Despite the popularity of websites like eBay, the world's largest auction house for collector cars never really embraced online bidding.
Not until the Covid-19 pandemic stepped in. What started as a survival tactic — a failsafe in case live events never came back — turned into a strategy that helped Mecum Auctions bring in a record $675 million in revenue last year, according to CEO Dave Magers.
The business, based in the small town of Walworth, Wisconsin, has been around since 1988. It wasn't exactly a small company pre-Covid: In 2019, it brought in more than $400 million in revenue from live auction events around the country. The auctions can attract anywhere from 20,000 attendees to 100,000 apiece, the company says.
Without them, Mecum was left with only an online bidding process that Magers admits was "pretty boring ... it was a static screen with a number on it, and you press a button."
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Over four months of lockdown, the company built a new system that implements livestreaming video meant to make you feel like you're sitting in the front row of a fast-paced auction. The idea is to make you experience the excitement of bidding on a 1966 Shelby Cobra convertible, or the 1968 Ford Mustang driven by Steve McQueen in the movie "Bullitt" — even if you're sitting on your couch on the other side of the world.
The system only exists to augment live events: Mecum doesn't host online-only auctions. But when the company resumed live events in July 2020, its number of online bidders skyrocketed from roughly 50 per event to more than 1,700. People showed up again in person, too.
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"We dramatically increased the number of eyeballs and the number of participants just because we had people sitting at home with nothing else to do," Magers says. "And this was something for them to do."
Replacing a 'pretty boring' system
Before Covid, Mecum was largely known for its televised auctions on auto-centric TV network Speedvision and NBC Sports. It's long been one of the top employers in Walworth, a town of more than 2,800 people near Wisconsin's Lake Geneva.
The company is still owned by founder and president Dana Mecum, who ran the business with his wife and four sons for decades. Magers, a former insurance executive, came on as CEO in 2013 after previously serving as Mecum's financial advisor.
Seven years later, Magers wasn't sure what to expect from Mecum's first live event in the pandemic era. "Our thought was: When we go back to auction, there's going to be a lot of empty seats, and there's going to be a lot of internet bidders," he says.
Instead, he was shocked to see that "every seat in the house was full." Attendees flocked to the in-person event at Indianapolis' Indiana State Fairgrounds, which can seat nearly 14,000 people. The 1,700 people who joined virtually could finally participate too, with a live video stream of both the auctioneer and the cars on the auction block.
"The auctioneer knows who you are and talks to you just like he talks to somebody who's sitting at the auction," Magers says.
Not only did the increased online activity not come at the expense of in-person attendees, Magers says having more internet bidders from around the world actually inspired more spirited bidding and resulted in higher sales numbers.
"The more people that are bidding on a car, the higher the price will be," says Magers, adding that Mecum was also experiencing pent-up demand from an audience that was eager to spend money after being cooped up in their homes during the pandemic — a phenomenon that affected consumers and businesses in a variety of markets.
"What we saw was prices started to rise relatively dramatically during the pandemic, because of that competition [and] because of built up resources," he says, adding that Mecum is on track to easily outpace last year's revenue totals in 2022.
Magers projects more to come: The company signed a media partnership with the Motor Trend Group last year that now airs Mecum's auctions on Motor Trend's television network, alongside 160 hours of auctions livestreamed online each year.
The idea is to reach as many potential bidders as possible, whether they attend in person or virtually, Magers says. The company's forced embrace of the internet could make the deal more fruitful if the livestreaming helps Mecum develop a more global audience beyond the reach of cable television.
"In our mind, the entertainment side of our business, the entertainment value of what we do, is relatively infinite," he says. "And we've barely scratched the surface of that."
Disclosure: CNBC parent NBCUniversal owns NBC Sports.
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