Updated: Nov 4, 2022
Reward based crowdfunding is a way to raise money by letting people pre-order a product (reward - mostly hardware based product). This is not the same as equity based crowdfunding where you sell equity of your company. We launched HOLOFIL-cardboard, our patent pending consumer product, through a successful reward based crowdfunding campaign (see here) in July 2022 to raise €13k on Indiegogo platform, where 130 devices were preordered by 145 supporters.
Indiegogo and Kickstarter are two top platforms from USA which were founded around 2007. Before launching on Indiegogo a thorough analysis was done about its competitor platform Kickstarter as well. In this blog post we give an overview of the crowdfunding as a concept, give insights about some common perceptions, throw light on some myths, and offer deep insights from our experience of both the platforms. We do not repeat the generic available information on Internet about the two platform differences, but only that exclusive information that you will not find anywhere that we found through our own execution experiences. So you will learn a lot. Do not forget to recommend this article to some one who is looking to choose between the two platforms for their crowdfunding campaign.
Reward based crowdfunding is used by individuals / companies to raise money to finish off a new product development, or launch a new already finished product by promising in return the actual product once its ready to deliver. You could be in different stages of product development when it goes to crowdfunding, be it prototype, production ready, etc. but in any case the important thing is having at least a prototype to show during the crowdfunding stage to get accepted on any of these platforms.
Indiegogo and Kickstarter are two prominent platforms (both USA based) when it comes to international crowdfunding. Both have their pluses and minuses and exist since around 2007 and have a community of around 10 million (Indiegogo) and 25 million (Kickstarter) respectively.
Kickstarter has a slightly more brand visibility than Indiegogo but they offer vast different choices that can make or break your decision to use either of them.
What's the general thumb rule of crowdfunding - A generic thumb rule when it comes to crowdfunding is you need to have your own strong community that is ready to fund at least the initial few thousands $, in the initial raise of the first benchmark of 10k euros / dollars which is considered by both the platforms as an initial benchmark to count your campaign as successful . By successful it means your campaign then will be added to an existing collection of campaigns that get showcased on these platforms.
A 10k goal is a minimum goal that is your target to hit then, and then you can raise as much as high possible further. A generic rule is at least 30% of this goal should come from your own supporters in the first 24 or 48 hours once the campaign gets launched to show the traction. Most campaigns aim to raise much higher amounts but typically will keep the initial funding goal around 10k, to hit the first benchmark as quick as possible, for PR publicity.
Typical benchmarks are 10k, 25k, 50k, 100k, etc. The platforms provided you extra marketing support as you hit these goals, like for .e.g. Indiegogo will post a Social media post on their Instagram channel for the 10k goal and include your campaign in one of their existing successful collections. If you hit 25k your campaign gets added to Indiegogo weekly newsletter once, so that it reaches the existing Indiegogo community. And so on. Kickstarter will have similar features.
Now if you are amazed by all those campaigns that raise in 6 figures (100k onwards) or 7 figures (1,000,000 onwards) you will be amazed to know that, these campaigns always have insanely high marketing budgets, where they spend multiple of tens or multiples of hundreds of thousands of $ on marketing budgets to generate leads before the campaign goes live for a few months. Once the campaign goes live, these leads who have shown interest to order then fund the campaign within a few hours. This is called pre-campaign launch preparation to fund the campaign on the launch to generate massive traction.
These campaigns then proudly publicize that their campaign has hit the first 10k goal in just a few hours. This is a great PR publicity to get attention of more people to fund. A campaign that usually raises the first 10k in a just few hours typically has already spent at least multiples of tens of thousands of $ on ad marketing (with the assistance of some marketing agency) to have generated pre-campaign leads that fund the campaign on launch. Marketing agencies have their own commission for the lead generation phase. If you get marketing agencies involved only after hitting the first goal of 10k, then once the campaign hits the first goal of 10k, then the marketing agencies take a commission further on each sale that they bring in by running social media ads based on the budgets you allocate them per day to run your campaign's marketing to get more customers for you.
There are many many marketing agencies out there who charge different fixed fees such as 2k to get started as fixed fees and then 15% to 20% on each sale made. There are companies who can design the entire campaign, shoot video, photos, strategy, lead generation, execution and charge even tens of thousands or even up to 50k in their fees, depending on the scale of the campaign and your budget. During live campaign execution, these agencies have a contract with you where they ensure you provide them at least 100$ or 200$ per day budget or even more based on their requirement during the campaign execution of say 30 days duration so that they can bring enough leads to your campaign for sales. So imagine if you are spending $200 per day on Facebook ads for 30 days, that itself can go to $6000 in total ad budget. And this is still on the lower side, its very easy to spend at least $500 / day on Facebook ads by campaigners who have money to spend and agencies to afford and top marketing agencies will ask you that kind of budget mostly.
So all these campaigns that raise massive money spend an insanely proportional money on marketing agencies that do pre-campaign lead generation and then during campaign execution marketing using your ad money budget per day mostly running Facebook / Instagram ads. Crowdfunding campaigns are an insane game of money spend on marketing if you want to make a really large raise, because to reach to high number of people, you need to spend money on marketing to make your campaign spread. Different markets have different cost of ad execution, for e.g. US ads will be the most expensive, as US also is the most successful crowdfunding market, so if you want to target US crowd, you need to spend massive ad money to show your ads.
And then this of course gives rise to many scams as well, where agencies tell you they will bring you results, and leads and sales, but it does not happen. There are newsletters where you pay a single fee of a few hundred $ to a few thousand $ where they try to promote your campaign to newsletter community, but do not assure success, and tell you they will rerun your promotion if you are not satisfied. There are PR companies which promise you exposure in news media, etc and ask to pay a few thousand $ etc. So its basically a wild wild west of marketing agencies which try to take money from you in different manner. Some are genuine and many try to make quick buck. We talked with almost all top marketing agencies to understand their various packages, fees, strategies etc. and decided to execute our own campaign without them as it all went out of our budgets quickly.
So the thumb rule is the higher a campaign has raised, the higher is the amount it has spent on massive marketing, and the lower is their relative profit as a lot of money gets spent on marketing budgets. There are instances in the past where campaigns that raised in millions could not deliver the product because they spent most of the money on marketing and were left with no money for production.
So you will ask why do these companies do crowdfunding if they already have so much money to spend on marketing ads? Well the crowdfunding here is treated as a game to mostly attract investors later by showing the revenue traction irrespective of profits. If you have money to spend on marketing, you can use that to get more revenue and show that revenue of hundreds of thousands or millions to investors showing traction to get more money from them. It's all a nice setup to raise more money in different smart ways. Money attracts more money.
I hope you got to understand some critical understanding of how many successful campaigns are executed and the role of marketing money and agencies in this execution. There are campaigns where organic reach happens, but they are very very rare, and usually have a very very strong community of their own already over many many years, so they do not need to use external agencies to bring people to the campaigns. But as you can understand it requires many years of work and experience and community building, which most do not possess.
Having given brief insights about how campaign execution looks like, now comes the important question, how do these two platforms (Kickstarter vs Indiegogo) compare? There are too many Internet pages giving generic features based comparison, which we do not repeat here, as our aim is to offer comparisons that no one offers on the Internet.
HOLOFIL-cardboard campaign was created in parallel on both Indiegogo and Kickstarter as it is using the exact same media for the main story. The initial plan was to launch on Kickstarter but Indiegogo approached HOLOFIL to partner with them with some exclusive marketing benefits such as pre-campaign home-page exposure for 5 days and newsletter inclusion for lead generation. Special exclusive promotions during campaign execution. Though we were happy with friendliness of Indiegogo as Kickstarter does not offer any such exclusive features to work with you at all. Still our decision to use Indiegogo in the end was mainly influenced by the two realizations which were critical flaws we found in Kickstarter ecosystem for independent entrepreneurs like us.
The first flaw is Kickstarter does not provide fundamental support in terms of campaign supporters basic information availability such as their name, email, address, etc. which allows the campaign owner to track who is supporting the campaign during execution for strategy. Kickstarter does not share this data with you during campaign execution at all. The second flaw in Kickstarter was the lack of any support for Facebook ad tracking infrastructure (using Facebook pixel tracking code), so the ad performance can be tracked and tuned during social media marketing ad strategy. We will revisit these two points in detail later during this post.
Now lets elaborate on the major other differences between Kickstarter and Indiegogo.
Home page lay out - Kickstarter has a strong brand and if you look at their home-page it does not look as well organized compared to Indiegogo according to us. A constant observation is Kickstarter has many games that get launched on it, such as board games etc. compared to Indiegogo. Kickstarter home-page is much less attractive and less user friendly compared to Indiegogo home page. Indiegogo home page has neatly laid out projects which are mostly technological projects and you get a good overview quickly of what you want. Indiegogo is also a lot more visually appealing in terms of its overall look compared to Kickstarter.
Kickstarter campaign editor is similar in terms of overall functionality to Indiegogo, but has some better features such as better image and text indentation compared to Indiegogo editor. Indenting your images and text is a nightmare in Indiegogo as the white spaces keep on changing depending on newlines etc. and ends up creating a messy looking page and you need to spend a lot of time in removing spaces etc. to make it look great. Kickstarter does this in a much better way saving a lot of time. Then, Kickstarter allows direct upload of GIF images unlike Indiegogo., In Indiegogo you have to put a html line in <img> tag in the html source code, with GIF URL of GIF uploaded externally on sites such as Giphy. This is a really painful time consuming process as well and not sure why Indiegogo has not improved the GIF integration like Kickstarter so far.
Overall, Kickstarter has a much superior editor compared to Indiegogo and not sure why Indiegogo has not improved it yet at all, as its a pure technical problem that should be easily solvable. We suspect lack of man power as the only reason.
Kickstarter does not allow pictures (above picture) of the perks / rewards and just shows text in the rewards section, while Indiegogo allows pictures showing the perk / reward, which we believe is super useful and friendly for the supporters. Not sure at all, why Kickstarter does not allow pictures of rewards / perks.
Kickstarter precampaign launch page (above) is super basic and so minimal it literally does not give any information about the upcoming product except a picture and a few sentences. In comparison Indiegogo precampaign launch page is very well arranged and has many different elements to integrate many different pictures and text descriptions giving a much better overview of the upcoming product launch. Super useful when it comes to understanding of the future product.
Kickstarter precampaign launch page allows email address to be registered and get notified once the campaign gets launched. Indiegogo does not allow automatic notification on the registered email id, but Indiegogo allows you access of the emails so that you can actually see who is the person interested in your product. A super important tool in the lead generation process.
The supporter details availability is an important requirement for being able to track campaign's progress once the campaign is live and supporters starts funding it. Kickstarter for some reasons does not provide you any details of who your supporters are. GDPR? We do not believe GDPR has anything to do with it at all, but its some internal policy itself. No name, no email, nothing. Kickstarter only tells where the supporters are arriving from in terms of approximate geographical location.
In comparison Indiegogo gives you full details of who your supporters are once they have contributed including email, address, name etc. which is critical to understand how the campaign is being supported. Ability to remind your supporters to fund in case they forgot is an important requirement for campaign execution.
Lack of the supporter information availability was one of the fundamental reasons we did not launch our campaign with Kickstarter as we needed to know who our supporters were to remind those who had not funded yet, but had indicated earlier they would be supporting us. Most successful Kickstarter campaigns are executed by marketing agencies who bring leads using different means and handle the tracking, so we believe, Kickstarter really does not care about an individual campaigners ability to know who are their supporters as most campaigns on Kickstarter are managed by these agencies, who mostly bring leads through their own efforts.
Ability to track your ads analytics using Facebook pixel tracking is critical for ad performance tracking, which Kickstarter again does not support. Facebook pixel is Facebook tracking code integrated in your campaign page that allows Facebook to know who visited your campaign page from their ads. It allows measuring performance of your ads and retargeting of ads as well.
Almost all the campaigns mostly rely on social media ads to drive traffic to the campaigns. Indiegogo supports integration of Facebook pixel on the campaign page in an integrated manner allowing you to track your ads.
This is a critical piece of infrastructure that is must if you want best usage of your ad money, and Kickstarter does not offer this fundamental support. There are lots of third party support infrastructure done by the marketing agencies where they have some how created some integration with Kickstarter to track this and we believe Kickstarter simply does not care if the campaigners can track, as most campaigners with lot of money use these marketing agencies who can track it for you in different ways. While on Indiegogo its as easy as putting the Facebook Pixel ID in your campaign dashboard to be able to start tracking as Indiegogo allows this integration fundamentally in its platform. This was the second biggest reason we decided not to use Kickstarter as we wanted full control on our own Facebook ad execution.
How good is Indiegogo ?
As we worked super closely with Indiegogo, we explain how good that experience was next in details.
1. Indiegogo has a better support for individual entrepreneurs and they offer more personalized hand holding compared to Kickstarter. We had a single point of contact to discuss various pre-campaign related things and then the same contact stayed in touch with us for any inquires and we were also offered support by their campaign strategist who would answer more involved questions. Not all campaigns get assigned individual attention like we got. Though we got this extra support because Indiegogo had approached us to partner with which they do to a few select campaigns per quarter, in general Indiegogo has better support. Kickstarter has no such personal support.
2. Indiegogo offers special marketing exposures if they partner with you in terms of pre-campaign lead generation through home-page exposure, newsletter inclusion, to let you generate leads.
3. Indiegogo has support for things like "secret perk" which is extra type of perk that you can offer to select people through dedicated sharable links, that are not visible to generic audience. This allows you to offer special discounts etc. for a group of people if needed.
4. Indiegogo has a very small team compared to the number of campaigns they receive which we believe leads to lots of internal chaos in terms of delays, communication mismanagement, etc. We elaborate a few bad experiences next.
5. Indiegogo has different stages that its internal trust team categorizes your campaign in. Some stages are Prototype, Production, Shipping. HOLOFIL-cardboard campaign was submitted to Indiegogo in Production stage for verification almost 3 weeks before it went live, however, just three days before (on Friday June 17th ) before it went live on June 21st Tuesday, the trust team degraded the campaign stage from Production to Prototype, citing not sufficient proofs such as photos submitted for Production stage verification.
This was bad because Indiegogo puts a big banner giving a warning message as above for each stage, and Prototype stage had a warning that the team is just working on prototype and its not guaranteed when it will be out. This was a horrible bad branding, showing complete mistrust for any one who will visit the campaign and would affect the campaign negatively. We submitted some photos of the inventory that was available immediately but Indiegogo trust team did not accept it. Our inventory was in a different physical location and it was not easy to photograph it easily given the logistics involved. Mean while the campaign went live on June 21st and as it was critical to be next to the computer we could not get the pictures, so the stage stayed in "Prototype".
Then Indiegogo asked if we could provide Invoices as we argued how the photos can be easily photoshopped and the photos Indiegogo sent us as a reference, does not matter in our case due to the type of our product. Photos is never a solid way to ensure production is in place. Indiegogo should ask for invoices during the campaign design stage itself for stage verification rather than photos (photos if some one really wants to scam can easily be photoshopped). Indiegogo team lacked a coherent standard way to verify the stage and wasted almost 3 weeks when our campaign was with them in review phase before it went live. After the product stage was degraded to Prototype the emails we were writing were first sent to campaign strategist and then the strategist would forward them to Trust team in San Francisco. So this added further delays. The replies would arrive very late (early morning in EU time zone) wasting a full day in just time zone conversions. After the campaign went live on June 21st Tuesday, the next weekend we went to our storage inventory and took photos and submitted them. The invoices were already submitted, and finally after 9 days after we raised the first dispute, Indiegogo moved the campaign stage to Production. We had got all negative branding during the launch of campaign itself by this time that was fully due to the mistakes of Indiegogo solely.
We have no idea how much bad branding we got due to this total failure on Indiegogo's part to move our campaign to Prototype stage. Because many strangers will doubt any campaign in the Prototype stage. This was a pure failure on Indiegogo's part that affected our campaign very badly in the early launch days, and we even told Indiegogo we will file a legal action for their bad management, but was told in the terms and conditions, Indiegogo can not be held responsible.
Internal communication - Indiegogo had promised us an exclusive marketing benefit which is a feature in their newsletter at an extra % commission from the sales that would come through their newsletter outreach. Once we crossed 10k Euro mark we approached Indiegogo for it and Indiegogo said, they can do it only if there is space available on their Saturday newsletter. The communication then completely stopped as we asked can we not get a place in the weekday newsletter instead of a weekend newsletter. No idea what was going on in the background, but no communication happened even if we told them to put our campaign in Saturday newsletter as time was passing by. Then randomly some new person replied to one of our email telling us, our campaign was not included in Saturday newsletter either.
We had to write a strongly worded email citing all these chaos and how its affecting the campaign execution strategy, and Indiegogo strategist came back after almost 3 weeks had passed apologizing profoundly and when only 5 days of campaign time was remaining. We then said, we will extend the campaign by 30 more days so the newsletter can be sent still. So then we extended the campaign from its earlier end date of 27th July to now new end date of 21st Aug. Indiegogo allows one time extension of maximum total duration of 60 days. Our earlier campaign was set for 30 days, and then we extended it by 30 days. Indiegogo then put our campaign in their newsletter finally. But all of this took incredible effort and we observed a complete chaos from their teams in managing this. It appeared as if they did not care about the passing of the time when a campaign was live in execution.
How enthusiastic is Indiegogo community? When we were first planning to go ahead with Kickstarter and were discussing with some top marketing agencies who had played a role in marketing of successful Kickstarter campaigns, we asked one company a question, "Why you only work with Kickstarter and not with Indiegogo?" The agency had replied they find Kickstarter community much more enthusiastic than Indiegogo.
As we explained how some critical technical issues in Kickstarter infrastructure forced us not to use it and go with Indiegogo, one of the observations that we had was from the behavior of the Indiegogo community during our observations of their newsletters in pre-campaign and during live campaign execution. The response of Indiegogo community during newsletter exposure was very below average (less than 1% conversion from the visitors who visited the campaign through newsletter). Indiegogo exposes your campaign through recommendation, explore, and a few other ways. So in overall, we had around 15% of total funds raised, that came through Indiegogo community. However, the contribution of Indiegogo newsletter was super low and below expected. Also only around 1000 people visited our campaign through newsletter exposure in real numbers, which again was pretty low number given the community of millions that is always given as an example of exposure. So newsletter conversion rate was very low, while the other methods like recommendation, explore, search, brought most of the supporters from Indiegogo community.
What was the social media ads strategy? Social media ads mostly Facebook / Instagram are prominently used for lead generation and scaling campaigns. We did spend a few thousands $ (a decent amount of money in relation to total funds raised ) on Facebook / Insta ads but the campaigns failed to generate return on investment, as we observed some critical fundamental issues in Facebook infrastructure where Facebook completely messed up identifying the audience size for retargeting after initial exposure campaigns were executed. We have raised massive disputes with Facebook and asked for a refund given the issues we observed were fully technical and showed fundamental issues in Facebook ad infrastructure where Facebook failed to track their own ad parameters correctly, leading to incorrect audience size for retargeting and hence campaign failures. The dispute is ongoing for more than 3 months now and Facebook is still investigating as it tells us, as we have told Facebook if we do not get a refund we will seek legal options. If any of you faced issues with Facebook ads showing technical issues in tracking, do let us know.
What we realized as Facebook / Instagram ads strategy is you need to spend an incredible amount of money at least in tens of thousands of $ or hundreds of thousands of $ for both the lead generation and execution scale given the way the ads work in terms of the volume of ads, the market in which ads gets shown, and the actual conversion that results. During the same time as our campaign was executing Philips had launched a ultra-short throw projector and was bombarding all possible channels with their non-stop ads (including Youtube). They must have easily spent around a million $ at least on ads to generate around 5-6 million of sales revenue. We already had spoken with a few campaigners who had spent around 40 to 50k on ads to generate around 200k in revenue. The moral of the story is you need to spend massive money on ads if you want to scale the campaigns to massive numbers. A good number could be at least 20% on ads of the total funds raised. So if a campaign has raised 200k, it can be easily said they spent 50k at least on ads. If they raised 5 million, they must have at least spent 1 million on ads.
Kickstarter vs Indiegogo
Having given this overview of our various experiences with Indiegogo as we worked super closely with their team, we strongly feel Indiegogo team is overworked and very small in size and that is affecting their ability to do effective communication. We gave a very strong feedback to Indiegogo team about various issues we observed citing that as a bad experience and which can be easily improved.
We are not at all sure how Kickstarter experience would have been but considering Kickstarter does not even allocate personal individual teams to help you, we strongly feel Kickstarter experience would have been even more negative as there is no personal attention given by Kickstarter to your project, the way Indiegogo teams do. Also, considering the fact that Kickstarter does not allow some fundamental important infrastructure support such as access of supporter info such as email, name, and lack of Facebook pixel tracking integration for ad effectiveness tracking we were highly turned OFF by Kickstarter ecosystem and would still back Indiegogo ecosystem any time because we believe Indiegogo is more individual entrepreneur friendly, while Kickstarter ecosystem is completely designed around marketing agencies who run your campaigns.
So that is our overall impression about the two most popular platforms Indiegogo and Kickstarter. Hope it will help you to take the right decision in choosing your platform for your campaign. .