Comment

Is 2020 Finally The Year That Auctioneers Can Take Back Control?

February 4, 2020

Are we finally seeing independent full service software as a reality for SME auctioneers?

We’ve been talking about the power of Auction Aggregators and their hold over Auctioneers since 2017. In that time we’ve seen the successful anti-competitive challenge against the ATG change the way that their organisation faces the market.

We’ve seen the aggregators raise their fees, and the kickback from larger auction houses as they count the cost of fees eating into their hammer prices.

We’ve seen some good friends fall by the wayside as they tried to compete in a crowded market space, and we’ve seen aggressive entrants moving into the fine art space to try and create a collection of larger provincial auctioneers in readiness to take on the ATG.

The level of competition and new ideas that it has generated means that the auction industry has continued to prosper via increased access to affordable online technology that both improves their operational efficiency and marketing awareness. Porterian forces at work...

Back in 2017, I wrote two thought articles on brand independence and the power of aggregators in the market. The basic premise of both articles was that at some point in the future, auctioneers should be able to operate independently and have a technology platform that allowed them to do everything in one place.

At the time we were faced with multiple platforms for web, back office, live bidding and analytics. This meant that both auctioneers and their clients needed multiple logins to remember at multiple locations, reducing the barriers for the aggregators who effectively offered all auctions in one place to the end user.

We then saw the deprecation of the standard Adobe Flash based web cast technologies alongside a real uptake in mobile device adoption amongst auction users wanting to view live auctions on their mobile devices whilst plugged into headphones. The established platforms were caught on the hop and needed to upgrade their ageing technology platforms. Some of them did, some still haven’t as its very costly to do properly to support enterprise level clients and some have gone by the wayside. The big players made the changes and then raised their fees – significantly…

And that was a moment, the moment that spurred a number of software suppliers including Auction Marketer to accelerate their R&D and agile development efforts towards a full service software solution for their clients. We knew it was a moment in time, and we were prepared. It wan't as simple as the aggregators upping prices to support new technology, although that was a factor. The larger provincial auction houses were already using the ATG technology as white label, with lower or 0% internet bidder rates, so the aggregators were about to lose not insignificant income if those auctioneers moved to a new private label platform for their own bidders. Higher fees would insulate against this, but it was more than that. The aggregators now needed to get new buyers to the larger auctioneers in order to continue a business relationship. And as we know in the marketing world, that takes money, effort and a solid strategy, None of which are easy when you are playing across a huge breadth of auction types and sizes.

So how is the world changing for aggregators?

Well, 2020 will probably be the year that auction houses with enough turnover will move to a private label solution whilst using the aggregators platforms to deliver new bidders. The anti-competitive suit filed by the now dissolved Bid On This group changed everything. It stopped the aggregators trying to control the market by making it hard for auctioneers to use private label. And my, how that market has taken off,

But, don't write the platforms off. Look at how Amazon has become a behemoth in online retail. By adding value to the end user, being there on every search, making it super easy to find things, and driving further relevance to its client base through ongoing marketing tactics. The auction industry could still succumb to a marketplace solution, but the point is the bigger auctioneers have been smart to it. They've watched the disruption of the online retail sector, with margins crucified and they are fighting back.

Its likely that the next round of aggregation in the auction marketplace is going to come from smaller technology players developing niche marketplaces that work in favour of the auctioneers, possibly by vertical or reputation. Developed to drive traffic through search engine effectiveness and grouped marketing automation these platforms will be highly automated and inexpensive to run operationally, they won't be looking to control or own data but to provide an equitable service the auctioneers will be happy to participate in and pay a fair price for using.

The marketplace for smaller auctioneers without the budget to market effectively will still be served by the traditional aggregators who will continue to be 'market makers; for these businesses, exposing them to global buyers.

Private Label and Internet Bidder Fees

This has been an interesting subject. We've seen a number of models but the general feeling is that in 2020 more of the houses using private label will move towards a no fee model. It is more attractive to buyers, increases the hammer prices and encourages the switch to the private label platform.

Whilst its compelling to add buyer fees to make an income on the private label bidding software to cover costs, it's generally a false economy. Taking into consideration the costs of running a private label solution, the increased hammer price potential, opportunity for attracting new bidders and movement of aggregation platform bidders to the private label platform, combined with the additional user and underbidder data, we are seeing auctioneers delivering significant increases to owned internet bidders using private label live and online only bidding software.

So, 2020 is probably the year that auctioneers finally take back control of their online business. And while it doesn't spell doom for the aggregators it does mean that will have to work harder to earn their fees. All of which is great news for bidders. After all they are the lifeblood of the industry and anything that reduces their fees while protecting the auctioneers margin can only be a good thing?

Lets see what 2020 delivers...

A commentary piece by Roger Martin F IDM  (Any opinion expressed is the authors)

Roger Martin (Dip Dig M) F IDM is the CEO of Star Digital, a RAR award winning digital marketing and web solutions agency, and a founding director of Auction Marketer Ltd, the Auction Management Software Provider. He has worked in digital marketing globally since 1999 consulting to the online auction industry since 2006, with a proven record of successful digital strategy and ground breaking digital marketing solutions across auction verticals.