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How to Plan the Right Sized Marketing Budget to Conduct a Successful Crowdfunding Campaign

20 Oct

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

By Robert Hoskins

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.

Front Page PR is the #1 Crowdfunding PR firm in America

Front Page PR is the #1 Crowdfunding PR firm in America

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.

This is reason that Kickstarter campaigns have a 65% failure rate and more than over 90% of indiegogo campiagns fail to achieve a 100% funding rate.

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.

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More Articles on Crowdfunding Marketing Strategies:

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Planning a Successful Crowdfunding PR Campaign

8 Dec

Planning a Successful Crowdfunding PR Campaign

Planning a Successful Crowdfunding PR Campaign

Need help using PR to generate funders/donor for your next big Crowdfunding campaign?

8 Dec

Need help using PR to generate funders/donors for your next big Crowdfunding campaign?

Need help using PR to generate funders/donors for your next big Crowdfunding PR campaign?

8 Dec

The key to building a successful Kickstarter, IndieGoGo or Rockethub crowdfunding is to plan ahead and put some money or skin into the effort. I would also recommend reading a book called “The Kickstarter Handbook: Real Life Crowdfunding Stories” by Don Steinberg.

This is a great book because it details how much actual works goes into a campaign before, during and after a successful crowdfunding campaign.  It also covers how using effective public relations (PR), media relations and social media strategies can either make or break your campaign.

After discussing the right and wrong way to handle the marketing, the crowdfunding handbook then discusses the types of rewards that can be given to your supporters as well as warn you not to promise something that you can not deliver without breaking your piggy bank.

The crowdfunding handbook then examines a lot of different crowdfunding campaigns and details what successful crowdfunding campaigns did right and what worked well for them in the publicity department as well as what unsuccessful campaigns did wrong. I highly recommend reading this book before launching any type of crowdfunding campaign and will only set you back $16.

Last, but not least, is the crowdfunding business plan template in the back of the book. It provides a step-by-step process of how to completely write up a crowdfunding business plan including all the videos, marketing, public relations, publicity, social media, event planning, email marketing campaigns, advertising campaigns, speaking engagements, and other cool ways to completely publicize and make the world and lots of investors aware of your crowdfunding campaign as well as the right calls to action to encourage people to review, analyze, join your movement and, of course, donate money to your crowdfunding campaign.

What the book does not explain fully is the step-by-step process of developing a PR media plan and how to leverage social media once you have begun getting some positive publicity.  That is what our firm does, teach people and businesses how to generate positive publicity and leverage large groups of people in vertical segments of social networking sites to pass along your crowdfunding campaign’s messaging points to millions of their friends, families, business colleagues and other good Samaritans that may not know or meet.

But if they like your product, service or crowdfunding cause as a hobby investor, social entrepreneur or micro investor, they may just give you $100 to get one of the first cool gadgets, widgets or rewards that your crowdfunding campaign promises them.

As with any blog post, always finish with a call to action.  If you need help creating a successful crowdfunding campaign, please give me a call at (512) 627-6622. Doing will not only put you in touch with the industry’s leading PR crowdfunding experts, but it will put your  story in front of the worlds top 250 media contacts that continuously write news stories about the crowdfunding portals as well as the latest and greatest crowdfunding deals of the day that are worth reviewing.

Learn how to generate publicity and investors for your crowdfunding campaign.

Learn how to generate publicity and investors for your crowdfunding campaign for a hockey stick growth rate!

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