Online Incentive Auctions

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Online Incentive Auctions

• Greg McHale, Founder EVP, cMarket, Inc.
• Ira Ozer, President, Motivation Partners, Inc.

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Agenda

• Incentive Industry Challenge
• Improve Motivation Systems
• Incentive Auction Overview
• Types, Benefits and History of Incentive Auctions
• Charity/Cause Related Online Auctions
• How a cMarket Online Auction Works
• Best Practices and Industry Research
• Charity/Cause Related Incentive Auctions
• Q A

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Motivation Partners, Inc.

• Innovative Motivation Solutions Company
• Administering the Incentive Show Auction
• cMarkets Incentive Industry Representative
• Design and Administer cMarket powered online
  auctions for incentive programs (Incentive
  Auctions)
• Open Platform Work with Everyone
• Corporate Incentive Program Sponsors
• Incentive, Advertising and Promotion Agencies
• Suppliers of Merchandise and Travel

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Incentive Industry Challenges

• Create Motivation Systems that work more
  effectively to improve peoples performance, with
  ROI
• Improve incentive program structures and results
• Improve engagement and communications
• Differentiate tangible incentive programs from
  retail catalogs, gift cards and stored value
  cards
• Avoid confusing incentives with compensation
• Total incentive expenditures 115 Billion
  (ISPI/SITE)
• Tangible awards 27 Billion
• Cash 88 Billion

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Incentive Auction Overview

• Points or dollars earned in an incentive program
  are spent bidding for award items on an auction
  website
• Can be branded for the sponsoring company, or a
  stock site, with many companies participating
• Can be run as the primary award vehicle, or as a
  promotional overlay to a traditional online
  catalog, or stored value card program
• Can also involve a live auction at an event
• Auction catalog can include merchandise, travel,
  special events, unique products, corporate items,
  etc.

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Incentive Auction Benefits

• Auctions are an exciting way to boost incentive
  program performance
• Motivate participants to achieve objectives
  sooner, to have auction dollars or points
  to bid on desired, limited time award
  opportunities
• Competition of bidding increases drive and focus
• Increase participant award value and/or reduce
  program costs, by taking advantage of special
  deals, limited time offers and closeout items
• Maintain a fixed budget if desired
• An innovative award vehicle that is interesting
  and relates to the popularity of E-Bay and other
  auctions

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Incentive Auction History

• Have been run since 1983 or earlier
• Several incentive companies have an auction
  capability, including BI, Hinda and
  EBay/Globoforce
• Consumer marketers run auctions e.g. American
  Express Blue Card
• Auctions are becoming a popular part of online
  incentive programs usually a promotional
  overlay
• Three primary methods
• Sponsor buys the merchandise and issue an open
  ended amount of points to participants for
  bidding
• Incentive agency buys the merchandise and allows
  participants in existing programs to bid
• Auction company facilitates transactions

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Incentive Auction Program Examples

• Easy Life Real Estate conducted an auction
  incentive program five years in a row. Employees
  earned auction bidding dollars for listings,
  sales, attending educational seminars and
  meetings, etc. and bid at a live auction at their
  company picnic (Sales MM, 9/85)
• Hinda conducted an online auction for 3,500 pax
  nationwide and had 60,000 hits in one hour (4/01,
  Incentive)
• Dr. Pepper gives auction dollars to bottlers for
  achieving various production levels, who then
  spend them at a live auction at their national
  meeting
• BI offers their incentive auction module, Q-Bid
  as an option to all program sponsors and has many
  of them participating, with millions of hits
  weekly

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Industry Research Supports Incentive Auctions

• Programs of shorter duration, with exciting,
  updated awards are most effective (ISPI/SITE
  Research, 2002)
• Tangible (non-cash) awards support psychological
  processes
• Evaluability affective reactions and perceived
  value
• Separability non-compensation and above and
  beyond
• Justifiability free auction bidding and unique
  items
• Social Reinforcement recognition and trophy
  value
• Top three reasons executives choose online
  incentive programs are (Online Incentive Council
  Study (5/05, Incentive)
• Ease of use (30)
• Reduced investment costs (20)
• ROI measurement (18)
• Online programs have higher participation rates

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cMarket, Inc.

• Two-year old specialty e-commerce company serving
  the auction segment of the 240 billion
  fundraising market
• 500 customers, 700 signed events (50 in last
  90 days), 300 completed auctions
• Auctionpay, Convio, GetActive, Network for Good,
  United Way
• 47 employees, located in Cambridge, MA

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Wide Range of Nonprofits Doing Online Auctions
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What Problem Are We Solving?

• With fundraising professionals under pressure to
  
• Identify new funding streams, grow existing
  sources
• Engage new donors and protect donor base
• Provide corporate supporters with quantifiable
  value
• Comes the need to get smarter about
  fundraising
• Through better hiring, more effective
  solicitation, smart technology investments,
  innovation, etc.
• And the need for a better auction model.
• Live fundraising auctions suffer supply and
  demand inefficiencies
• Internet shows tremendous opportunity to both
  complement and create new, low hassle fundraising
  events

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Potential to Grow Overall Giving

• Auctions arent limited to consumers charitable
  spending auctions reach through the giving
  budget to household expenditures

7 Trillion Annual Household Consumption
200B in Donations
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cMarket

• Easy to use Web-based auction services that help
  fundraisers
• Drive more bidders (demand) and items (supply)
• Expand and protect their donor base
• Develop new fundraising streams new auctions,
  sponsorships
• Easily get their fundraising cause onlineesp 2nd
  time
• cMarket Place, a virtual consignment store that
  eases, accelerates and enhances catalog
  development (supply)
• 130 items from 6 partners available with one
  click
• Opening bid is set at wholesale cost
• A growing menu of services built around best
  practices that drive up average event yield

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Online Auctions Work for cMarket Clients
When compared to traditional fundraising events

• 73 engaged more constituents
• 60 involved more bidders
• 20 secured more sponsors for their event

Source cMarket Market Segmentation Study, 11/04
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Advocate Organization Cause
Auction homepage
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Showcase Items Donors
Auction Item
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Engage Entire Constituency
HTML email
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Winning Bidder Confirmation
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Auction Types

• Online Catalog Only
• Put the entire catalog online to enable previews
  prior to the event
• Promote event and cause through email and auction
  homepage
• Completely Online
• Generate new revenue through a totally online
  event
• Avoid cost/complexity/time involved with event
• Recover from a failed event or move unsold items
• Online-to-Live
• Put some or all of your auction items online for
  bidding
• Promote your auction to your entire constituency
• Allow people to preview your auction items online
• Start the bidding online and carry the highest
  online bids into the live event, thereby raising
  the bar for live bidding

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Case Study Online-to-Live Auction
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Best Practices

• Be willing to engage your entire community by
  connecting with them through their inboxes
• Research shows that multiple touches through
  email generates more bidding and higher bids
• Be sure to create an engaging catalog with a
  variety of items that will appeal to your
  community
• Consider your demographic

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Best Practices

• If possible, link up with a media partner to help
  promote the auction
• On air radio promos, links from the radio
  partners website, even running ads in your
  community newspaper helps
• If youre running both a live and silent auction,
  leverage the communications youre already
  sending to promote the live auction
• Print the URL to the online auction on the save
  the date cards, in flyers, or even in your
  catalog

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Types of Incentive Auctions

• Traditional performance incentives
• Sales Incentives
• Channel Marketing
• Employee Recognition
• Consumer Loyalty Rewards
• Charity/Cause related incentives
• Volunteerism
• Charity Drive Participation
• Donation Incentives
• Product Test Drives and Trials

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Charity/Cause Related Incentive Auctions

• Motivate Employees, Channel Partners and/or
  Customers to participate in Charity/Cause related
  giving and volunteering
• Using an online auction, tied-in to the
  Charity/Cause is a logical way to build focus and
  interest
• Charities can increase funds raised by
  participants who bid for more than the amount of
  their incentive awards i.e. if earns 50
  incentive award, but bids on and wins a 100
  auction item proceeds will go to the
  Charity/Cause
• Increase awareness and constituency for the
  Charity/Cause i.e. increase member/donor base

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Charity/Cause Incentive Research

• Consumers expect firms to associate with social
  causes (Cone, Inc. Corporate Citizenship Study,
  04)
• 80 trust companies that invest in social causes
• 21 increase from 1997
• Companies with high Corporate Philanthropy Index
  (CPI) (Walker Research, 2001)
• Customers are 28 more likely to do business with
  them than low ones and
• Employees are 35 more likely to be working for
  them in 2 years
• Corporate supported Volunteerism is increasing
  Financial Services and Insurance are two
  industries most involved - over 30 of employees
  (Walker)

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Charity/Cause Incentive Research

• Only 50 of employees are satisfied with their
  job (Conference Board, 3/05, Incentive)
• Down 10 from 1995 survey
• A 1-unit increase in Employee Satisfaction leads
  to a 31 increase in Customer Satisfaction (Forum
  for People Performance, 5/05, Sales MM)
• 74 of workers between 18 and 34 say incentive
  program affects continued employment at the
  company (Maritz Poll, 5/05, Sales MM)
• More than 55 not happy with current programs
  (12/04, Corporate Incentive Travel)

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Summary

• The incentive industry continuously needs to
  create new motivation solutions that deliver an
  ROI
• Incentive Auctions are an exciting, motivational
  vehicle that drives performance, while reducing
  costs
• cMarket has world class online auction technology
• Motivation Partners represents cMarket and this
  system is available for everyone agencies,
  suppliers and end-user corporations
• Charity/Cause related incentive programs are
  important to corporations, in addition to
  traditional sales, channel, employee and consumer
  programs

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Q A

• Questions?

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Thank You!
Greg McHale greg_at_cmarket.com Ira
Ozer iraozer_at_motivationpartners.com cMarket,
Inc. Motivation Partners,
Inc. One Main Street 412
Whippoorwill Rd. Cambridge, MA 02142
Chappaqua, NY 10514 www.cmarket.com
www.incentive-auctions.com 617.621.1000
914.238.2220