress will conduct the first-ever multi-newspaper “travel” auction, scheduled from Sept. 26 through Oct. 5. About 30 to 40 papers from across the United States plan to participate, and each will have conducted a prior auction with CityXpress. “The travel category is one of our top performers,” says Dubois. “It attracts a lot of bidders.”

Advertisers have much to gain from the travel auction. “This is an opportunity for the smaller, mid-size advertisers to get national exposure ? to appeal to people outside their own local markets,” Dubois explains. “Newspapers will also get more revenue than usual from the auction because there will be bidders from across the country. This is a platform to build the auctions on a national scale, and have multiple papers participating and cooperating.”

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