Should you use Kickstarter or Indiegogo?
Are you new to crowdfunding and unsure which platform to use? Signalling theory may help you identify what's right for you.
Should you use Kickstarter or Indiegogo, or both? That’s the question I’m often asked by people new to crowdfunding, and while I have my own preference, there is now some interesting data that helps us address this nuanced question.
As many of you know, Kickstarter is the main crowdfunding platform I use. For reward-based crowdfunding, it has the largest volume of projects, and arguably the largest user-base of any other platform, which (we hope) maximizes our changes of being seen by backers, and ultimately funded. That’s why I always recommend new creators to launch there.
But Kickstarter (KS) isn’t the only game in town. There are many other platforms with different features that support creators and backers, with Indiegogo (IG) being the most prominent of the bunch.
From the outside, the biggest difference between the two platforms is the funding model philosophy: All-or-nothing (AON) in the case of Kickstarter, and Keep-it-all (KIA) in the case of Indiegogo (although that is now a choice that creators can make). This means projects on KS will only proceed if they hit their funding goal before their campaign deadline, otherwise all funds are returned to backers. In the KIA model, creators keep all funds received by the deadline, regardless of whether they hit their funding goal.
IG is therefore quite appealing to some creators, particularly those new to crowdfunding, because they argue that getting some money is better than getting no money, which is what would happen if they fail on KS.
Intuitively, that make sense. But it’s also a problem.
I used to back projects on IG way before I got interested in KS, but after a while, I started getting burned. My pledges would be taken, but I never received any reward and the creators vanished from the platform. That’s when I called it quits with IG - even before it became a controversial hot-bed for ComicsGate creators.
Late last year, I started getting emails from the IG team, asking me questions about why I wasn’t using the platform, and asking for my feedback - which I duly provided as long as they stopped emailing me.
But, I was curious. I went back to check out the platform and realized they had made massive changes, including the option for an AON model, and also a new tool that allowed creators to import their campaigns directly from KS or other platforms. Moreover, I found several campaigns that I had previously backed on KS, and realized that many creators were launching on both platforms (sequentially, not in parallel) and raising a fair-amount of funding.
To me, this suggested the KS and IG audiences were actually quite distinct.
From a creator perspective, this is great. It means you can run campaigns on both platforms without creating backer fatigue. But running two campaigns at the same time is definitely playing on super-hard mode, even if the campaign messaging is identical. It’s probably a better proposition to run them sequentially: first on KS and then re-launch on IG.
Why this way around?
You only have to build one campaign page in KS and then port it over to IG. Simple right?
Not exactly. A recent paper does an unusual analysis to probe campaigns on both platforms, to understand what signals are most effective, and in what combinations: Signalling entrepreneurs’ credibility and project quality for crowdfunding success: cases from the Kickstarter and Indiegogo environments.
A brief detour into signalling theory
As I’ve discussed in previous posts, signalling theory is a key framework used to investigate reward-based crowdfunding. Due to the information asymmetry between creators and backers, signalling theory posits that any signals provided by the creator will reduce the information asymmetry and help backers to make more informed choices about whether to back or not. What are these signals? In a nutshell, they are elements that the creator controls and puts out into the ecosystem: videos, campaign information, updates etc.
Much of the research into crowdfunding investigates one or more of these signals to understand the impact on campaign success, but one of the many challenges is that signals are treated in isolation from one another e.g., papers explore the impact of having a video (or not) on the likelihood of success. In reality, signals can reinforce or contradict one another, and this was something studied in the paper.
But beyond that, the authors asked about the boundary conditions of signalling in a crowdfunding context, i.e., does the funding model change the nature of the signals? Reductively, this is a question about comparing KS to IG.
The research
To do this work, the paper authors first identified over 1000 projects on KS in the Technology and Design category over a two-year period. They then searched IG for evidence of the same projects, and after eliminating some of them due to matching criteria, they were left with a dataset on 62 projects.
These are 62 identical projects (in one KS category) that were launched on both platforms, using both funding models, that had a minimum goal of $1000.
To analyze the data, the authors needed to identify the presence of relevant signals by manually reviewing all the campaign pages, and whether the campaign was successful or not. On KS, this was easy to tell, but they needed to create a success variable for the IG projects. They did this for campaigns that ended up with a funding ratio equal or above the mean funding raised by all projects.
Signals of interest
The main signals investigated were common ones identified from the literature:
Credibility
Success experience - creators had previously launched a successful campaign
Failure experience - creators had launched a prior campaign that failed.
Backer experience - creators had backed at least one other project on the platform
Industry experience - the project was in line with the industry experience of the creator.
Project quality
Project preparedness - evidence of videos, text, images on the campaign page
Third party endorsements - evidence of blog reviews, social proofing etc.
The analysis uses a specific method to accommodate binary data, and requires a multistep process to establish necessity and then sufficiency of the signals. The important part is the last one, as that identifies all the possible configurations of signals that lead to success. The table showing this is indicated below.
What does this mean for creators?
The data revealed there were five configurations of signals that led to success on KS (K1-K5) and only two on IG (D1 and D2), and each KS configuration accounted for 49% of the outcomes of the campaign (compared to just 29% for IG).
To understand this in more detail, let’s look at K1 on Kickstarter. This configuration only includes signals for failure experience and backer experience - so this means the creator had backed at least one KS project, and launched and failed at least one KS project.
That’s it.
The K1 configuration has NO signals of project quality at all - just evidence of prior experience and previous backing, i.e., creator credibility. The other four configurations all had at least one signal of project quality, so this is still an important factor to focus on.
What this also tells us is that past failure on KS is not interpreted as a negative by backers, as some creators may fear. So, if you launch your KS campaign, and it fails, that’s okay - make changes and launch it again.
It’s also interesting to note that all KS configurations required backer experience signals to be present. That’s why it’s important for KS creators to back other people’s projects.
Perhaps what is interesting to explore, are configurations not identified above. e.g., there was no KS configuration where the creator had past success, but no other signal. This is suggestive that it is the combination of signals that helps to nudge backers.
On the IG side, the interesting thing to note is that prior experience (success or failure) was not a signal of note for either configuration, but backer experience and third-party endorsements were.
This tells us something interesting about the AON funding model on IG: namely that community signals are paramount. You need to have backed other projects, and need some social proof to vouch for your projects. These are the key signals that IG backers are looking for.
So, if you are importing your KS directly into IG, you need to make sure that these signals are present in the campaign, otherwise you could be harming your chances of success.
Summary
Overall, what this paper shows are potential configurations to help creators best position their campaign for success. If you’re on KS and have no third-party/social proofing signals (as in K1, K2, K3), then you better make sure you have the other signals in place.
Conversely, if you are planning to use IG, then you need to be seen as a backer of other campaigns, and also have social proof on your campaign. The AON model requires stronger signalling than the KIA model, likely because there is more uncertainty about the project.
My own experience as a backer confirms this, becoming disillusioned with creators on IG who raised money, but then never delivered - either because they never intended to, or because the product actually cost more than they had raised, and they were unable to fulfill it. Such things also happen on KS, but not in the same volume, as the intent is that the amount sought by KS creators should be enough to fulfill the campaign.
What does this mean for the initial question?
For now, I still recommend creators to use KS. The AON funding model may appear risky for creators, but there are lots of things you can do to ensure your campaign is successful, and the first thing you must do is BACK OTHER PEOPLE’S CAMPAIGNS!
The findings from this study suggest that KIA models favour more community-based signalling from creators, which could be extra work for creators who are not already on these platforms. If you’re already active on IG, then keep doing that. If you’re not already there, you may need to spend time investing in other projects before launching your own.
For those who want to use KS and then move to IG, I think this is a viable pathway, but only if you’re already engaged on both platforms. If you’re already on one platform and not the other, then you may be better staying there, unless you’re prepared to spend the time and money to build up your social cache.
There are many limitations of this study, notably the restriction to Technology projects, and it may well transpire that different projects lend themselves to different signalling configurations on different platforms. I’m sure that research is already in progress, but I think the findings are interesting and as a user of Kickstarter, they feel correct. Hopefully they’ll also prove useful to those launching new campaigns in either funding model.
Signalling cheatsheet
For KS (AON funding)
You must back other campaigns to improve your chance of success
You must launch your project (even if it fails first time around, it benefits you)
For IG (KIA funding)
You must back other campaigns
You must have third-party signals in your campaign (e.g., blog posts, reviews, social proofing)
One last thing
I really want to hear from folks about what they would like to see in future editions of Virtual Creator Con and have launched a short, and anonymous, survey to collect perspectives. What would you like to see? What would you not want to see?
Please let me know by completing this survey which is also available through the Virtual Creator Con website www.virtualcreator.org.
Were you surprised by the findings of this paper? Do you prefer all-or-nothing models to keep-it-all? If not, why? Let me know in the comments.