In-process promotions focus on promotional activities during marketing events such as auctions, crowdfunding, or fund-raising. Firms can observe consumers’ responses to these promotions and use this information to adjust future promotions sent during the same events. The authors study the impact of promotions on market outcomes and focus on one use of such promotions: messages sent during online auctions, in which the outcome is the final auction price. They propose that the effect of these messages can be understood by observing their aggregate impact on final auction prices and by examining how messages affect behaviors at the bid level, namely, new-bidder entry and jump bidding. These bid-level behaviors can, when summed at the auction level, affect auction prices. Besides examining the messages’ impact on bidder behavior, the authors study the auctioneer's strategy in issuing these messages. They distinguish between informative messages, which focus on product attributes, and persuasive messages, which try to motivate the message recipients to bid. They test hypotheses derived from their framework using data from online auctions of Air France airline tickets. The authors also conduct “what-if” simulations to help auctioneers identify the optimal number of messages to send during an auction.
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