By Hays Goodman
Associate Editor

Soft drink? Coke or Pepsi. Car? Ford, Chevy, Honda, Toyota. Online books? Amazon. Online auctions?

The odds are probably a thousand to one you just answered that two-word question with “eBay,” so strongly is the brand entrenched in people’s collective conscious.

According to Nielsen/NetRatings, the site drew 32.5 million unique visitors in October 2002, ranking in the top 10 with other powerhouses like Yahoo! and Google.

How can a local newspaper compete? It would seem that local auctions would be ideal for certain types of merchandise, such as furniture and non-exotic or rare automobiles, yet few newspapers would have the programming resources to run individualized auction sites.

Canadian company CityXpress focuses on helping newspapers conduct auctions through use of its in-house hosted software and on-site sales assistance. The financial model is simple: Advertisers provide goods and services in exchange for newspaper space.

First, the retail value for each item is set, with the newspaper having the right to determine a reserve price (minimum price for the item). Readers bid on each item via a Web browser or telephone call. The highest bidder who exceeds the reserve price wins the item. The advertiser then receives an advertising credit equal to the retail value of the item if it is sold. Using this new distribution channel, the retailer benefits from increased floor traffic and the opportunity to move a different mix of goods and services.

The Orange County (Calif.) Register (daily 307,000; Sunday 365,000) held its first auction with CityXpress the week of Oct. 11, under its own domain of ocauctionoutlet.com.

“The first major challenge was to get everyone on board, beginning with convincing the executive team members that this was an appropriate project for us,”said Lyn Liby, senior product manager for Freedom Orange County Information, the paper’s online unit.

“This was a huge effort for our company and included virtually every department from printing, production, finance … to marketing, advertising, consumer sales and more,” she said.

Associates had to be trained on how to use the software to enter and price auction items. As with any new technology being implemented, this was a challenge.

Coordination of the marketing and promotional campaign had to happen in a short span of time. When the site went live on Oct. 11, The Register featured a special section insert listing all of the auction items with descriptions and photos. For this purpose, CityXpress provides a module that will generate pre-formatted QuarkXPress pages of the auction inventory.

The promotion included advertisements in The Register, community weekly newspapers, rack cards, Advo direct mail pieces and banner ads on myOC.com and OCRegister.com. Promotional ads also ran in external publications including OC Metro and the Orange County Business Journal, plus four local radio stations.

Although Liby would not release financial information from the auction, she said the newspaper did achieve its initial target. The ocauctionoutlet.com site received 7,881 total bids from 2,066 registered bidders: 7,768 online bids and 113 bids by phone. A total of 750 of the items offered were sold at the advertisers’ minimum acceptable prices. In total, more than 1,800 goods and services were showcased at a total value of $2.2 million.

“Because this was a new product completely different from what we historically work on, everything was a challenge in the beginning,” said Liby. “However, having done it once, it was a tremendous learning opportunity. We now look forward to 2003, when we will be implementing the auctions twice, at six-month intervals.”

The Leader-Telegram (daily 29,007; Sunday 41,292) in Eau Claire, Wis., also recently completed its first auction with CityXpress. Like The Orange County Register, the Wisconsin daily set goals before starting the pre-auction preparation.

“My main goal was to get $250,000 worth of merchandise for the auction,” said Lani Renneau, sales director for the paper. “Out of that, I used some percentages that CityXpress had given me to figure out what we could net out of the deal. My goal then became to net $105,000.”

The Leader-Telegram ended up selling $298,000 worth of retail items through the auction with a final net of $127,000. Renneau anticipated that some winners would be non-payers, but the amount of unpaid bids ended up being less than she expected.

“We had outstanding results with payment. Out of the net we lost only around $3,000 to $5,000 (due to nonpayment), with 413 auction items total.”

Most of their advertising to promote the auction was done in print and on the radio. Online advertising was done as well.

“We had branded the auction about a week in advance online,” said Brian Sandy, marketing manager for the Eau Claire Press Co. “Then when we went live we had a pop-up on our homepage directing people right to the auction. That seemed to work really well … we also did some billboards with the same graphic. We started the billboards a full month before the auction.”

“We had 10 days of radio,” added Renneau. “The first five days was the week before the auction started, announcing the fact that there was going to be an auction, and to pick up the catalog with all the auction items in it, which we printed the Friday before the auction and ran in the newspaper.”

The Leader-Telegram plans to conduct another auction within the next six months. Its first-time experience taught Sandy to expect such issues as how to track the difference between taxable and non-taxable merchandise. The daily also learned it had to book enough time to establish a secure online credit-card system in order to meet guidelines established by verification vendors such as VeriSign Inc.

Tom Kuchera, advertising manager for the Grand Forks (N.D.) Herald (daily 34,000; Sunday 35,000) had heard about CityXpress auctions from a colleague in Topeka, Kan., Roger Brokke. Kuchera was looking for something new to offer advertisers and readers who use the Knight Ridder Web site www.gfherald.com.

ưAs far as prep and promotion we followed CityXpress’ recommendations very closely,” said Kuchera. “Advertiser participation was based on incremental spending from August through December. I set a department goal of $120,000 (incremental) and was happy to come very close to achieving that on a first time effort.”

One of CityXpress’ goals is to have advertisers treat the auctions as another sales channel rather than a way to move used goods. Kuchera echoed those goals when he approached clients.

“The most challenging part of the process was insisting that our advertisers only put quality merchandise into the auction and not try and dump their distressed inventory or junk. We also had to come up with some creative ways to package some of the merchandise for the auction.”

Kuchera said that customer feedback was virtually 100 percent positive, and that the site worked well and was easy to navigate. That, along with the financial performance, has convinced the Herald to do several more auctions.

“They (CityXpress) really have got this down to a science and make it extremely easy to implement. The only caution I would offer is that since the auction is based on incremental spending it’s not something you can bring back year after year. We’re looking at doing two auctions in 2003 and then skipping a year.”