Everything You Need to Know About Crowdfunding Marketing

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:

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.

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.

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.

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 CrowdfundingInvestment IncentivePayback RequiredBest For

Rewards-BasedProduct/ServiceNoStartups, Creative Projects

Equity-BasedShares in CompanyNoGrowing Businesses

Debt-BasedFinancial ReturnYesEstablished Businesses

Donation-BasedNoneNoCharitable 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 essential for achieving success, as well-planned crowdfunding marketing strategies can extend the campaign’s reach and attract a wider 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.

Integrating Crowdfunding into Your Overall Marketing Strategy

Crowdfunding marketing should be integrated into your overall marketing strategy. This integration ensures a consistent brand message across all platforms and maximizes the impact of your campaign. Consider how your crowdfunding goals align with your long-term brand objectives and message.

Why Use a Crowdfunding Marketing Strategy?

Here are key reasons why you should use a crowdfunding marketing strategy:

Promoting your campaign allows you to reach a wider audience, which enhances the likelihood of securing funding for your business.
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
Building a Community Around Your Brand: Engaging with your community through crowdfunding creates a sense of ownership and loyalty among backers. Utilize crowdfunding as an opportunity to gather feedback and ideas, fostering a collaborative environment between your brand and its supporters.

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:

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 target audience and begin identifying individuals who fit this profile. Social media serves as an excellent starting point. Engaging in relevant groups on platforms like Facebook, LinkedIn, and Reddit can assist you in connecting with the right people who support your crowdfunding marketing project.

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, launching your marketing campaign, and post-campaign updates.

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 shareable social media links on your landing page so that your audience can easily share your campaign on social media platforms.

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.

Here are some effective content types you can use for your crowdfunding marketing campaign, including but 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.

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, and persuasive posts)
Track results and tweak your strategy to improve results

Engaging relevant influencers can significantly expand the reach of your campaign. Therefore, it is advisable to incorporate influencers into your social media promotion strategy.

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)

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 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.

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.

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.

Crowdfunding agencies do bring significant value to your project, though:

Crowdfunding agencies provide valuable expertise in marketing and campaign management, which is essential for those launching their first campaign.
They help craft compelling narratives, design rewards, and manage the campaign logistics.
The fees, while a consideration, should be weighed against the potential increase in campaign success rates and funds raised.

Leveraging Digital Marketing for Crowdfunding Success

Maximizing Online Presence

Utilize SEO strategies to increase the visibility of your campaign.
Engage with potential backers through consistent and compelling content across your digital platforms.

Using Analytics to Refine Your Approach

Track the performance of your marketing efforts using analytics tools.
Use insights from data to refine your marketing strategy, targeting the most responsive demographics.

More Great Crowdfunding Marketing Tips

Here are some more great Kickstarter Tips from Crowdfunding experts:

Image: Envato Elements

This article, “Everything You Need to Know About Crowdfunding Marketing” was first published on Small Business Trends