I have just came to realize something:

The people who made the Ubuntu edge project, Had never thought it will reach it’s legendary goal. It was just a very smart PR campaign, that will make it a sure successes, and a part of mass communication studies from now on.

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.

Crowdfunding – Just another way for duplicating money?

About 6 month ago I run my first CF campaign, and got to know that phenomenal field of crowdfunding. It was love from firs sight. The idea of exposing your dream to the world, inviting the people to join you in making it come true, has captured my heart on the spot. For the next couple of months I was preaching to anybody who was not quick enough to avoid me about the unavoidable revolution in the way humanity is about to consume itself.

Take some money, and bring me a successful CF campaign!

Take some money, and bring me a successful CF campaign!

Well, as we all know life is one boringly predicted story, so just like any other love story this one had also came to that point where reality hits you in the face. I think it started as I launched a new campaign in Indigogo last May. It was for the same purpose as the first successful campaign, but abroad. From day one I started receiving offers from all kinds of different people, who advised me to use their know-how skills in order to promote my campaign. since we really didn’t have any money, I thanked them all politely, and tried to do it all by myself. It was a disaster. When I talked to some of my Linkedin friends, trying to understand what went wrong, they were very amused when I said I didn’t spend any money on marketing the campaign.

A month later, a big scandal was heating the media: It turned out that the most successful CF campaign ever to be held in Israel, for a well known author who raised his full goal in 10 hours, was actually financed by the publishers of his book. Few weeks later I was giving a seminar at the TLV hub, and at the end of it a lovely woman came over to me and told me she is responsible in person for another very successful CF campaign. When I asked her with true admiration how on earth did they do it, she claimed, with the most natural way, that they actually got most of the money in advance, and they made the campaign mainly in order to promote the book, although they where very happy to get some more pre-sales.

This is when I began to wander. Is it possible that I got it all wrong? Is the wonder of CF actually nothing but another stage in the evolution of advertising and public relations? Is it again, the same old story of people with money that find the way to make some more money, only this time they made it more sophisticated than ever: they really make you believe you can create something new, all by yourself, with no need of any background of any kind, just a good idea and tones of passion? And I bought that. Pehhh.

LIMKEDIN2 LINKEDIN1 LINKEDIN3

I raised that question to my friends in Linkedin, to see if  it  really is the tendency, or just my attraction to conspiracy stories. Well, it certainly raised an interesting talk. some people thought it is a very dangerous tendency, that must be condemned. Others, on the other hand, claimed it is a legitimate approach to the CF field, that should be excepted and recognized, just like forge likes in facebook.

As for my own opinion, the truth is I haven’t made it, yet. Of course I loved the Cinderella version of CF much better. But if the party is actually a costume party, maybe I better get myself one (the witch?), and have some fun, shouldn’t I?

Is there a place for the big ones at the crowdfunding game?

Recently I met Lianna Wolfson, the personal assistant of David Sable, Global Chief Executive Officer of Young and Rubicon advertising agency, and an interesting lady in her own right (Thanks to Adam Avnon for this connection). Lianna asked and I answered to the best of my ability all I know about Crowdfunding. Then she asked another question, that possibly is self-evident, but I somehow not encountered that before: what is the role of the big players of the market, in the crowdfunding game? Do they have a place in the framework of crowdfunding, or is this a game for small and medium business only?

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A giant tries to join the game.

 

I admit that I did not have an answer – at least not an intelligent one. Well, it is clear that Coca-Cola can support any project that it chooses, and that such a firm can upload  by itself any project it desires, or even many projects. But will that afford it any advantage? Will people accept a giant and established player, who clearly can set up any project without the support of the public? Why should I, as a supporter, enlist in a funding project that intends, as an example, to develop a new soft drink with organic tomato taste? As we know, Coca-Cola has a turnover of billions of dollars per annum. It will be fair that it finance by itself the development of its products. When the bubbly tomato drink is ready, I will decide if it is to my taste, and if I will buy it. Actually, the whole ideology behind crowdfunding is in contrast to the nature of giant, established concerns. This ideology allows for the existence of the smaller businesses, that until now struggled to grow in the shadow of the giants. It follows, that Coca-Cola and the likes are not invited to this party!

And yet, this answer is also problematic in my opinion. The realm of crowdfunding, by not making room for these major players, is shutting out a relevant and sizeable part of the market. If we accept the exclusion of the tycoons, we enlarge the chasm between small business and its investors, and their giant counterparts. And this, to my taste, is an unwanted direction for all parties. An intelligent and perfect platform is the one that knows how to let all players join in the game: projects from 1k to 1m. From supporters at 50.- $ to those who bring 50k. Only an arena that welcomes all, will allow a holistic game, which is fair and wise.

This multitude of problems I put before my discussion groups at Linkedin. It turned out that I broke into an open door. This question worries a lot of people in the field, and there is in the meantime no satisfactory answer. Amongst the many reactions that I received, I chose to share two that seemed of most interest:

Dara Albright, the founder and director of NowStreet, finds that this dilemma is resolved by setting up the platform Circleup, which allows large institutions (such as P&G) to support large projects. As far as I see it, this is not a satisfactory solution, because it does not really let the big ones join the game, but it promotes an alternative platform, an alternative game, for the big league. Judge for yourselves.

Beverley Hamilton,  Chief Experience Officer of CABINS™, advises another direction – more interesting in my opinion : large concerns, says Beverley, apparently are unable to start or join projects that are within their normal every day assembly line. However, if they present a special project, that was intended specifically to fit into crowdfunding, which is especially built to improve the world, yet is still connected to what the concern knows to do – it is possible that here is the beginning of an interesting connection: namely a link between a large commercial product and an interesting philanthropic venture, through an innovative project. This may be sufficient cause to turn to the public. The intention is not for a campaign where Coca-Cola invites the public to donate money for hungry children, or to decide for what charity Coca-Cola will donate. This is not only a matter of money, but their commitment to a real earmarked project. For instance, if Coca-Cola itself is developing a can of mineral water, that will keep the water fresh and clean for a duration of many months even under very poor conditions of storage, for distribution all over Africa – that may be a project that the public is interested in; Coca-Cola will earn image points, the children of Africa will quench their thirst, and all will benefit from the power of crowdfunding. Here is the suggestion by Beverly.

It seems that this problem poses more question marks than exclamation marks, as so many developments in our surroundings do.  Again, we learn as we go along. It is the time of the unknowing people, who are willing to open their eyes and ears, and explore.