The role of social networks in crowdfunding
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There has been something of a glut in crowdfunding research in the past few weeks. For instance, I wrote recently about a new study emerging from UC Santa Barbara that suggested that it’s crucial for founders to invest in their community prior to launching their crowdfunding campaign.
A second paper has explored a similar theme and set out to understand the role social media buzz plays in a successful crowdfunding project.
The researchers tracked the progress of 6,340 projects over their full lifecycle. They were particularly interested in the behaviour of the backers, both on the crowdfunding platforms themselves and on social networks such as Facebook and Twitter.
It emerged that a degree of social buzz can play a big part int he success of a project, although the researchers point out that not all social networks are as effective.
“Facebook works significantly better than Twitter”, the researchers say. “Recommendations are based on trust and this is more pronounced on Facebook due to the closer social connections between Facebook users.”
In other words, because what we post on Facebook tends to be more a reflection of us as people, the recommendations appeared to carry more weight there than on Twitter.
Just as with the previous study, this one highlights the importance of engaging with ones community if your project is to succeed.
The paper also echoes research conducted earlier this year that highlighted the crucial role obtaining early success plays. Once momentum is built, it’s much easier to maintain that and achieve the funding goal. The early weeks therefore are vital.“Three-quarters of those campaigns that raise one quarter of the funding goal within the first week of the campaign are also able to achieve their final target. Only 10 percent of those campaigns that fail to clear this hurdle prove successful”, they say.
They also uncovered an interesting quirk of more social good style projects that invoked the bystander effect as covered in another study from earlier this year. Basically, if a worthwhile project already seems to have attracted a good amount of support, then people don’t feel they need to add their own.
As you can see from the number of references to other studies in this post, the research hasn’t really uncovered anything truly novel. They have however done a decent job of pulling it all together into something useful, so in that sense the study should add some value to the crowdfunding marketplace.
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