The Economics Behind Our First Giveaway

We recently completed our first Facebook giveaway. Congratulations to the winner who won $50 in store credit to their local game store - Blue Bridge Games in Grand in Rapids MI!

I wanted to go over the thought process behind the giveaway, delve into the actual economics of it, and brainstorm some next steps.

The Giveaway

We’re in the home stretch before our Kickstarter for Nut Hunt (Summer 2022) and wanted to turbocharge our outreach with a giveaway.

Roque Deleon structured the campaign for us, including setting up some really cool back end via a chat-bot to collect e-mails. He is intelligent on marketing, and super easy to work with (highly recommended).

There was a lot of talk about what to give away as we wanted something close enough to our product (a board game) to have healthy conversions, but we don’t have a tangible product yet, and don’t want to get into the habit of “cheapening” our product through giveaways and sales.

We settled on $50 to your local game store (LGS) for a couple of reasons:

1. It aligns with our philosophy of community and supporting brick and mortar stores.

2. People who buy board games are our target demographic – so it is self-selecting.

3. $50 felt like the right number – that would excite people and allow them to either buy outright or make a big dent in most games – but wouldn’t break the bank. It’s also in line with our expected MSRP.

Our ad used pretty generic imagery – we chose a Ticket to Ride stock image because it is recognizable as a board game, but fairly generic. We also consider our game a gateway game (really gateway +), so didn’t want a super heavyweight game headlining the campaign.

Here is a link to the giveaway copy – it’s also pretty generic.

The chat bot is a powerful tool, in addition to collecting e-mails, we used it to further drive engagement by asking entrants to 10x their chances by tagging 3 friends. 40% of participants took us up on the offer!

By The Numbers

Excluding set-up costs that we paid to Roque (which we expect to leverage over multiple campaigns), we spent $235.60 on the campaign.

We collected 67 new to us e-mails, which comes out to a $3.52 acquisition cost per e-mail.

Our estimated variable unit margins for Nut Hunt are $12.85 (see this post on budgeting for a game). Which means that we need a conversion rate of 27% for the giveaway to make sense from a first order economics perspective (that is the percentage of new e-mail contacts who back our project). Which is a bit of stretch.

For our first giveaway to be economically viable we need to rely on the harder to measure intangible benefits of holding the giveaway and having a larger mailing list:

1. Early momentum on a Kickstarter is a big driver of success – so more day one pledges might have a multiplicative effect on the overall project success.

2. Having a monthly giveaway – which we send out to all our subscribers - may entice people to join our mailing list outside of when the giveaway is live.

3. Nut Hunt won’t be our only project – so lifetime conversions may be substantially higher than what we need to justify the economics for our first game.

That said, I’d really like to get the acquisition cost below $2.00 which would equate to about a 15% break even conversion rate.

What We Can Do Better

While we leveraged Roques expertise, this was the fist giveaway we’ve done as a company – so there’s definitely some room for improvement.

1. The giveaway got a lot of interaction – I’d like to figure out a way to convert more of those onto our mailing list. A couple of options would be to really emphasize that you must comment in order to be eligible to win (not just like), or to increase the dollar amount of the credit.

2. There was some confusion over whether we are a brick-and-mortar store and if-so where we are located (no one wants a credit that they can’t use). Figuring out how to emphasize that the giveaway is for your LGS wherever you are located might go a long way.

3. Our corporate page was starting pretty much from scratch, and hasn’t been the main focus of our outreach and engagement. So, we were heavily reliant on paid advertising to drive post interaction – a more robust following on our main page could lighten that load and have a multiplicative effect on engagement and reach.

I’m excited for round 2, to try some new ideas and to iterate on the process. If you’d like to be notified when the giveaway launches – hop on our monthly mailing list.

Have you run a giveaway for your brand – how did it go?