crowdfunding as a marketing tool

Trying to summarize the myriad projects of crowdfunding launched on the various  CF platforms, we will find they can all be classified under two categories:

1. Projects that invites you to be part in improving the world . Here’s a cool example.
2. Projects that invites you to purchase in advance a  very cool, not yet existing product (usually technological gadget). As such.

Those two categories are very different in almost every aspect: each of them is drawing its attraction from a different place, and aiming for a very different part of our mind. But, in fact, they are both looking at the same chunk of our wallet, and says:

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Both are competing for financial reserves of the supporters. Unexpected investment we should spend on products that were not in our shopping cart yet. Therefore, although it’s coolness coefficient and the interest the network discover in the field, it encountered a glass ceiling. Clear to everyone that the potential of the method is huge, but the real business will only happen when crowdfunding will be able to deal with trivial retail products. When a person can purchase through CF within its existing cart, and businesses will find a way to use it for promoting their sales, then it will start to really interest the crowd.
This breakthrough is happening right now, as CF reveals his new phase: crowdfunding as a marketing tool.
To illustrate the idea, let’s look at a semi-fictional user scenario:
Andy is a successful chef at his prime, that began four years ago when he was a finalist in some cooking Realty show. Since then he opened a small but exclusive network of three gourmet restaurants. All three works nice with a small but stable growth. However, last year Andy recognized the first signs of stagnation. Seems the talking about cuts, layoffs and recession hit his regular crowd, due mainly to the high part of the middle class. Andy decides to act, and re-position his restaurants in a way that will stand the palates and pockets of diners from a bit lower and wider status. He enlists a budget of 70k, and turns in an advertising agency, asking for a campaign that will prepare him for that matter. The agency says the amount is too small, and advise him to invest it in a  small local posters campaign. Andy is pretty depressed.

Then, he encounters a friend, telling him about the idea of crowdfunding. He likes it, and they sit and make the fallowing campaign:

The project: the world’s largest Passover Seder with 1000 diners! Revenues will be contributed for food security organization.
Recruitment target: 83k. This is the amount that covers just the products and tools, no extra dime for the work, which is a contribution of Andy and his staff.
Awards: Support Andy’s project, and get one or more of the dishes in his restaurants. In fact, the project page in Indiegogo is a breakdown of the menu, with it’s surprising prices.
Now, Andy takes his 70 thousand dollars he intended to invest in advertising, and create a beautiful campaign for the world’s largest Seder: He makes a moving trailer with beauty shots of cooking, amazing stills of food, nice PR, significant Facebook appearance, SEO, YouTube Content , banners and other tools.
Please note – all of the advertising campaign is based on the presentation of the award the supporters will receive, which are, as you may remember, actually dishes from Andy’s new menu – his message.
After two months of work, he achieves the following goals:
Easily cross the target amount, he has 98k, with which he can easily produce the world’s largest Seder, and even hire a Production Manager.
But what is much more important, is the 2500 people who supported the project, already pre-purchased the new menu dishes. Furthermore, Andy can learns that some dishes are more attractive, while other are less.
And much, much more important, is that 2.5 million people were exposed to at least some of the new menu!
Please note – the last two sections happen in any case, even if the campaign did not reach its destination.
If, however, Andy achieved the target after two months there is indeed the world’s largest Seder, with 1000 diners, and 100 media crews …

This is how crowdfunding works as a marketing tool.
Some would say it is unfair to use the CF naive world for marketing and advertising. These are probably the same kind of people who said that it is unfair to use Facebook, with its friends and likes, in order to communicate brands. By the way, readers of this blog probably know that I myself also belong to the same miserly segment. But if you can accept that Facebook is not really a place for friendly meetings and an authentic emotions, but very elaborate marketing tool, you may as well accept the role of crowdfunding the mass media.

Time will tell…

But don’t count on it. Time can be very confusing, sometimes.

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