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The Counterintuitive Nature of Crowdfunding Promotion

Updated on October 7, 2016

Dispelling the Myth of Inflated Promotion Budgets

As my three year anniversary with Crowdfund Buzz approaches I've talked with thousands of crowdfunders, entrepreneurs, artists, authors and lots of other people all over the world and heard it all.

In many cases, crowdfunding is their first foray into the world of business and lots of myths and misconceptions cloud the entrepreneur's clear vision preventing them from finding a workable way forward to bring their vision to market.

One of the most alarming things I hear is the myth of advertising budgets. Too many people have the mistaken notion that spending more money on advertising equates to more sales automatically. This is dangerous thinking that leads many start ups to burning through several thousands of dollars of precious capital on various forms of online advertising and public relations only to find out the sales didn't come after the money is gone.

All too often, money is wasted on high-priced digital marketing agencies and related Facebook Ads, Google Adwords campaigns and all kinds of other online marketing that fail to move the needle on hitting a crowdfunding goal but does move cash from the crowdfunder to the advertiser. Lots of it.

In the immortal words of Shark Tank's Mister Wonderful: "Stop the madness!"

I've cultivated the opinion that most crowdfunders bring a lot of passion to their crowdfunding projects but not nearly enough entrepreneurial acumen. While passion and drive and desire to succeed are critical elements to success in any business venture, entrepreneurs can't turn a blind eye to the bottom line and all of the cold, hard facts used to calculate it.

Crowdfunders need to approach any given crowdfunding campaign with the mindset of a master capitalist much more than a passionate entrepreneur or inventor. Would a sensible investor drop tens of thousands of dollars promoting an untested product? No way.

In fact, crowdfunding needs to be considered a product testing tool just as much as a funding mechanism. Response to your crowdfunding campaign gives you very valuable market research as public reaction to your offering. Are you attracting a lot of attentions and early backers? Are people passing your project by? Gauging public reaction is often the determining factor in your decision to move forward with your idea or ditch it.Putting a lot of money at risk promoting such an untested product or service is exactly the kind of behavior an enlightened entrepreneur avoids.

Be that guy. Be the sensible investor. As an entrepreneur seeking to bring a product or service to market, you're an investor of not only your time and your effort but also your money. Sensible investors know that "prior performance is not necessarily indicative of future results." This is triply true in crowdfunding where campaigns that crack the $1 million funding ceiling are actually quite rare while the vast majority of crowdfunding campaigns (65% of them!) fail altogether.

While it's entirely possible you're sitting on the next multi-million dollar idea, you don't need to sacrifice suitcases of cash to promote your crowdfunding project to find out.

Quite the contrary - most crowdfunders who dropped bundles of cash on expensive crowdfunding promotion and high-priced crowdfunding consultants found out the hard way it made no economic sense -- even when crowdfunding success was achieved! Read all about it in this Wall Street Journal article: Many Crowdfunding Consultants Come Up Short

The World's First TV Commercial for Crowdfunding

Watch this commercial that's been airing on the local Fox TV Station in Las Vegas on a regular basis. Then go visit the crowdfunding campaign advertised. You will be absolutely stunned to see how all of this expensive TV advertising had virtually zero impact. You read that right; there was barely any public reaction to all of this pricey promotion.

This is irrefutable evidence that spending a lot of money on advertising is no guarantee you're going to hit your crowdfunding goal, make more sales, etc. The only guarantee you can be sure of is that you will be burning through a lot of your money - and fast.


What your advertising budget should be.
What your advertising budget should be.

Getting More Reach for Less Money

Here's the contrarian view I promised in the title: Spending less money on crowdfunding promotion works best. That's because you can reach lots of people and reach them quickly through proven public relations. Organic social media engagement trumps paid advertising every time and a single press release can reach tens of thousands of people faster and for far less money when compared to buying impressions or paying for clicks when advertising a crowdfunding campaign.

Added bonus? If just one TV producer or reporter notices your crowdfunding press release your crowdfunding campaign can go viral and be in front of millions of people in a matter of hours. Simply put; You can promote a crowdfunding campaign and reach huge audiences without maxing out your credit card or putting a big dent in your bank account.

Here's an added bonus: Once you've achieved "proof of concept" through measurement of initial public reaction you're a smarter investor in the position of making an informed decision - with many more facts at your disposal - who can then decide to risk money on paid advertising.

Some of the most successful crowdfunding campaigns only decide to spend money on crowdfunding marketing AFTER they were able to gauge initial public reaction through measuring press release media pick up and initial social media engagement.

So before you decide to sign that marketing agency contract accompanied by an upfront payment of $5,000 or $10,000 or even $15,000 PLUS a percentage of your funds raised, think twice. Think about all of the money you might be wasting. The smart investor should be thinking about all of the money that can be saved through far more effective and more affordable crowdfunding promotion options.


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