Explaining the ALS Ice-Bucket Challenge
By now you’ve undoubtedly seen all of the ALS ice-bucket challenge videos that have been popping up on our social media feeds. I like most people enjoy watching my friends dump buckets of ice on their heads but what I like about this fund-raising campaign even more is that it is a brilliant example of viral growth. If we take a quick look at the power of viral growth we can easily see why the ALS Association reported that it raised $15.6 million as a result of the challenge, nine times what it normally raises in the same time frame. Project ALS and ALS TDI, two other ALS charities, reported donations up between 10 and 50 times normal just since the beginning of August.
For viral growth we start with a simple formula for our viral coefficient (Cv), which is essentially how effective our campaign is at spreading from one person to another. In the equation we have Fan Out, how many people one person asks to join, and Conversion Rate, how many people actually join. Most people making ALS ice-bucket challenge videos call out or invite 3 other people to join. I suspect not everyone converts, which as I understand the rules is even better for the charity because you are supposed to donate $10 if you do the challenge and $100 if you don’t. However, it appears that the Conversion Rate is very high; my guess is as high as 75%. This would yield a viral coefficient of 3 x 0.75 = 2.25. For every one person that produces a video and donates they attract 2.25 people on average to also produce a video, donate, and nominate 3 other people.
Cv=Fan Out*Conversion Rate
In order to see the cumulative effect of this spread we turn to one more formula, Cumulative Donors. This is simple the Viral Coefficient multiplied by the Retention Rate, which matters a lot if you are a social media site that needs users coming back day after day but for donations just participating in the challenge is sufficient so we can use 100% for that variable. One of the cleverest ideas of the ice-bucket challenge is calling people out and giving them only 24-hours to accept the challenge. This forces the cycle of fan out to be very high. In our equation the frequency of usage is 1 since people only make one video and then the cycle is 1 day (24 hours).
Cumulative Donors=(Cv*Retention Rate)^(Frequency*Cycle)
If we start with one person on day 1, it requires just a few hours past the 20th day for the number of cumulative donors to exceed the world’s population of approximately 7 billion people (see the graph below). Pretty nice for a fund-raising campaign! Of course, all the interesting growth occurs that last few days. You might even notice that this week your social media feed will be inundated with new videos.
What the graph above does not show is that adoption of anything (technologies to fund raisers) is that the curve is really an ‘S’ curve in that once the adoption hits a maximum it flattens out. There is only a certain number of users, customers, or donors that will ever user your product or donate to your cause. But it’s certainly a fun ride getting there.