Why crowdfunding is a must-have marketing tool for budget-bound startups
WITH startups generally lacking bulky marketing budgets, investing in innovative promotional projects can be challenging. A lack of funds, as well as an avoidance of financial institutions to place their money on unproven ideas, often puts a halt to creative ideas.
But gone are the days when business owners had to sacrifice their creative dreams due to a lack of funds. The emergence of crowdfunding platforms has opened a new door for businesses.
Crowdfunding platforms enable business projects and ideas to receive equity funding in return for a chance to be part of the project, or to be one of the first to experience the product or service.
“Crowdfunding that offers the product being developed as the reward for support is a good way to test ideas and build support for the product among consumers who are innovators,” said Amitava Chattopadhyay, professor of marketing and the GlaxoSmithKline Chaired Professor of Corporate Innovation at INSEAD. “Research shows that this segment of consumers is also those who are more likely to spread word of mouth, an important driver of purchase for those exposed to it.”
Most crowdfunding platforms use an “all-or-nothing” model, meaning that if a project does not raise enough funds to match or exceed the funding goal, then it will not get the funds. Thus, marketing is a crucial component for funding success.
In order to optimize success in a crowdfunding campaign, your marketing strategy should be well planned. Here are a few tips to get you started.
Research your audience
The first thing you should do when preparing for a crowdfunding campaign is to analyze the nature of your business and then ask yourself who your target audience is. This will allow you to understand how best to market your campaign, with the requirements and expectations of your contributors in mind.
Pick a suitable crowdfunding platform
There are a range of platforms out there, each of which come with certain advantages and disadvantages. Since you can only carry out your campaign on one of these platforms, it is necessary to do your research to determine which is best for your project. Some of the most popular crowdfunding platforms include Kickstarter, GoFundMe and IndieGoGo.
Create a blog
A blog can be a very valuable tool when carrying out a crowdfunding campaign. It can help you provide your visitors with the latest updates regarding the progress of your project; provide potential investors with important information regarding your business and goal; and act as another platform in which to engage a larger audience.
Build a network of contacts on social media
In today’s digital age, social media is an effective tool for marketers. Social networks such as Facebook, Twitter and LinkedIn provide you with a powerful platform from which to reach potential investors. Each follower will take you one step closer to your goal, so integrating your campaign information onto your social media channels is really important for success.
Preparing a press release
Launching your crowdfunding campaign with a press release will enable extra visibility to your brand as well as appearing more professional.
Though the crowdfunding campaigns of businesses are often in the public eye, it is still relatively early days for this funding strategy. Furthermore, marketers are sometimes hit with various regulations which make crowdfunding difficult. However, these regulations appear to be changing.
“In Southeast Asia – e.g. Malaysia, Singapore – equity crowdfunding has already become legal. As such, there is a high likelihood that a framework for equity crowdfunding will be announced in Hong Kong as well, to remain competitive with the neighboring region,” Chattopadhyay said.