Sittin’ on the dock of eBay adds ad dollars

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By: Lucia Moses

The St. Louis Post-Dispatch’s first online auction last year brought more than $500,000 in new ad dollars to the paper, and made new customers out of about 120 businesses that hadn’t advertised before. Newspapers have learned a lot about how to run online auctions since The Topeka (Kan.) Capital-Journal ran one of the first such events in 2002.

Under the dominant model set up by the handful of online auction service vendors, the paper promotes the items to be auctioned in a printed insert. The paper gets the proceeds from the auction, and the advertisers get ad credits equal to the retail value of items sold.

Roger Brokke, the Capital-Journal’s advertising director, said the learning curve was steep. Some items didn’t sell because they were priced too high. And the paper had to take payment orders by phone because its vendor didn’t have an online payment option. On the other hand, the paper netted “a substantial margin” on $100,000 gross revenue from the auction ? and Brokke discovered that grandfather clocks were a “hot and heavy” item.

Vendors that give newspapers the tools to run online auctions see a strong future. CityXpress, a supplier of auction tools to CanWest, Gannett, and Knight Ridder newspapers, among others, expects to run 150 auctions by the end of 2004, up from fewer than 50 in 2002. Auction Media says it has run over 100 auctions.

While online auctions generally have been trade-based events featuring general merchandise, the logical next step is to extend auctions to classified print sales, run auctions in specific categories of merchandise, and make auctions ongoing.

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