Crowdfunding Research Reports Predict Crowdfunding Industry to Grow into a $150 Billion Industry by the End of 2015
By Robert Hoskins, Front Page PR
According to a leading crowdfunding industry research report by massolution, the crowdfunding industry in the United States grew by approximately 105% in 2012 and represents the largest crowdfunding marketplace in the world. And, according to a recent TABB Group crowdfunding research study, the alternative financing industry is expected to grow into a $150 billion powerhouse by the end of 2015.
Top 10 Value-Added Marketing Programs that Every Crowdfunding Platform, Portal or Fundraising Website Needs to Attract Potential Investors and Profile Managers
What is really impressive is the fact that the nascent crowdfunding industry is just getting started. But once media outlets, national associations, chambers of commerce, ecommerce centers, vertical business-to-business industry portals and/or franchising sites with several hundred thousand readers, subscribers or followers realize they have what it takes to launch a crowdfunding platform website, they will do so in droves.
As soon as these players begin crunching the numbers and learn how much they can collect at 4% of the total amount of crowdfunding raised, a multitude of new websites will join the 500 or so crowdfunding pioneers that are already making it possible to launch all kinds of new businesses.
Many entrepreneurs like the idea of crowdfunding because they do not have to surrender any control to outside venture capital investors.
For example, a successful $50,000 crowdfunding campaign would pay the crowdfunding platform owner a 4% commission of $2,000. A small website managing 100 successful crowdfunding campaigns per month at $50,000 each could earn up to $200,000 a month or $2,400,000 over twelve months. This will be a very lucrative business for platforms that understand how to generate a steady stream of crowdfunding profiles and investors to fund them.
Many argue that there are too many crowdfunding platforms already in existence, but trust us when we say that 2012 was just the tip of the iceberg for what is to come over the next five years. The biggest challenge that many early adopters in the crowdfunding industry will face is the need for strategic marketing programs. Like many small technology companies, however, many crowdfunding platform invest everything they have in the underlying technology and/or cloud-based systems needed to create a crowdfunding platform, but invest very little in the marketing programs needed to make their platform successful.
We talk to lots of new crowdfunding platforms on a daily basis and are surprised at how many do not have formal marketing programs. In the beginning stages of building a crowdfunding website is to amass a large following. Without a high volume of potential investors and plenty of crowdfunding campaign profiles to browse through crowdfunding platforms will generate very little, if any revenue to sustain their operations.
A secondary challenge that crowdfunding platforms are facing is how to offer a portfolio of value-added business services to help their campaign managers launch successful marketing programs necessary to plan and execute a successful fundraising campaign.
The reason that Kickstarter currently rules the roost is because they have figured out how to make sure that their crowdfunding campaign managers have access to very cost-effective marketing programs. Instead of spending a lot of money on its own marketing programs, Kickstarter provides subsidized marketing programs that make it easy and very affordable for their crowdfunding campaign managers to get the professional help they need to develop great crowdfunding profiles and then generate free publicity by utilizing strategic public relations (PR) and media relations services.
The result is that instead of Kickstarter spending a lot of money on its own publicity campaigns, they have hundreds of crowdfunding clients generating publicity for their individual Kickstarter fundraising campaigns. The result is widespread news stories that generates a significant amount of interest in Kickstarter’s platform from funding raising campaign managers and donors/investors who are looking for the best crowdfunding website to do business with.
Using Google Analytics and other website measurement services such as Alexa, it is fairly easy to do Kickstarter vs. Indiegogo comparison to see which site is generating the most traffic. performing a
Thus, Kickstarter has become the 800-pound gorilla. But at one time, only a few years ago, they were in the same spot as most small crowdfunding platform are today – small, hungry and hoping they will succeed.
The key to success are successful advertising, marketing, PR and media relations programs. A good example to reflect on was the competition between IBM’s OS/2 operating system versus Microsoft’s Windows operating system in the 1990’s. Technology experts agreed that IBM had a superior product, but IBM lost the battle because they under estimated Microsoft superior marketing, business development and channel marketing programs that effectively build worldwide distribution channels.
Another good example of superior marketing was the Intel Inside marketing program was very successful. Intel would pay for 50% of all costs for computer manufacturer’s advertising campaigns as long as the Intel logo was featured prominently in leading trade publication advertisements. This allowed both Intel and computer manufacturers such as Texas Instruments, Dell, Gateway and others to double the power of their marketing budgets.
So what type of marketing programs does it take to make a crowdfunding platform successful? It would be wise for every crowdfunding site, regardless of industry, to add a menu tab to their crowdfunding websites offer the following value-added crowdfunding support services:
- Social Media Campaigns
- PR/Media Relations Campaigns
- Press Room with News Story Building Blocks
- Crowdfunding Video Production
- Donor Email/Newsletter Marketing Campaigns
- Google Advertising Campaigns
- Google Analytics Conversion Tracking
- Event Marketing Campaigns
- Perks-Based Fulfillment Companies
- Affiliate Marketing Programs
It is very simple for every crowdfunding platform to build a directory of service providers for each category of value-added services. Providing a list of qualified service providers makes it easy for crowdfunding campaign managers to shop for the best deal on copy writing, video production, PR, perks fulfillment and other types of crowdfunding services they need to help them launch fundraising campaigns.
As platforms mature, the more sophisticated crowdfunding platforms will soon allow crowdfunding campaign managers to request bids for these types of services when they create their initial crowdfunding profile. This will enable crowdfunders to subscribe to important marketing services before the campaign begins versus half-way through the campaign when they are in fear of failure. Creating professional profiles supported with well-thought out marketing campaigns, which will raise the visibility of the both the crowdfunders as well crowdfunding websites and will ultimately lead to an overall crowdfunding success rate due to increased web site traffic and and higher donation/investement conversion rates.
Building a rock solid database of potential donors/investors with a known-propensity to support various crowdfunding campaigns along with a high conversion rate for vertical financial marketing programs will be extremely valuable in the future of the booming crowdfunding industry.
A general rule of thumb is that crowdfunding platform founders/CEOs should dedicate a minimum 4% of their total budget to marketing programs. And should they decide to invest their marketing dollars in setting up co-operative marketing programs for their crowdfunding clients it will allow them to double down and significantly increase the reach and frequency of every marketing dollar spent.
Even crowdfunding platforms on a shoe string budget should consider matching marketing funds for their most promising crowdfunding accounts. In most cases, investing wisely in marketing programs will lead to higher commissions received due to the higher amount of funds that will be raised. Collecting 4% of $50,000 is much more lucrative than 4% of $5,000 and the extra revenue should cover almost 100% of the initial marketing investment.
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