We have now launched a new website examining the impact on Swine Flu on the UK.

Now, back to the Penny Auctions.

The recession? How will this affect sales and business for Penny Auctions? In short, I would imagine that the recession would lead to an increase in the number of people using Penny Auctions, even though this may at first seem counter intiuitve.

The basis for this conclusion about who is most likely to use Penny Auctions, is taken from lottery user statistics. Namely, that the people whom play are generally those that can least afford it! This is because Lotteries, scratch cards, etc are ‘inspirational’ products; in my opinion you are not buying a realistic chance of winning, instead you are buying £1 worth of hope, oppertunity, ‘what if’s’. Given the struggle which many people can face when trying to pay the bills and support themselves and their families, this is understandable.

Penny Auctions can be seen to be working in very much a similar way. The chances of winning a product are not all together that great, however the potential reward is great. Also the types of products on offer through Penny Auctions are ‘inspirational’ types. Ones that many on low incomes desire, but can generally not afford. Therefore they try and win them, generally without a dedicated or specialist Penny Auction Strategy - which is highly reccomended. Whilst the bidding represents a better ‘return’ generally than a lottery, many people bidding do not properly understand what they are ‘up against’ or the processes that are used to win.

The recession will see a higher number of people out of work, with many in the lower classes being hard hit. Those whome are unskilled and have basic, low paid jobs are often the first to be made redundant. Therefore, they will have an increased amount of spare time, and so an increased likely hood of logging onto a Penny Auction website. Also given the situation of unemployment may make the appeal of winning a desireable product all the more likely, therefore increasing the user base of Penny Auction websites, especially of those that may not apply the correct strategy.

1) Pandemics = Stay inside!

Why do Las Vegas casinos keep the lights constant, have no windows and a distinct lack of clocks? Simple, so that you lose track of time and spend as long as possible in there; and so spend as much money as possible.  Swine Flu may have a simmilar affect on the PennyAuction industry. Look at it like this, more peoeple are going to be staying inside, either sick off work or trying to avoid the disease. These people are going to need something to do, therefore if you run a Penny Auction type website, then this may be a time of increased business. Think about it, if a pandemic infects 1/2 the population (not an unreasonable figure) in the UK this would mean 30 million people.

Whilst for most it is a mild condition, people will still take time of / place themselves in quarantine. During this period, they may be bored or lose track of time. Therefore the excitement of a Penny Auction or other style of fun bidding for a prize and then hopefully winning it may well appeal to them.  Therefore it would not be unreasonable to expect the userbase of Penny Auction websites and other simmilar style auction operations to increase substantial this fall! Stay tuned to see wether these predictions concerning penny auctions will prove to be correct.

SONY PLAYSTATION 3 for less than $20.

How is it done? Simple. PENNY AUCTIONS.

Ok, So what are they?

Penny auctions are a new and exciting type of auction that has recently been bought to life on the internet. In this type of auction, each bid placed raises the price of the item in the auction by 1 penny. Bidders buy ‘bidpacks’ and then bid on the item.

The end result? Some great products go for a fraction of their usual cost, giving you the oppertunity to get some great bargains.

Ok, so whats the catch?

Be careful when you bid! Each bid you place costs money (often between $0.5 and $1), so you have to make sure to bid at the right time. However, you can greatly improve your performance by using the auctions at different times of day, watching the prices items go for and seeing the way other users place bids. There is skill involved, no doubt about it.

But, if you like a challenge and would like to have some of the latest high end luxury goods at a fraction of their normal price, penny auctions may be right for you! You could even resell the what you get on Ebay and make a healthy profit. The possibilities are endless!

Commercial secured loans might be a good option for you as they can provide a cash injection into any business that you are trying to start (eg. a penny auction website). It is also worth shopping around to find the best commercial secured loans on the market, that will give you the lowest % repayable and require the least collateral on your part. However, it do make sure that it you do decide to take out any type of commercial secured loans that the company / entity that your are doing business with has been properly accredited and is reputable. You also want to ask what the process is if your commerical loan repayments can’t be met - do you lost your assets straight away? Can you repay at a lower amount, over a longer period? These are all things to consider before taking out a commerical secured loan eg. if you want to start a penny auction website and do not have the startup capital available to you. Keep reading for a further look at business models and proposals to consider when trying to run your own penny auction.

However, you still want to let the penny auctions visiters know that the clock is ticking and time may be running out on any of the great items that they see. So you need to highlight, on the front page the items , their current price (which is obviosuly cheap / great) and how there are only a few seconds left on the countdown timer on the penny auction. But this must be done in a ’soft’ way, perhaps, rather than large garish bid now signs. However, this is just one opinion on the tactics you can use when creating your penny auction own site, so they should be modified depending on how you feel and wether you are targetting a specific demographic and how much capital you can use when investing in the site and creating different designs / themes.

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By using bid packs on your website, you have now gained two advantages - compared to if you didn’t use them. Firstly, there is not guesswork about what your cash income will be, and therefore a greatly reduced risk concerning the amount you can spend on prizes. This is because in affect, the bids have already used by the bidder! They are now merely ‘allocating’ their bids on which ever item they would like. Whereby the number they allocate will increase the likelyhood that they will win the item being auctioned off. Although timing, bidding ‘personalities’, time and the current price of the item are all part of the equation as well. Which brings us onto another penny auctions strategy. Never bid on items already under progress. In fact, the first time you use these types of websites, it may be advisable to not bid at all. Instead, just sit, watch and take not. In many respects, Penny Auctions are simmilar to Poker in many respects. Whilst poker may intially seem very much like a game of pure chance, in reality it is not. There is a great deal of skill involved in becoming a good player. In many respects, you are playing the people not the cards. Online is the same. Sit, wait and look at how people place their bids. Do they wait till 0 seconds left? Do they bid straight after you? How agressive are they? It is alll about getting inside their head and looking at the penny auction from their perspective. How badly do they want the item, what are they willing to do to get the item on the penny auction website?

Once you begin to understand your opponents, you will begin to understand how to maximise your efficiency and use tactics to win the products that you desire from the penny auction website.

The most popular penny auction items / products to consider are generally high end technology gadegts and consumer goods that are probably outside of the everyday budget of most people that will be using your website. However, you also want to make sure that these high end goods are well known and desired. For example, I am sure there are some very expensive and advanced electric fire places out there - but that doesn’t mean people will want to bid on one in an auction.

Instead, in your penny auction, you would want to concentrate on items such as Plasma T.V’s, laptop computers and the latest games consoles. Almost really expensive Christmas type gifts. There is a good reason for this. They are aspirational products that people may have used before; this direct experience with what you are offering on your online penny auction website is key. They know that these items are good, fun but, however, are a luxury which can rarely be bought without much thought and consultation. Therefore if people think that they can have these for free, they will take the oppertunity. In short, if it would appear that a small financial input, with some risk carries a potentially large payout then this is attractive - especially when the product they are bidding on is well known and desireable.

This is what penny auction studies experts call the endowment affect. Once the user has bid on an item, it is in their nature to keep bidding to make their previous bids worth it. Think of averaging down in a falling stock market, so that you hold more stock at a proportionately lower price than you did before, this is the same mentality that can be applied to the tactics of a penny auction website. The end result being that people will go past the amount they may initally wanted to have spent in the penny auction just because they have already spent so much.

Stay tuned for a look at the concept of bid packs and how this will help your penny auction website to remove the ‘real’ money aspect from the user experience and so encourage more bidding on your website.

In this second of a series of posts about how to setup and run your own penny auction, we will be examining the potential for gaining free marketing and driving traffic to your website.

Social networking is the latest buzz in the Web 2.0 world nowadays and looks set to stay around for some time to come; it is a great idea to capitalize on this. Many Penny Auctions already do, so you’ll have to as well. If you have a lot of ‘friends’ on Facebook or Myspace, why not create a group telling them about the new website you have set up? Perhaps offer them cheaper bid prices if they are among the first X number of people to register with your website. This brings us onto another point to consider when setting up a Penny Auctions website. The critical profit mass. That is the number of people you need to be ready and waiting when you activate the site. After all, if there is only one person that knows about your offer and is waiting, they could potentially win all the prizes for hardly any bids purchased. If this cycle continued, you would probably run out of start up capital very quickly. The solution? Create a buzz.

Run your own Penny Auction: Creating a Buzz

Letting people know about your venture is vital before you launch. The main methods for doing this can be divided into two categories, online and offline marketing. We will be looking at the latter method in another post. When considering online marketing, you also need to choose between traditional ad driven marketing and the newer concept of ‘viral’ marketing. The former will often produce more solid, predictable results at a price. Whilst the latter, is basically free but will usually either fail or become very successful. (99% are probably of minimal affect). Stay tuned for the next Penny Auction post where we look at viral marketing in greater depth and study its implications when thinking about running your own Penny Auctions.

In this blog, we will aim to help you devise a Penny Auctions strategy, a tactical look at what you need to setup your own version.

Run your own penny auction: Money!

Before starting any kind of business venture, it is always sensible to consider the risk and reward involved. Creating a website such as this is no different; in short, it takes money to make money. Whilst the internet has given a platform for penniless college guys to make millions, these people remain in the minority. To run your own penny auction will require initial setup money, and the amount you have available may well determine how successful you will be.

The first thing to consider is the level of competition you will face in the online marketplace. In the UK, there are roughly 5 or so ‘main’ penny auction websites. Of which the largest two are the biggest by far. These companies have significant ad budgets that are probably much higher than yours. The reason for this large advertising budget is simply to attract new customers. Which = more money = more ad budget = more customers etc etc. Another thing to consider is why would people leave their current penny auction website, where they may have developed a specific strategy / invested time to come to yours. Assume for the minute that the items being bid on are the same (usually the latest must have technical products. eg Nintendo Wii’s and Plasma TV’s) what does the website that you run have that is special? The simple answer? Lower priced bids.

The real answer? The simple answer is not the way to go! As a startup you will need a higher profit margin, and lowering the prices of the bids whilst retaining the same number + level of products as your competitors is a problem. Therefore, levels of growth will be limited unless you have substantial initial investment for advertising and the ability to operate on lower bid prices that are of good value to the end user. Stay tuned for the next post about how to run your own penny auction website where types of free marketing will be examined and we will try to develop a good strategy to use.

These guides will be available for a low fee - to reflect the amount of work that has gone into them! We also hope to setup an affiliate program for them, allowing all of those interested in the subject to both help others gain knowledge and also help themselves!

More information to follow in the next few days!