Making Money From Social Media
A Facebook auction company, with former NZX boss Mark Weldon as an investor, and McDonalds and Thomas Cook as new clients, is proving there can be gold in those apps
In 2012, Neil Campbell, then chief executive of Webb’s auction house, had the idea of a Facebook auction platform. Something like Trade Me or eBay, but instead of listing goods on an external site, people with stuff to sell could take advantage of social media networks and have their own branding on the auction. Campbell didn’t imagine that two years later, BuddyBid would be a profitable company with clients including Thomas Cook, McDonalds, House of Travel, Turners Auctions, Grays Online (Australia’s biggest e-commerce site) and Mitre 10. (It’s even being used successfully by a couple of Idealog's sister titles, Dish and NZ Fishing World to sell wine and fishing charters.)
Campbell also might not have suspected that he’d now be in the throes of negotiations to secure more than $1.5 million from a small group of international investors. On the other hand, Campbell knew from early market research there was latent demand for a social media auction platform. “When we put in the words ‘Facebook’ and ‘auctions’ together into Google trends we could see they were search terms that were being used more and more each month. There was a developing demand of people who wanted to sell through their own networks, but couldn’t.” BuddyBid was released without any publicity in late 2013, and the Facebook platform has already generated activity in 104 countries, Campbell says. More than 750 businesses are using the app to sell everything from holidays to motorbikes, wine to African art. There's a strong market for distressed sales – unsold holiday packages or excess stock.
Sellers report getting better prices than through other last minute channels like GrabOne, and say they don't have to devalue the brand with overt discounting. One of the advantages of BuddyBid over, say, Trade Me, Campbell says, is the product has three revenue streams – monthly licence fees, a percentage levy from every transaction, and companies paying for data retrieved after the auctions. The latter has proved particularly popular, he says. Say a travel company lists a last minute cruise package; BuddyBid's immediate post-auction information about the unsuccessful bidders gives the cruise agent leads to follow up – these are people who have money and availability to take a holiday at that particular time.
BuddyBid now has eight staff, and Campbell’s board of directors includes former NZX boss Mark Weldon (now CEO of TV and radio company MediaWorks) and former Silicon Valley entrepreneur Ken Brickley, the company’s CEO. Campbell says the $1.5m-$2m capital raising, which will provide two or three years’ growth funding for the company, comes earlier than expected. “We have just had our first profitable quarter, and we weren’t expecting that until late this year or early 2015.”