Crowdfunding marketing is a good way to raise money for your small business. But not all crowdfunding campaigns meet their funding goals. Only a few successful crowdfunding campaigns, which make the best use of crowdfunding marketing, raise capital as they intended.
If you want to raise money through crowdfunding, this crowdfunding marketing guide can help you meet your funding goal. Let’s dive in.
What Is Crowdfunding?
Crowdfunding, as the term suggests, is a financial practice that involves raising funds from a large, diversified pool of individuals, often facilitated via the internet.
In this democratic process, a large number of people contribute relatively small amounts of money to support a business, project, or cause.
Unlike traditional methods of business financing that often involve a few major investors or institutional lending, crowdfunding turns to the collective for financial backing.
Investors in a crowdfunding initiative vary in their motivations and rewards.
Depending on the specific type of crowdfunding model chosen, they may make their financial contributions either charitably, with no expectation of a direct financial return, or they may receive equity stakes, product samples, or other incentives based on their level of financial contribution.
What Are the Four Types of Crowdfunding?
Here are the four types of crowdfunding for raising capital:
1.Rewards-Based Crowdfunding
In this customer-centric type of crowdfunding campaign, a business incentivizes financial support by offering rewards such as early access to its product or service, exclusive merchandise, or special experiences.
These rewards serve as both a thank-you to investors and an encouragement for others to also contribute, thereby enhancing the potential for the crowdfunding project’s success.
2. Equity-Based Crowdfunding
Equity-based crowdfunding is a more formalized small business financing option where investors receive a small percentage of equity ownership in the business as a trade-off for their monetary support.
This establishes a more enduring financial relationship between the investor and the enterprise, and gives the investor a vested interest in the long-term success of the business.
3. Debt-Based Crowdfunding
Also known as peer-to-peer lending or crowdlending, debt-based crowdfunding requires that businesses repay the funding money they receive from investors within a predetermined time frame.
The repayment terms are often clearly outlined in a contractual agreement, and investors may or may not receive interest on their contributions, depending on the specific terms and conditions laid out by the crowdfunding campaign.
4. Donation-Based Crowdfunding
In this altruistically-driven type of crowdfunding, investors contribute small financial amounts to a business or social cause without the expectation of any tangible return on their investment.
This model is often used for charitable organizations, social ventures, or community projects, and relies heavily on the goodwill of contributors.
Comparison of Types of Crowdfunding
It can be difficult to understand the nuances between different types of crowdfunding at a glance. The table below breaks down the four main types of crowdfunding, offering you a quick comparison of each to help you choose the one that best suits your business needs.
| Type of Crowdfunding | Investment Incentive | Payback Required | Best For |
|---|---|---|---|
| Rewards-Based | Product/Service | No | Startups, Creative Projects |
| Equity-Based | Shares in Company | No | Growing Businesses |
| Debt-Based | Financial Return | Yes | Established Businesses |
| Donation-Based | None | No | Charitable Causes, Personal Ventures |
What Is Crowdfunding Marketing?
Crowdfunding marketing is a specialized subset of marketing activities that businesses undertake before, during, and after their crowdfunding campaigns.
This proactive approach is crucial for success, as well-thought-out crowdfunding marketing strategies can amplify the reach of the campaign, capturing the attention of a broader audience of potential investors.
Effective marketing can thus translate into more substantial monetary support, enabling small businesses not only to meet but potentially exceed their crowdfunding objectives.
Why Use a Crowdfunding Marketing Strategy?
Here are key reasons why you should use a crowdfunding marketing strategy:
- When you promote your campaign, your reach a large group of people, increasing the chances of your business getting funded
- A powerful marketing campaign can help you create relationships with your audience
- Creating and running a crowdfunding marketing campaign offers you opportunities to engage with your community, which can foster trust and confidence
Also, crowdfunding marketing campaigns leverage social media, email marketing, and other marketing avenues to maximize the success of your crowdfunding.
Strategies for Successful Crowdfunding Campaigns
The following are proven strategies to make your crowdfunding project successful:
1. Build an Audience for Your Crowdfunding Marketing Campaign
The success of your crowdfunding campaign largely depends on the size of your audience who believes in your business venture. So you should start building an audience for your crowdfunding marketing campaign in the pre-launch stage.
Create a buyer persona for your ideal audience and start finding such people. Social media can be a great place to start. Being active in relevant groups on Facebook, LinkedIn, and Reddit can help you find the right people who believe in your crowdfunding project.
2. Construct a Timeline for your Crowdfunding Promotion
Promotion for your crowdfunding works best when you create a timeline for your campaign, for a timeline will keep your team members on the right track.
A typical timeline for crowdfunding marketing includes building your audience, testing your launch, launch of your marketing campaign, and post-campaign updates.
3. Design a Landing Page on the Crowdfunding Platform
A landing page plays a crucial role in crowdfunding marketing. A landing page can help you build an extensive email list in the pre-launch stage.
Make sure the landing page has the following elements:
- Strong, clear call to action
- Visual content to keep the target audience hooked
- Clear, concise, persuasive copy
- Responsive design
You should also include sharable social media links on your landing page so that your audience can easily share your campaign on social media platforms.
4. Create Content and Messaging for Your Audience
Content is king in all forms of marketing. To create engaging content that delights your audience. A good story has the power to move people. So make sure you use storytelling in your content.
Some effective content types for your crowdfunding marketing campaign include but are not limited to:
- Blog posts on your website
- Guest posts on relevant websites
- Social media videos
- Webinars and podcasts
Instead of keeping the spotlight on yourself, focus on how the crowdfunding campaign can benefit your audience.
5. Promote Your Crowdfunding Campaign Via Social Media Channels
Social media is a powerful platform to promote your crowdfunding campaign to a large audience.
Here is a step-by-step process to promote your campaign page on social media:
- Pick the right channel (Facebook, Twitter, Instagram, LinkedIn, etc.) where your audience hangs out
- Choose the appropriate hashtag for your campaign
- Plan a social media content strategy (including informative, engaging, persuasive posts)
- Track results and tweak your strategy to improve results
Roping in relevant influencers can catapult the reach of your campaign. So you should consider including influencers in your social media promotion.
6. Gamify Your Campaign to Raise Awareness
Applying gamification tools to your campaign can increase the engagement of your community, thereby increasing awareness of your crowdfunding project.
Here are some popular tools you can consider using in your campaign:
- Fundraising progress bar
- Leaderboard for the top investors
- Badges and trophies
- Prizes and incentives (tangible items or virtual passes)
7. Employ Email Marketing Strategies
Email marketing is one of the cheapest marketing strategies to promote your fundraising campaign. In the pre-launch stage, you can experiment with your email campaigns to check what works best when you collect emails from your audience.
Here are a few tips that can help you succeed in email marketing:
- Write clever body copy to appeal to the human interest
- Include social sharing links in your emails to enable the audience to share your campaign
- Leverage the power of animated video and visual content
- Use a powerful CTA in your emails
You should also take the help of email marketing tools to run a campaign. Analyze outcomes to make necessary changes for getting better results.
8. Provide Product Demos to Promote Usability
Offering product demos can encourage more people to fund your venture. This is because product demos let your community experience how good your product is. So include product demos in your crowdfunding marketing campaign.
If users allow, you can create videos of them using your product and share them on social media. Doing so can encourage more people to invest in your crowdfunding campaign.
9. Attend Events to Increase Your Audience Base
To run a successful crowdfunding campaign, you should start attending events relevant to your industries to increase your audience base. Research the web to find relevant online and offline events where your potential investors are likely to be present. And figure out ways to participate in those events.
Podcast interviews, video interviews, and online conferences are a few popular events you can explore to increase your audience base.
How Much Do Crowdfunding Agencies Charge?
The crowdfunding fee structure varies from site to site. Crowdfunding agencies usually charge 5-10 % of all funds raised. Depending on the crowdfunding platforms, you may also have to pay due diligence fees, payout fees, or other charges.
More Great Crowdfunding Marketing Tips
Here are some more great Kickstarter Tips from Crowdfunding experts:
READ MORE:
- Spotlight: Agency 2.0 Focuses on Marketing Crowdfunding Campaigns
- Butcher Shop Startup Discovers Crowdfunding Magic Via Intuit
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This article, "Everything You Need to Know About Crowdfunding Marketing" was first published on Small Business Trends