In the month leading up to the launch of my project on Kickstarter, one of the things that I most wrestled with was should I purchase banner ads on the Boardgamegeek.com website. BGG is the most highly trafficked board game website and in my research I often noticed ads for many of the games on Kickstarter. You can't really visit the site these days without seeing at least one ad for a Kickstarter project. But are they worth it?
I'll give you my opinion later, but I first want to show you some analytics and how you can make an educated decision rather than wildly guessing whether they are right for your project or not.
First let's look at how banner ads generally work:
Take a look at the pyramid. This is a basic model of how banner ads work. Typically, you pay for a set number of impressions over a certain period of time. The goal in this case is obviously to drive traffic to your project page and ultimately get a pledge from the visitor who saw your ad.
This process is illustrated in the pyramid starting at the bottom. First an impression is made when your ad appears to someone browsing the BGG site. Whether or not they notice or pay attention to the ad is irrelevant, it still counts as an impression.
Only a few of the people who see your ad will actually click thru and go to your project page. This number divided by the total impressions is called the click thru rate.
And finally, of those that click thru, only a few will actually be converted and pledge toward your project. Obviously the more the better as this is the ultimate goal of purchasing ads. This number divided by the number of click thrus is the conversion rate.
When you purchase ads from BGG you purchase them for a number of impressions. Sometimes people break the cost down to cost per thousand impressions. As with most things the per unit cost goes down when you purchase more volume. Some figures will not be disclosed in order to protect the interests of both Van Ryder Games and BoardGameGeek.com
For the current rates and to purchase ads email Chad from BGG at: email@example.com
Weighing all the factors...
Now before we go further and look at some data, let's look at a project scenario and some factors you should think about when determining if you should buy ads on BGG. These are not in any particular order, nor are they all of the questions you should be asking yourself.
1. How long will your project be? If it is a very short project BGG ads may not have time to be impactful. If it is very long you will need to think about when is the best time for the ads to run (i.e. beginning, middle, or end of the project)
2. What is the project's funding goal in $? And what is the ratio of the cost of ads to the funding goal? If the ad costs are 15% or more of the funding goal you shoud probably just be puttin the money toward the project. Example: Project goal is $2,000 and BGG ads are going to cost you $600, it probably doesn't make much sense to purchase ads.
3. Are there hidden costs? And if so have you accounted for them? Such as... Will you pay to have banners designed? If designing yourself are you accounting for the time it will take and planning accordingly.
4. Can you afford it? If you are taking a second mortgage or selling your kidney purchase BGG ads you might want to rethink it. (exaggerating for affect here)
5. Are you prepared to lose it all? Remember, if your project does not fund you get nothing. And BGG is under no obligation and should hold no liability as to the success or failure of your project whether you purchase ads or not. You won't be getting a refund.
Luckily we can look at some things to make an informed decision! Especially with regards to #5... as no one wants to lose their money.
How many incremental pledges are needed?
Ok. So how do we decide if the ads are worth it? Your probably thinking, "hey if I get at least my money back in pledges than it is worth it!"
The ads need to earn you quite a bit more in pledges than what you spend on them to be worth it. Here is why...
Hopefully you have already read, Kickstarter Metrics you aren't thinking about... but should be! (Part 1) because we will use Average Pledge amount in this discussion.
The assumptions we are using are as follows:
The goal for the funding achieved through Kickstarter is to pay for a print run of the game.
Amount we plan to spend on BGG ads: $600
Projected Average Pledge amount: $40
Kickstarter and Amazon fees of 10%: $4
Projected Non-Manufacturing expenses per pledge: $8
So using the original argument, to be worth it the ads would need to generate $600 in the hypothetical situation above. So that would be 15 incremental pledges (15 x 40 = 600).
Seems like that is doable right?
But wait... if we factor in other things like the Kickstarter fees and even the extraneous costs that aren't going toward printing our game, like shipping and non-game rewards, we actually are only getting $28 per pledge and would need 22 incremental pledges (22 x 28 = 616) to make the ads worth it.
The lesson? Always make sure you are accounting for all of the costs! If we'd paid someone to design the ads we'd have to factor in and take out even more from the $40 base!
Hitting the target
Ok, so how do we know if we can hit our target number of pledges? Well, you never know for sure... but we are going to look at some things that will give us a damn good idea of what will happen using what we know from what happened with If I'm Going Down.... Remember the pyramid at the beginning?
Ok now let's take a look at how the If I'm Going Down... ad campaign did by looking at the click thru and conversion rates. After starting at a 0.62% click through rate (which according to Chad is over 2x the BGG average) the final click thru rate ended up being 0.42%
A drop should be expected as the longer the ads run, the more likely visitors have already seen them and therefore are less likely to click them whether the did previously or not. Keep in mind that the click thru rate is largely dependent on the quality of your ads and whether or not they are enticing enough to make folks want to click them. Below are some of the ads we put on BGG:
Now let it be known that I am not a graphic designer by any means, but I did have a simple strategy that I thought would yield results.
1. Show off what makes the game visually appealing - the Zombies!
2. Use very few words. Making it so if you want to know more you have to click the ad.
3. Identify it as a Kickstarter but don't slam people in the face with the Kickstarter Logo or a plea. (That is what the project page is for)
Ok they clicked the ad and are on your Kickstarter page. Now you have to convert them. This is a job in itself and a great video, page presentation, reward structure, and information like rules and reviews are needed to give prospective backers the information they need to make an informed decision. There are certainly others who have done it better, but you can check out the "If I'm Going Down..." Kickstarter project page here to see how we did it: http://kck.st/pzGjQg
The average conversion rate for small businesses is 1.5% according to this article: http://www.searchmarketingstandard.com/what-is-the-average-c...
IIGD came in at 1.2% according to the number of backers that came from BGG as we are now able to see in the new Kickstarter project dashboard. Now this number may vary from the actual as people who saw the project by clicking an ad but then came back later through another channel wouldn't be counted in that stat. On the flipside, some of the number may be people who came from BGG but not from clicking an ad but rather through a link in a forum post or something. So the raw number from KS is probably fairly accurate if we consider those factors a wash.
Ok so now we know the variables! We can do the math and get to our projection! Based on what I know from my project and what I know from researching click thru and conversion rates, I recommend using base assumptions of 0.30% Click Thru rate and 1.25% conversion rate.
You can adjust those figures based on your own assumptions, but I think using them as is will give you a nice conservative estimate of what to expect.
Ok so using those figures if we need 22 incremental pledges, the minimum number of impressions we need for our $600 is:
22/0.0125 = 1,760 (click thrus)
1,760/0.003 = 586,666 (impressions)
So if our $600 is going to buy us more than 586,000 impressions we can feel pretty good that purchasing the ads will be worth it!
Accounting for risk and your risk tolerance
But... there is just one more thing to consider... RISK! Even if this formula does not indicate you should buy the ads it may still be worth the risk. And vice versa, even if it says you should it might not be worth the risk.We can't just make decisions in a vacuum and as useful as the data is and the formula to project if ads are worth buying, we must factor in risk and our tolerance for it.
We can do this by taking a hard look at our project, funding goal, and what we think the likelihood of different scenarios happening are. The most important factor is what the chances are that the project will fund. I know we are all confident our project will fund, but you need to take a realistic approach when doing this!
So look at your project, all the work you have done, the marketing prep, etc. and make an educated guess at what you think the chances of success are that your project would be funded. In our example let's say we are asking for $6,000 and we have put in the work an we think our project has an 80% chance to be funded with the purchase of BGG ads.
Let's say our $600 buys us 700,000 impressions. So we expect the ads to yield 26 pledges using the preceding formula. The pledges total $1,040. After we factor out fees and non-mfg costs we expect it to yield $728 toward printing. Ok! Nice! Plus we believe our estimate is conservative so it will likely be more.
But wait, we won't get our funding 20% of the time so we have to factor that in... So using a situational formula factoring in this risk we see that:
80% of the time our $600 yields $728 and 20% of the time it yields 0.
So the weighted average expected return is:
($728 * .80) + ($0 * .20) = $582
Now this value below $600 so a finance major might tell you the investment is not worth it. But this assumes our factors are 100% accurate. You could easily yield much higher or your success % could be much higher. You must determine if your risk tolerance is greater than the chance the investment will not be worth it or you could lose it all.
Look even if you don't fully understand all this math, or the reasoning behind it, if you take the time to look at it you are already winning by taking a closer look at your project and challenging your assumptions.
Final Summary and my opinion:
By looking closely at your project and the factors involved, you can make a very educated guess as to whether or not you should purchase BGG ads for your Kickstarter project.
Consider both the data and external factors and know that you will make the decision that is best for you!
For me, I can say post-project that the BGG ads were definitely worth it. Pledges from the ads amounted to over $1,600 and I spent less than 1/3 of that. I think it was definitely a good investment.
I chose not to pay myself back from the project funds but to instead leave the initial investment to go toward producing the game. This was just a personal decision as the funding needs every bit of it to get the games printed.
Thanks for voting on the topics everyone! There was a 3 way tie so the next 2 installments will be: Modeling a Cost Benefit in Excel and How Long should a project be?
To see the original version of the article using simple booklet go here: http://midd.me/SQRf
DISCLAIMER: The figures in the example scenario for BGG Ad cost do not reflect the going rates and you should contact Chad@boardgamegeek.com to get the current rates.
Using the formulas and/or advice in this article are by no means guaranteed to make your project a success. Results of course will vary so please do not come to me saying you did everything mentioned and the project still did not fund.
Copyright 2011 Van Ryder Games. This article may be used on your Blog, Podcast, or website with proper attribution to Van Ryder Games.
Ok, this started off as a blog focused on Kickstarter, but of late I've been discussing more topics and thus I have renamed the blog to a more general title. I hope you enjoy my ramblings!
20 Dec 2011
- [+] Dice rolls