Take Me Out To A Ballgame
A recent start-up company, DropIt, has come up with a innovative way for everyone to win. Through a live auction during sporting events, DropIt allows individuals to bid for items that are displayed on the jumbo screens by continually lowering the price until a spectator swipes up on the DropIt app to claim the prize. These 60 second auctions are enticing to advertisers who hope to gauge a greater amount of the audience’s interest and attention — by creating an interesting game-like setting the advertisers hope that individuals will me more receptive of their ads. Ultimately, even if the items being auctioned are sold for less than retail value, the sponsors are able to find solace in the fact that the money lost would have been spent on less attentive advertisements.
Eventually, DropIt ends up making its money through payments from advertisers, advertisers are able to better get the public’s attention, the hosting team gets a payment from the advertiser, and spectators are able to get better deal opportunities through these auctions — so at the end everyone is a winner. Currently, DropIt has has numerous trial runs (most in New Zealand where the start-up developers hail from) and is now looking to break into mainstream American sports and has recently signed contracts with the Phoenix Suns and the San Fransisco 49ers, so it won’t be too long until fellow ECON 2040ers will begin to see it in action.
The auction method aforementioned is directly related to our previous class discussions that were centered around auctions. DropIt’s method of reducing the price until a bidder finally bids is akin to the Dutch Auctions we had mentioned. So (after taking what we learned in class and applying it here — the dominant strategy?), what should ECON 2040 students do if there ever in a DropIt sporting event? Well, as we learned it would be best to swipe up when the asking price reaches our true value of the object, that way ensuring that we do not overbid for an item we don’t value as much nor do we run the risk of losing an item that we were comfortable paying for more.
Furthermore, as we learned in class, sponsors and advertisers could run business analytics to gauge what prices should be instated for new products, for which companies do not necessarily know the true values of the products. By allowing for a bidding situation, companies and sponsors alike will be able to understand what prices ranges are more “optimal” to ensure greater success.
Link: https://techcrunch.com/2017/10/18/dropit-runs-live-auctions-on-stadium-scoreboards-that-fans-bid-on-from-the-stands/
