Planning a Successful Crowdfunding PR Campaign

Tips on How to Plan a Successful Crowdfunding PR Campaign

By Robert Hoskins

Crowdfunding PR receives many calls from customers that want to know, “What is the best and most cost-effective way to plan a successful crowdfunding campaign?”  It seems like a simple question, but the answer can get complicated quickly.

Just as in starting any small business every crowdfunding campaign should begin with a business plan that states what the crowdfunding campaign’s goals and objectives are and what products/services will be offered to potential donors and/or investors. Similar to any product/service launch, a crowdfunding profile should describe the features and benefits needed to entice the customer into desiring the offer and making a purchase decision.

Tips on How to Plan a Successful Rewards, Perks or Equity-based Crowdfunding Campaign Using Cost-Effective PR/Marketing Campaigns

Tips on How to Plan a Successful Rewards, Perks or Equity-based Crowdfunding Campaign Using Cost-Effective PR/Marketing Campaigns

Next comes a marketing plan that defines what strategies will be used to reach the most appropriate target audience that will have the highest propensity to invest/donate money in a company’s crowdfunding perks/rewards/investment opportunities in order to provide an attractive return-on-investment.

Once the marketing messages have been created, delivery of the messages is a purely a mathematical decision. The success of any business is directly tied to how much the business spends on marketing to “reach” a calculated target audience to raise awareness for the products/services or securities being sold.

Measured in “reach” and “frequency,” all forms of marketing are designed to increase the awareness in the marketplace for a company’s products or services.

The more people that are reached with a marketing message that is designed to elicit the desired course of action, the higher the chances that the marketing or crowdfunding campaign’s goals and objectives will be achieved.

In general terms, it takes a minimum of three exposures to a marketing campaign’s messages before they will cross the customer’s/investor’s “threshold of consciousness.”  Once exposed several times, a potential customer will begin to decide whether they will ignore or respond to a marketing campaign’s “call-to-action.”  This is also known persuading public opinion using mass marketing campaigns.

If you reach the right target audience with the correct marketing messages based on their demographic and psychographic profiles, there is a very good chance that the customer will follow the recommended course of action to visit a crowdfunding campaign’s profile to check out the perks/rewards being offered or the equity crowdfunding investment’s potential return-on-investment.

The fundraising campaign’s success/failure rate is then dependent on the perks/rewards being offered or the “return-on-investment” (ROI) that an entrepreneur, startup or small business is offering for an equity investment.

In fundraising events, supporters will often support a cause by offering more money for an item than it is really worth in order to help the campaign achieve its goal.  However, there is always “point-of-diminishing returns” where people use common sense to calculate a deal’s worth before spending their hard-earned dollars, which is why crowdfunding is a very good way to gauge the public’s interest or desire for any given product or service.

Most marketing campaigns have a response rate of around 1% to 3% depending on the industry being served and the marketing medium selected to target potential customers.  Direct mail, newspapers and TV advertising used to be a very successful marketing strategy, but now most people read their news in digital format and shop online due to its convenience factor.

This is why the use of PR/media relations to generate digital news stories and social media blog posts delivers the most cost-effective way to promote crowdfunding campaigns. Once digital news stories are generated, social contacts can be used to share this information via search engine optimized (SEO) blogs posts on a vast array of social media networks, which is why campaign managers need to build a social network of at least 5,000 to 10,000 contacts prior to launching a fundraising campaign.

News stories written by unbiased reporters provide serious credibility. When combined with the influence of friends, family and business colleagues that share these stories with their circle of friends, social media campaigns will be extremely critical in determining any given crowdfunding campaign’s success rate.  (more below)

Advertisements work well too, but a written story is 500% more believable than any paid advertisement that a customer reads because it is written by a third-party that has vetted the company’s story and promises. Reporters always check the facts and figures before filing a story with their editor.  This is why journalism serves such an important role in society.

So when people ask us how much it costs to launch a successful crowdfunding campaign it really comes down to how much money is needed to be spent to create carefully targeted marketing messages  to reach a sufficient number of the correct target audience to achieve a successful conversion rate.

What results marketing budgets can actually achieve really depends on the industry targeted and what the typical cost-per-thousand (CPM) is to reach the correct target audience as well as the frequency is takes to yield the desired conversion rates.

Now that general solicitation can legally be utilized to target accredited and unaccredited investors in states with intrastate crowdfunding exemptions, most companies will begin planning very targeted advertising and email marketing campaigns to achieve guaranteed exposure in tandem with PR/media relations campaigns to generate news story coverage during the campaign’s launch.

Regardless of what publishers will tell you, spending a little money on advertising is always a good way to make sure that a publication can afford to cover your story with editorial ink.

Now, let us do the math.  If a crowdfunding campaign is offering a perk that costs $25 and you have a crowdfunding goal of $100,000, you would need to convert 4,000 readers into active donors/investors in order to achieve the campaign’s crowdfunding goal.   With a typical response rate of 1%, a crowdfunding marketing campaign would need to reach a minimum of 400,000 potential customers to convert 4,000 contacts into crowdfunding profile visitors.

In order to reach 400,000 customers at cost of $25 CPM,  a crowdfunding campaign manager would need to plan on spending around $16,000 to conduct a successful campaign.  This is why a large portion of small businesses and most crowdfunding campaigns fail.  They do not spend enough money on marketing to reach the correct target audience and make them aware of their crowdfunding offering.

This also is why building a very large crowd of social media contacts prior to a crowdfunding campaign is so important.  With the right circle of friends, followers and influencers a crowdfunding campaign can reach an additional 1,000,000 social media contacts on Facebook, Google+, Linkedin, Pinterest, Twitter, WordPress and YouTube for free. Compared to paid advertising, free is a very good way to reach potential donors/investors.

If a crowdfunding campaign can achieve the same 1% response rate via social media contacts as mentioned above for paid PR/marketing campaigns, suddenly  a fundraising campaign can drive an additional 10,000 potential donors/investors to their crowdfunding profile for free through word-of-mouth.

The difficult thing about social media campaigns is measuring their effectiveness because it is almost impossible to measure conversion rates unless specific click-through URLs are utilized.

Many times, people will learn about a crowdfunding campaign from a friend via word-of-mouth, but then search for the campaign using a crowdfunding profile name or news story headline.  So the original value of the social media post is lost and cannot be measured effectively.

Regardless, reaching 200 social media contacts with an additional 250 network contacts that each pass the crowdfunding campaign profile on to a third circle of contacts with an additional 20 followers each would allow a social media campaign to reach 1,000,000 people for free.

This is why crowdfunders with no Facebook friends or Linkedin network connections are doomed to failure from the very beginning.  They simply do not have the right support mechanism in place to sustain their campaign’s success.

Fundraising is a very personal endeavor.  Crowdfunders need to plan on raising at least 30% of their money from people that know and trust them.  This is why movie/rock stars, celebrities, entertainers and big name brands will be very successful at leveraging crowdfunding campaigns.  They have extensive networks of loyal fans that will stop at nothing to invest in the next big movie, album or gadget so they can benefit not only by receiving one of the first copies to roll off the production line, but also to enjoy a financial return on their investment.

This is why crowdfunding is going to change the way America invests.  For the first time in history, average Americans will gain the ability to steer the economy with their hard-earned dollars because they are in touch with what their friends, family and business colleagues really want to see delivered to the marketplace.

And when people begin to invest locally in people they know and trust, crowdfunding will become one of the most stable and predictable investments in America, not the other way around. For more quick advice, check  out this infographic that reviews real world statistics on how to use crowdfunding to successfully raise money online.

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2 Responses to “Planning a Successful Crowdfunding PR Campaign”

  1. Crowdfunding PR Campaigns September 22, 2013 at 12:01 pm #

    SEC lifts ban on General Solicitation; Tips on How-To Plan a Successful Crowdfunding Campaign using PR, Social Media and Marketing


  2. Gurtek Singh July 4, 2016 at 10:35 pm #

    Thanks its very informative.


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