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We continue here with a 4-part series covering the recently released “Auction Industry 2010” research project conducted by the Broad College of Business at Michigan State University. This study was conducted by Dr. Forrest S. Carter, Associate Professor of Marketing and student researchers Marina Batchelor (lead), Kijun Yang, Sarah Andersen and Zoe Cai.

The study is broken into 3 basic parts, with a preface. I will also comment on some of the statistics presented.

Part III of the study concerned “about auctioneering.” A total of 1,972 respondents contributed to these statistics.

Some statistics:

Skills Required to be Auctioneer

Use of technology within your business 9%
Utilizing internet bidding portals 2%
Business management / accounting 6%
Salesmanship 12%
Networking skills to obtain clients and/or … 11%
Marketing/promotion of auction event 17%
Marketing/promotion of auction items 13%
Bid calling 10%
Organizational skills 17%
Other 3%

Other Skills Required

Negotiation skills 1.3%
Money / Capital 0.6%
Lotting / Tagging / Prepartions (Preparations?) of consignors 3.1%
Staffing / Having Good Ringmen 1.9%
Goal setting / Persistence / Leadership 3.8%
Finding items or Customers / Marketing 7.5%
Consistency / Customer Service / Listening 3.1%
Honesty / Integrity 35.6%
Entertainment / Being a professional ringman 8.1%
Presentation (Auctioneer only refers to bid caller) 1.3%
Experience / Understanding psychology of … 6.9%
Use of Auction.Zip (AuctionZip.com?) / Right software 2.5%
Appraisal / Expertise in merchandise 17.5%
All of those listed 6.9%

Management Challenges

Administrative 19%
Appraisals 8%
Technology 14%
Networking & Business … 12%
Advertising & Marketing … 19%
Public Speaking 2%
Bid calling 2%
Negotiations 10%
Staging & Set-up … 10%
Other 4%

Other Management Challenges

Accepting change 0.6%
Aquiring items, Clients … 23.4%
Accounting / Cash Flow 4.4%
Budgeting (especially …) 8.2%
Industry’s image / Honesty … 8.9%
All ov the above 1.9%
Discrimination / Barriers to entry 2.5%
Competition / Reduced Pricing … 8.2%
Customer Service / Dealing with … 8.2%
Government regulation 8.9%
Economic / Environmental … 1.9%
Employee relations / Labor … 1.9%
Growth / Management / Time … 3.2%
Knowing technology 1.9%
Legal requirements 0.6%
Not sure / None of them 3.2%

Industry Revenue Trends

Gross Annual Commissions Number of Auctions Average Revenue/Auction
Over $5 Million 45 $13,333
$1 Million to $5 Million 36.5 $8,219
$500,000 to $999,999 35.8 $2,095
$250,000 to $499,999 34.1 $1,100
$100,000 to $249,999 33.2 $527
$75,000 to $99,999 30.4 $288
$50,000 to $74,999 24.8 $252
$25,000 to $49,999 21.3 $176
Less than $25,000 11 $114

The study concluded that firms with gross commissions over $5 million held 4 times as many auctions in a year than firms with gross commissions less than $25,000; but they generated 117 times more gross commissions.

Further, firms with gross commissions between $1 million and $5 million held 1.7 times as many auctions in a year than firms with gross commissions between $25,000 and $50,000; but they generated 46.6 times more gross commission.

How Auctions Conducted by High/Low Revenue Categories

Annual Revenue Live Auctions Only Live w/ simulcast bidding Online-only
Over $1 Million 52% 35% 13%
Under $50,000 90% 6% 4%

More on How Auctions Conducted by High/Low Revenue Categories

Average Annual Revenue Average Number
Auctions per year
Live $460,047 23.5
Live w/online simulcast bidding $1,498,464 31.1
Online only $1,412,174 34.6

Social Media Usage Relating to Revenue & Number of Auctions

Average Annual Revenue Average Number
Auctions per year
Use Social Media $903,616 26.8
Does Not Use Social Media $465,164 23.3

Type of Auction Specialty by High/Low Income Categories

Auction Specialty Gross Commissions
$1 Million & Over
Gross Commissions
$50,000 & Under
Residential Real Estate 11% 9%
Commercial Real Estate 8.5% 2.5%
Farm/Land Real Estate 8% 5.5%
Benefit 4.25% 13%
Collectibles & Antiques 7.5% 15%
Art 2.25% 1.9%
Automobiles 6% 4%
Livestock 1% 1.9%
Estates and Personal … 8.25% 17.5%
Farm Machinery and … 6.25% 7.9%
Commercial 7% 3%
Business Liquidations 8% 7%
Auction House/Gallery 3% 4.1%
Other 0.25% 1.25%

The study concluded that with the exception of automobiles, high gross commission business had more commercially based clients (commercial real estate, farm/land real estate, art, commercial machinery and equipment, and business liquidations.)

The study came to the following two conclusions:

  • When auctioneers were asked what areas they required assistance they responded marketing / advertising and technology 43% of the time.
  • The industry is aging both in terms of the professional, and in terms of potential customers.

Areas Requiring Assistance

Business Proposals 10%
Licensing 4%
Contracts 8%
Clerking / Billing 4%
Accounting / Record Keeping 13%
Marketing / Advertising 20%
Insurance / Bonding 6%
Technology 23%
Human Resources 9%
Other 3%

Other Areas Requiring Assistance

Getting more … 2.2%
Laws / Legal 23.7%
Bonding / Insurance 2.2%
Image / Integrity 14%
Cost / Business … 11.8%
Customer Srvice (Service?) / … 25.8%
Staffing 5.4%
Not Sure / Think … 2.2%
None of those listed 8.6%
All of the above 4.3%

New Entries in the Auction Business

Age Group Exposure to Family Business Referral from Someone in Business Career Counseling / Career Program Experience Attending Auctions
18-24 63% 6% 0% 31%
25-35 51% 11% 0% 39%
36-50 33% 10% 2% 55%
51-65 24% 14% 1 61%
Over 65 18% 13% 1% 68%

340 Michigan State students were randomly selected and surveyed on their attitudes and experiences towards live auctions and eBay. Results showed students:

  • moderate users of eBay
  • having very favorable attitudes towards the site
  • with limited experience with live auctions
  • but open to the live auction experience

Frequency of Using Ebay for Purchasing

Less than once per month 83.8%
1-5 times 7.1%
6-10 times 5.9%
11-15 times 2.2%
16-30 times 0.6%
More than 30 times 0.6%

Frequency of Using Ebay for Selling

Less than once per month 90.9%
1-5 times 4.4%
6-10 times 2.6%
11-15 times 1.2%
16-30 times 0.6%
More than 30 times 0.3%

Attitude Towards Ebay

Very favorable 15%
Favorable 48.5%
Neutral 30.3%
Unfavorable 3.5%
Very unfavorable 2.6%

Have Attended a Live Auction

Yes 33.3%
No 66.7%

Types of Auctions Attended

Charity Event 53.9%
Real Estate 9.8%
Surplus Items 31.4%
Art / Antiques 21.6%
Automobile 30.4%
Memorabilia / Collector’s Items 14.7%

Consider Attending an Auction

Yes 73.6%
No 26.4%

Expectations When Attending Auctions

It would be interesting 71.4%
It would be generally boring 10.4%
It would be a waste of time and energy 7.4%
It would be fun 48.9%
It would provide some real bargains and unique items 50.6%
Would expect neither positive or negative feelings 10%

Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. His Facebook page is: www.facebook.com/mbauctioneer. He is Executive Director of The Ohio Auction School.