Referral Incentives in Crowdfunding
AbstractWord-of-mouth, referral, or viral marketing is a highly sought-after way of advertising. We undertake a field experiment that compares incentive mechanisms for encouraging social media shares to support a given cause. Our experiment takes place on a website set up to promote a fundraising drive by a large cancer research charity. Site visitors who choose to sign up to support the cause are then asked to spread the word about the cause on Facebook, Twitter or other channels. Visitors are randomly assigned to one of four treatments that differ in the way social sharing activities are incentivised. Under the control treatment, no extra incentive is provided. Under two of the other mechanisms, the sharers are offered a fixed number of points that help take the campaign further. We compare low and high levels of such incentives for direct referrals. In the final treatment, we adopt a multi-level incentive mechanism that rewards direct as well as indirect referrals (where referred contacts refer others). We find that providing high level of incentives results in a statistically significant increase in sharing behaviour and resulting signups. Our data does not indicate a statistically significant increase for the low and recursive incentive mechanisms.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7995.
Length: 18 pages
Date of creation: Feb 2014
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Find related papers by JEL classification:
- C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
- D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy
- L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs
- M31 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Marketing
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-03-08 (All new papers)
- NEP-EXP-2014-03-08 (Experimental Economics)
- NEP-MKT-2014-03-08 (Marketing)
- NEP-SOC-2014-03-08 (Social Norms & Social Capital)
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