How to survive an e-auction

E-auctions were invented not by procurement people but by their I.T. colleagues. They were originally intended for the bulk buying of low-value, frequently purchased, commodity items such as office stationery, widgets and component parts. Some clients are now using them to drive down the price of marketing fees and costs.

An e-auction is like ebay but in reverse – bids start high and decrease during the auction. Agencies are invited to take part and all bid remotely online. Bidding agencies can see the price of bids made by their anonymous competitors. The auction duration is controlled and extended by the client.

If you decide to take part in an e-auction please consider the following tips:

  • Insist the client provides you with a detailed description of the forthcoming auction in writing, including all job titles/agency roles and all third party items at least a week ahead.

  • Well in advance of the auction give yourself enough time to work out your pricing structure in fees/third party costs – in other words what effect lowering your prices will have on your profitability on that account/as an agency overall

  • Decide on your exit bid position – and under no circumstances bid below that number(s)

  • Make sure your senior colleagues buy into the numbers well before the auction starts

  • Agree in advance who from your agency will attend the auction – ensure the key players are numerate and sober – and keep attendees to a strict minimum

  • Nominate one computer literate person to enter the numbers/manage the auction from start to finish

  • Withdraw from the auction when the price(s) decrease to the level beyond which you are not prepared to go – you can stop bidding at any time during the auction

  • Withstand the auctioneers pressure (emails/phone calls/on line messages) to continue bidding lower than your exit bid position

  • Keep calm and don't get carried away!

  • ALL BIDS MADE DURING AN E-AUCTION ARE LEGALLY BINDING

Author: Rosie Doggett
Source: www.theguardian.com