Sunday, September 30, 2012

What determines whether a Kickstarter project will succeed or fail?

A paper published in July (PDF link) by Wharton professor Ethan Mollock tried to identify the elements that determine whether or not a Kickstarter project will be successfully funded. Professor Mollock and his assistant Jeanne Pi compiled information on 24,503 projects that were fully funded, 26,483 that failed, 4.073 that were still raising funds at the time that the research took place, and just over 100 cancelled projects. After removing projects with very small (under $100) and very large (over $1 million) goals, and foreign-based projects, the researchers were left with 46.902 projects representing $198 million in pledges.

Here's a summary of the team's findings (note that I use the term "average" instead of "mean"):
  • 47.9% of the projects studied were fully funded.
  • Projects tend to either fail by a large amount or succeed by a small amount:
    • 87% of the projects that failed raised less than 30% of their goal. Only 10% of projects that failed raised even 30% of their goal, and only 3% raised 50% of their goal.
    • 25% of projects that did get funded were 3% or less over their goal, and 50% were about 10% over their goal. Only about 11% reached double their goal. The remaining 4% achieved more than double their goal.
  • The average level of funding for all projects was 10.3% of the goal.
  • The average amount raised by an unsuccessful project was $900, and the average raised by successful projects was $7,825.
  • No very small projects (goals of $100 or less) or very large projects (goals of $1 million or more) were funded.
  • The maximum project duration has been shortened by Kickstarter from 90 to 60 days, but 30-day projects were a bit more likely to be fully funded than 60 days (35% vs 29%.)
  • Perceived project quality, defined by the researchers as having a video, was very important in determining whether or not a project reached its goal. Projects with a video had a 37% chance of success, while those without videos had a 15% chance of success.
  • Featured projects were far more likely to be successful than those that weren’t featured (89% success for featured projects vs. 30% for unfeatured projects.)
  • There’s a direct correlation between the number of Facebook friends that the project founder has and the chance of success: A founder with 10 Facebook friends had a 9% chance of success; 100 friends gave a 20% chance of success, and 1,000 friends gave a 40% chance of success.
  • Projects based in cities with a high percentage of workers in creative professions had a greater chance of success than those in cities with a low percentage of creative professionals.
  • Only 5% of fully funded projects failed to deliver their intended goods or services, but there were usually substantial delays in delivery. Of the projects that the researchers measured that delivered products, the average delay was 1.28 months.
  • Only 24.9% of the projects delivered on time, and 33% had yet to deliver as of the end of the study.
  • The more complex the project, the greater the delay in delivery. The more that the project exceeded its goal, the greater the delay in delivery.
  • Project category has a direct effect on project success: Based on four different models, video projects have the greatest probability of success, followed by dance and then theater. Design, film & video, music, comics and food follow in a fairly tight cluster. Publishing projects have the lowest probability of success.
Based on the researchers' findings, there are some practical suggestions for people considering Kickstarter campaigns:
  • Don't go for a very small goal, hoping that it will make it easier to get funded. The average amount that funded projects raised was almost $8.000.
  • Go for a 30- to 45-day project duration rather than 60 days.
  • The more Facebook friends (and, by extension, other social media contacts) that you can promote your project to, the better.
  • Projects that were featured by Kickstarter had by far the best chance of success--89% of featured projects were funded, vs. 30% that weren't featured. The Wharton team didn't look at which attributes make it more likely that a project will be featured.
  • If your project doesn't get featured, the more publicity that you can get from sources outside Kickstarter, the better.
  • Having a video to promote your project will more than double its chances of getting funded. However, the study didn't look at whether the quality of the video has an impact on funding success.

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