The #1 Mistake that Crowdfunding Campaigns Make Is Not Spending Enough Money on Marketing to Reach a Sufficient Universe of Potential Donors/Investors to Complete a Successful Fundraising Campaign
For Fortune 500 companies in the United States, launching a successful product or service involves many months of research, product development, focus groups, and beta testing before introducing a product or service into a competitive marketplace.
In addition, successful campaigns hire professional advertising, marketing, PR and social media firms that know how to target and reach a very specific target audience with carefully engineered marketing messages designed to elicit a predetermined response rate such as making a donation or investing in a small company’s equity stock.
Success is very rarely achieved by building a single-page crowdfunding profile with limited company or product information and hoping that there is enough website traffic on sites such as Kickstarter and indiegogo to find sufficient donors to push a crowdfunding campaign reach its financial goal.
Many entrepreneurs that launch crowding campaigns are duped into working with crowdfunding consulting companies that charge $100 to do unlimited press releases or think they can be successful by asking crowdfunding PR and marketing companies to work on a contingency-basis.
Other marketing firms offer low-cost crowdfunding training programs that claim to teach novice crowdfunding campaign managers how to plan and execute their own marketing, PR and social media campaigns. The problem with all of these cheap marketing solutions is that they are offered by crowdfunding consultants with little to no real marketing experience and take advantage of entrepreneurs that do not know better. Most copy their workbook marketing materials straight out of college text books that can be bought at any book store for $20.
Professional adverting agencies, PR firms and marketing consultants that can deliver real results usually charge $5,000 to $10,000 per month for their services because they know they can deliver the marketing results that crowdfunding campaign managers need to complete a successful fundraising drive. Anyone that charges less does so for a reason. They simply do not have the experience to get the job done right.
Experienced marketing firms that can deliver the goods do so because they have a staff of seasoned, highly trained marketing executives with 15 to 20 years of proven, real world experience. They also have the specialized media planning tools that cost thousands of dollars per year to use, but are essential in planning targeted marketing campaigns.
Anyone can buy a text book on how to fix cars, but without an auto shop full of experienced mechanics and the right set of tools, they will fail miserably when trying to rebuild a motor. The same is true for people that try to plan marketing campaigns without the right set of media planning tools and professional skills that take years to learn.
In addition to the right tools and highly trained marketing executives, marketing campaigns cost money to implement. They involve many hours of researching media outlets, building databases of reporters and bloggers, and hundreds of hours send to pitches to the media and social media networks. This work load simply can not be executed for free. An important rule to remember is that it takes money to make money. The same is true when launching a successful crowdfunding campaign.
How much does it cost to conduct crowdfunding marketing, PR and/or social media campaigns? The answer really depends on selecting the target audience that needs to be reached, the number of media outlets that can effectively reach the desired target audience, and the time it takes to evaluate various media outlets and prioritize which ones will be the most effective. This effort requires a tremendous amount of time and effort.
Media outlets also have a ton of different options that can be utilized to reach various segment that comprise the right target audience. Most media outlets offer digital/print advertising, email blasts, direct marketing, blogs, newsletters and multitude of other marketing options that all cost money to reach the correct target audience. They also have a masthead full of reporters that might be enticed into writing a news article for free, but pitching stories to the press also takes a considerable amount of skill, expertise and experience.
The work doesn’t stop there. Next comes the conversion rate factor. A typical marketing “call-to-action” can persuade around three-percent (3%) of prospective donors to visit a crowdfunding campaign’s profile. More critical is the actual number of visitors that read through the crowdfunding profile and are converted to actual donors or investors, usually around one percent (1%).
The final question to be answered is how many people need to be reached with 3% call-to-action and a 1% donation/investment rate to meet a crowdfunding campaign’s financial goal? And most people do not respond to the first message they are exposed to. It usually takes three or more exposures to cross the “threshold of consciousness” and be enticed into following the desired course of action; in this case making a crowdfunding donation or equity crowdfunding investment.
A simple way to figure out how much money needs to be spent on marketing is for Crowdfunding campaign managers to divide their total fundraising goal by the lowest priced perk being offered in order to determine how many donors they will need to achieve their goal.
For example, a $10,000 goal divided by a $25 perk would require 400 donors to become successful. At a 3% response rate, a campaign would need to reach a total universe of 1,333,330 potential donors to convince at least 40,000 prospects to visit the crowdfunding profile and convert 1% into active donors. The cost to reach any given target audience really depends on the industry be served and the costs to reach them through paid advertising and PR/media relations campaigns.
The bottom line is that crowdfunding campaign managers need to plan on spending at least $5,000 per month to conduct a successful campaign. And most of the work needs to be done several months prior to the campaign to build a loyal crowd of followers/donors who will support the campaign once it goes live.
# # #
More Articles on Crowdfunding Marketing Strategies:
- Five Tips on How to Get Great Publicity for Crowdfunding PR Campaigns in Media Outlets Everywhere
- Planning an Effective Crowdfunding Campaign
- Planning Successful Crowdfunding PR & Marketing Campaigns
- Tips on How to Plan a Successful Crowdfunding Campaign
- Front Page PR Launches New $75 Crowdfunding Campaign Profile Evaluation Service
- Kickstarter vs. Indiegogo: Which is the Best Crowdfunding Site, Platform or Website to Launch a Crowdfunding Campaign?
- Broker Dealers Offered General Solicitation Campaigns to Market the Oncoming Wave of Equity Crowdfunding Investment Opportunities to the Next Generation of U.S. Accredited Investors
- Hourly rates for Crowdfunding Marketing, PR and Social Media Services