Vanity vs Sanity: Metrics to measure when looking to grow your auctions.
Metrics such as Catalogue Views, Registered Bidder count, Online Bidding and Marketing Spend are great for making your online bidding and marketing results look awesome. Unfortunately, they don’t have any real value. Why? Because they can be easily manipulated or inflated and don’t tell you anything “real” about the success of your auctions.
Read on to learn more about why you should ignore these vanity auction metrics during your next online auction and marketing campaign and what type of sanity metrics you should focus on instead.
What’s wrong with Vanity Auction Metrics?
The trouble with vanity auction metrics is that they steer you off course. Throughout your business, you measure things so you can make better decisions based on those measurements, but vanity auction metrics don’t contribute to that process. In fact, vanity auction metrics can be quite dangerous, they can lead your online bidding and marketing teams to focus on achieving results which often don’t deliver any real bottom-line value to your auctions.
Fortunately, for each vanity auction metric, there’s a corresponding sanity auction metric that really tells you something important about what’s happening in your business. Here’s how some of the more common ones stack up:
Catalogue Views Vs Successful Buyers
More Catalogue Views implies your online bidding and marketing team did something amazing, right? Not always. More catalogue views is usually a good thing, but it’s hard to determine what actually made these Catalogue Views happen and how to replicate it. A lot of times, you’re guessing without the right metrics in place. Was it something you did? Something someone else did? A share by an influencer on social media? It is also common for an increase in lots within an auction catalogue to increase the number of Catalogue Views, depending on the way this metric is measured by your online bidding provider. Can you see how a vanity metric like this can lead you astray?
Plus, it doesn’t really matter how many Catalogue Views you achieved; it matters how many convert into Successful Buyers and Under Bidders. Catalogue Views don’t necessarily make your business any money, Successful Buyers and Under Bidders do.
Registered Bidders Vs Online Sales
Like increases in catalogue views, Registered Bidder numbers can look far better than they really are and can easily be inflated by a reduction in bidder registration requirements, or an increase in promotional advertising either within an online auction marketplace or elsewhere.
In general, your online bidding and marketing team should be focused on finding Successful Buyers, not just Registered Bidders. If you stuff low-quality Registered Bidders into an online bidding platform, your administration team will eventually take notice and become frustrated with an increasing workload, by having to dedicate support for inexperienced bidder questions and providing information such as condition reports, shipping estimates and other queries, all without seeing a proportional increase in Online Sales.
Instead, focus on the number of active bidders and Successful Buyers being delivered. You want your online bidding and marketing efforts to attract quality bidders who actually have a genuine desire for your products and services. If you have lots of Registered Bidders but not a lot of Online Sales, it’s time to reevaluate how you’re advertising your auctions and your brand online.
Online Bidding and Marketing Spend Vs Gross ROI on Total Spend
It has been commonly reported that the increases in online bidding fees levied by the marketplace platforms have been, in part, to fund continued strategic growth and marketing promotion of the platforms. As such, if you use a third-party marketplace for bidder acquisition it is recommended to combine each platform’s Online % Fees with any Additional Platform Marketing spend to determine your total online bidding and marketing spend.
Your combined online bidding and marketing spend should always be considered as an investment in your auction business and, like with any investment, you should take careful consideration to measure its performance against your Online Sales to evaluate which efforts deliver the greatest Gross ROI on Total Spend. By measuring the Gross ROI on Total Spend you can accurately determine which online bidding platform and marketing strategy delivers the best returns for your business and which platforms you should seek to invest in further.
There is no point in counting Catalogue Views, Registered Bidders and Online Bidding and Marketing Spend unless it’s evaluated against Successful Buyers, Online Sales and Gross ROI on Total Spend. Yes, you need Catalogue Views and Registered Bidders to convert; but more of these does not always equal greater Online Sales, or even brand exposure, the key here is quality over quantity. As an example of this, I have included a set of results from a recent auction comparing both vanity and sanity auction metrics between a marketplace platform and the auctioneer’s own private label online bidding platform, empowered by Bidpath. This data was kindly made available to Bidpath by the auctioneer.
Before reading I would like to include some assumptions to provide measurable results of the selected auctioneer’s Gross Profit and Gross ROI on Spend.
- Auctioneer Buyers Premium — 25%
- Auctioneer Vendor Premium — 15%
- Additional Auctioneer Platform Marketing — £2,000
- Auctioneer Platform Cost — 1.5% of online sales
- Auction Marketplace Platform Cost — 5% of online sales
*Auctioneer revenue minus additional £2,000 platform marketing spend.
*In this example the auctioneer has chosen to pass the Online % Fees through to the online bidder, as such, they have not been included within the Gross Profit calculation.
It’s important that your online bidding and marketing strategy focuses on the metrics that matter and not vanity metrics. Make sure that the auction metrics you focus on give you real insight on how your online bidding and marketing efforts move your business forward and help you measure campaign success. Don’t focus on trendy auction metrics just because they’re popular; always question how much your auction metrics add value and help your online bidding and marketing team ensure overall business success.