KickstarterForum.org

TiMe22 wrote:

ralphk wrote:No one that I know that used FT paid $5K upfront. You should definitely negotiate a big discount.

The best offer I received from FT is US$2500 upfront and 31%.... Changes the numbers a little bit, but still, if you have not inflated your prices to accommodate this 31% and a bit to divide the US$2500 invested over the backers they bring in, it will not help your project any bit.

I`ve put a handful of the projects they mention on their website in Kicktraq and some really have 100's of backers (some even 1000's), but most projects more or less double/triple the amount of backers and that just doesn't cover the % and the upfront... It will probably work/benefit you if you setup your project with FT in mind though...

31% commission? It's a huge percentage to give up!

julee wrote:IWhat's the point of running a crowdfunding campaign if you're going to have 35% to a marketing agency? (unless 1. you are running on purely marketing purposes, and 2. you have set enough profit margin higher than that).. so I passed. I'm glad I have passed, because even if I had succeeded with them, my campaign would have been a deficit.

Julee, although you didn't find it worthwhile, others have and do. Some creators don't need their profits nearly as much (including for the reasons that you noted), and would prefer to invest those profits into increasing their backers, either by running their own ads in-house or by hiring professional crowdfunding marketing agencies.

There are many crowdfunding marketing agencies at present, but the biggest such agency for the last few years appears to be Funded Today, which I understand has worked with nearly 2,000 clients from mid-2014 to late-2017, and has helped a sizable percentage of those clients to raise over $150,000,000 altogether.

TiMe22 wrote:Even worse: It's 35% of all sales from the moment they get involved + the USD5000 upfront. For FT it's a goldmine and without any risks...

A 35% cut isn't necessarily a "gold mine" at all---it depends upon a lot of factors.

As a hypothetical example using some realistic rates, let's say that you spend $100 to show a Facebook ad to 10,000 people, that 5% (500) of those ad-viewers visit your client's campaign page, and that 1% (5) of those page-visitors back your client's project by pledging an average of $60 each, for which which your client pays you a 35% cut. This means that you've lost $100 in order to gain $105, which is barely profitable, and it means that you'll earn $5 for every $300 that you bring your client, which is far short of a small fortune. And this example assumes that you've collected enough data to be able to rely upon the accuracy of those rates, which isn't necessarily true, especially with only 5 backers---and, even if those rates are trustworthy, then they will invariably slowly decline over time until you can't earn anything anymore or, worse yet, even start to suffer a loss.

So, if you want to actually enjoy a "gold mine" (without negotiating for a higher cut), then you'll need to raise those hypothetical rates tremendously, which means achieving (A) a much higher CTR for your ads and/or (B) a much higher conversion rate for your client's campaign page. Although those two goals are definitely within the realm of possibility, average Facebook ad CTRs are only about 2-3%, average Kickstarter conversion rates are perhaps only 1-2% (and those conversion rates fall with rising pledge sizes), which means that you'll need to stay far above-average if you want to maintain any hope of huge profits.

Although a few campaigns may be highly profitable, I can testify that most are relatively challenging for marketers, even with something like a 35% cut. And, since you can't stay in business by persistently spending more than you earn, it's only natural for crowdfunding marketing agencies to try to cut their losses, as well as minimize their risks. And each new project (which should ideally be coming regularly) poses a new risk. Some projects might prove unprofitable no matter what's tried---and, as for the rest, a crowdfunding marketer might need to test dozens of ad sets in order to find only a few that will actually work. And, in the latter case, there's no way to clearly determine an ad set's profitability (or lack thereof) for sure without normally spending hundreds of dollars on each set---not only on showing those ads, but also on paying skilled labor to both design and analyze those ads, while perhaps maintaining some profit margins of one's own. All of that intense testing can be rather expensive, and so it's not unusual for crowdfunding marketing agencies to either charge sizable upfront fees for it like those that you cited (and then reject a significant percentage of clients whose campaigns prove unprofitable), or else choose to be very restrictive about what clientele they accept from the very beginning, as some other agencies have chosen to do. Without such efforts to mitigate the risks of doing business, those risks could become overwhelming, especially in such a volatile market-sector in which so many projects prove to be relatively undesirable---and, whenever a product isn't sufficiently appealing on its own, then there's only so much that even the best marketing can do to help it.

In any case, that's some of my insight about this subject based upon my own personal experience, for whatever it may be worth.

ralphk wrote:I have not signed up with FT but I have spent a fair amount of time on calls with one of their account managers. My impression at this point is that FT can work great for some projects and can fail for others. Success with FT will depend on a variety of factors, here a few:

1) Their costs are negotiable so you want to push for the lowest upfront fee and % of pledges.
2) The success of FT is heavily dependent on how well your project fits into their existing Facebook ad audience portfolio. You want to get some insight into why FT thinks they have audiences that will suite your project. If they don't already have successful audience built up that suites your project, you are unlikely to get the result you are hoping for.
3) You need to make very sure that your reward margins can actually absorb the additional 20% cost based on total pledges. FT could significantly drive up your pledge volume while at the same time eroding your profit margins.
4) You need to ensure that your entire supply chain (product and customer facing) can handle a potentially very large increase product volume. Can you supply the necessary product units and how much will that cost you to manage and execute?

My campaign:
Adventure Mat - A Clean Surface Wherever You Go.
http://kck.st/2dMPOur

Ralph, yes. Thank you for those suggestions, which I'm sure will help some people. Funded Today's successfulness varies a lot from client to client. Some paid thousands of dollars for testing in order to receive few (if any) pledges, and gave rather negative reviews. Others had campaigns that responded very well to ads, enjoyed many profitable ad sets, and profitably raised thousands, tens-of-thousands, or even hundreds-of-thousands of additional dollars that they would not have raised otherwise.

One additional reason for this variability that you didn't mention (but that perhaps should be mentioned) is that even the best marketing can only do so much for an unpopular product/service. It's normal for every entrepreneur to believe that he/she has an amazing product/service that many people will love (or else he/she wouldn't spend countless hours developing it) but, regardless of what creators may think about their own creations, the marketplace may respond very differently than they expect---and, whenever the marketplace tells a person that his/her beloved "Mustang" is actually an "Edsel" (oopsie), then that fact always limits what marketing can do for it.

When those figurative Edsels simply aren't selling, it's sad when some creators decide to place too much blame on marketers for it (despite their good-faith efforts to do the best that they can with what they've been given) and not enough on themselves, but it happens. Which isn't to say that marketers don't make mistakes, as well---it happens. Nobody's perfekt. But it can potentially lead to some unfairly-negative reviews.

But, in any case, I can say with confidence rooted in experience that THE single most important criteria for successful marketing (not just in crowdfunding but in any other market-sector) is having a sufficiently-desirable product/service. Secondarily, designing a well-built "showroom" (your campaign page) for what you've created is also a HUGE factor. If you don't have those two right, then marketing won't necessarily help much. There are always some wonderful cases in which a certain product/service just needs to reach out to the right audience in order to enjoy successful fundraising, and would fail otherwise, and I've seen this happen repeatedly---but those are more the exceptions than the rule.

TiMe22 wrote:The best offer I received from FT is US$2500 upfront and 31%....

Yes, people sometimes negotiate for lower percentages. That can be good for minimizing your expenses, but there's also an important tradeoff involved---a lower cut can also reduce your total funds raised from ads. As I explained earlier in this thread, Funded Today doesn't like spending more money than it earns---so, it won't show ads that prove to be unprofitable. And so, by reducing Funded Today's cut, one can potentially transform some (or all) of its profitable ads into unprofitable ads---such as that hypothetical example that I cited, which would instantly transform into an unviable money-pit with only a 31% cut. Not only that, but a lower cut also means that Funded Today's won't be able to show its profitable ads as much before they lose their profitability. As a reminder, ALL Facebook advertisements slowly lose their profitability over time as they increasingly reach the same people and such; such "ad fatigue" is inevitable---it's just a matter of how quickly, and it always happens more quickly whenever the ads in question aren't very profitable to begin with. So, it's important to keep this tradeoff in mind when trying to negotiate for a lower cut---again, you'll save money on advertising, but you'll also lose out on potential backers/pledges that you'd otherwise gain.

emphimy wrote:31% commission? It's a huge percentage to give up!

Yes, perhaps. But many Kickstarter entrepreneurs can afford to spend that much.

I dare you to try to devise some profitable crowdfunding ads with only a 10-15% cut---it's definitely possible, but it can be exceptionally challenging even with the very best campaigns that Kickstarter has to offer. So, with such a small cut, you'd be practically guaranteeing your own failure before you even start. And, if you're constantly operating at-a-loss on nearly every ad-set that you test for every client, then you're probably not going to stay in business for very long.

On the other hand, with a standard cut of 35% plus a good-enough ads team, you can potentially find a way to advertise profitably for maybe half your clients or more. And 50% is a lot better than almost none.

RavenX86 wrote:35% of all it's crazy stupid ... makes no sense ... I understand giving sales commission on tracked referrals but not on actual growth made organically by the campaign itself ...

It may make more sense if you consider some additional factors. Firstly, unless/until some better tracking tools become commonplace, the effects of social-media advertising generally extend well beyond what's trackable; for example, for every 100 people who click on a Facebook ad to visit a campaign page and then pledge, you may enjoy another 15-50 or more who return on another visit to pledge, and those pledges won't necessarily get tracked. Some ad viewers may even find their way to the page by other methods. And, in any case, whenever you get a vast throng of ad referrals pledging to a project, this can influence a significant increase in organic pledges, as well---in fact, anytime a project is rapidly gaining pledges, rising in rankings, and thereby becoming more visible to everyone, regardless of the reasons for this, its rising visibility/popularity/success will normally inspire other people to want to pledge to it, as well. So, crowdfunding marketing agencies like Funded Today charge not only for trackable pledges but also for organic pledges because they know (just as I know) from experience that their work normally affects both---and, although those effects may be small for some projects, they may be HUGE for others.

DaveGarber1975 wrote:

julee wrote:IWhat's the point of running a crowdfunding campaign if you're going to have 35% to a marketing agency? (unless 1. you are running on purely marketing purposes, and 2. you have set enough profit margin higher than that).. so I passed. I'm glad I have passed, because even if I had succeeded with them, my campaign would have been a deficit.

Julee, although you didn't find it worthwhile, others have and do. Some creators don't need their profits nearly as much (including for the reasons that you noted), and would prefer to invest those profits into increasing their backers, either by running their own ads in-house or by hiring professional crowdfunding marketing agencies.

There are many crowdfunding marketing agencies at present, but the biggest such agency for the last few years appears to be Funded Today, which I understand has worked with nearly 2,000 clients from mid-2014 to late-2017, and has helped a sizable percentage of those clients to raise over $150,000,000 altogether.

Why did indiegogo remove most of their campaigns from their profile on indiegogo? It says that they have only done 3 campaigns...

gustofwisdom wrote:Why did indiegogo remove most of their campaigns from their profile on indiegogo? It says that they have only done 3 campaigns...

Yes, we were very much #1 in that partners gallery from early 2016 to late 2017.

I trust that our co-founders know why, although they haven't said much to the rest of us. So, I don't know why.

But I can say the following...

We've noticed from abundant experience that identical campaigns invariably attract pledges on Kickstarter than on Indiegogo---it's simply easier to get people to visit their campaign pages, and it's easier to get those visitors to pledge once they've looked everything over. This perhaps results from Kickstarter being both better-known and better-trusted. But, whatever the reason may be, we haven't encountered a single exception yet. And that's why we typically advise our newly-onboarded Indiegogo clients to transition to Kickstarter, if at all possible, so that their projects can enjoy the best chances of success. And the best chances of our finding successful ads for them.

If our clients' projects do well enough on Kickstarter, then they can always transition back to Indiegogo InDemand afterward. And we've also helped a number of our most successful campaigns to do that, as well. In fact, the vast majority of our listed Indiegogo partners were InDemand campaigns, nearly all of which had been successfully funded (with our help) on Kickstarter rather than Indiegogo.

Indiegogo liked that we brought so many successful Kickstarter campaigns so regularly to Indiegogo InDemand, but I don't think that they would have been very happy to learn how many live Indiegogo campaigns we helped transition to Kickstarter. I've heard that it may be that Indiegogo finally started to realize the latter, which may be the reason why they got upset with us enough to remove all of our listed partners. As for our partners, they were generally quite happy to remain our partners---we did well for them.

Anyoo, just some thoughts, for whatever they may be worth.

I have seen campaigns raise great amounts with them, and I have seen campaigns raise none. But here's the interesting part: the campaigns who raise lots with them seemed to have already had a good amount of funding first. But it's always hard to get exact figures on these stats.