The Penny Auction

Run your own Penny Auctions: Part 2

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.

written by admin \\ tags: advertising, marketing, penny auction, penny auctions, run your own, social networking, viral

Contrary to popular belief, it is most likely that each auction is not a ‘gamble’ for the website. Whilst they may ‘lose money’ on some, this is not actually where most of their profit is made. Instead of examining the number of bids placed on a single item, people should instead examine the way bids are pre-sold on penny auction websites.

Thats right, penny auctions already have your money. However, it must be noted that this is assuming that most are bought before hand rather than placed one at a time. This pre-buying of bids is much more widespread due to a number of factors. A) On some sites, it is the only way to get bids - for example in a minimum pack of 10. B) Buying bids for use in auctions in this way allows for bulk discounts and so makes it ‘cheaper’ for most users on the site. With each bid now potentially costing around 75p instead of £1.50 or there abouts.

Therefore, the penny auction websites already know how much money they have; that vast majority of bids have already been placed as such before an item is actually bid on. In many ways it can just be seen as users apportioning their ‘points’ onto different auctions as they see fit. To this end, the penny auction website operators should always be able to keep afloat as they already know how much money they have, the average ‘extra’ that will be spent by single bidders at the maximum rate without buying a bid pack (if the website allows it) and therefore the % they need to spend on products to make their site look glamourous with desirable high end goods, and still retain a healthy profit margin and bottom line.

We hope this has helped people to understand how these sites actually make money, rather than thinking that these sites ‘gamble’ on a having a few good auctions! Keep reading for more great information and further posts about how to beat the competition on penny auctions and actually get some good deals online!

written by admin \\ tags: bid packs, gamble, penny auctions