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The Digital Marketing Podcast
A Beginners Guide To Crowdfunding
00:30:15
An interview with Heather Deleaney
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Transcript63 lines
- [00:00]
A
Welcome to the Digital Marketing Podcast, brought to you by targetinternet.com hello, and welcome back to the Digital Marketing Podcast. My name is Kieran Rogers and I'm excited, listeners, because we're joined today by Heather Delaney and she's from Dynamo Communications. Hello, Heather.
- [00:27]
B
Hello. How are you?
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A
I'm good. And, Heather, you're a podcast listener?
- [00:31]
B
I am, yes. I have been for a while.
- [00:33]
A
Excellent. And you're also a bit of a communications specialist. And Heather got in touch with us previous episode, you may have heard, we put a shout out for anybody that had anything interesting they'd like to share and Heather got in touch. And, Heather, you are a bit of a specialist in crowdfunding?
- [00:50]
B
That's correct, yes.
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A
So, before we get into crowdfunding, tell us a little bit about yourself and kind of how you got into it.
- [00:58]
B
Yeah, so I've worked in various countries, including the US and the uk, and specialized in PR and communications. And I'm working with very large listed companies down to startups. And quite a few years ago, I was approached by a client who was going to launch on Kickstarter, and having no experience whatsoever on crowdfunding, it was quite a steep learning curve. And actually, at the end of the day, it raised 2.3 million for that first campaign.
- [01:30]
A
Wow, that's really throwing yourself at the deep end. I guess you had no idea it was going to be that successful.
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B
It was a wild ride. I was receiving hundreds of emails every day. It was actually a campaign called 3Doodler, which is the world's first 3D printing pen. And after that launched multiple projects and crowdfunding campaigns for them. But, yeah, I very quickly realized that if you have never launched a crowdfunding campaign yourself, then it's almost impossible to be successful. The more campaigns that you work on, the more you learn. Every campaign is completely different, whether it's targeting a different territory. It might be hardware or software or food or film. They're obviously going to be going after different audiences, different backers, different funding.
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A
So for those uninitiated, because I think everybody sort of. I have to put my hand up. I was vaguely aware of crowdfunding. I've been excited about it in the past, but I've never really looked into it in much detail. So we should probably just cover the basics before we launch into the detail on it. What is crowdfunding? How would you sort of summarise it? For those uninitiated with it, crowdfunding allows.
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B
An individual to fund a business or a project by raising, whether it's small amounts of money from a large group of people or obviously everybody would hope for large amounts by a small group of people. But it's typically done on the Internet.
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A
And there are two different types of crowdfunding as I understand it. You've got kind of equity and non equity.
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B
Yeah. So technically there's really three main. Reward based, equity based and donation based. The two big areas are reward based which is non equity. It's commonly known as reward based crowdfunding or peer to peer lending. So that that would be more of the well known platforms such as Kickstarter and Indiegogo where equity based crowdfunding allows a huge range of investors to fund a startup and small businesses in return for equity of that company. So this means that the investors can given amount of money in return for a small piece of ownership of the business. And it's usually offered, traditionally usually offered only to accredited investors. So this is more of the crowd cube, the we funder, the circle up platforms. And lastly you'll have the donation based. So this is normally non profits and humanitarian efforts. So go fund me or zero bound, which is more for student debt.
- [04:11]
A
Okay. So I think in this interview we're going to focus more on the non equity side because that's the more well known aspect. A lot more platforms focusing on that. As I understand it, the equity side of crowdfunding is still kind of a growing emerging market. Is that right?
- [04:29]
B
Yeah, that's absolutely correct. I would say equity crowdfunding is probably about four or five years behind non equity just because of the further complication. It's obviously reward based. It's very easy. I give you money, you give me a fun product that I can hold in my hands and give to a friend where equity you're investing and it's far more legal complications that you need to educate consumers on.
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A
And so the non equity side, how are people using crowdfunding? What sort of things is crowdfunding being used for?
- [05:08]
B
Traditionally I would say crowdfunding is used to start your business or create a product. The arts are very big on crowdfunding. If you give me money and fund my art project, I will be able to produce a dance, I will be able to produce artwork. There's a lot more tech. Tech and gaming actually are really big areas for crowdfunding. So you're finding where traditionally people were funding project and an idea to get it off the ground and get it into people's hands. There's a lot more crowdfunding to raise the brand awareness, to test the markets to see if a product is viable within certain countries and territories, if consumers are willing to pay for it.
- [05:52]
A
Okay, and so let's talk about the platforms. What are the main. Because I understand there are lots and lots of different crowdfunding platforms. There's a few well known ones, but then there are lots more niche ones for more niche audiences.
- [06:07]
B
Yes. So definitely Kickstarter, Indigogo are two of the big ones. Some of the listeners might have heard of GoFundMe, we funder Crowdcube. It really depends on the country that they're based in as well. I believe the World bank actually estimated that global crowdfunding just within equity is worth about 93 billion by 2020. Wow. So quite a big area. And there was another survey, I think it was the Mass Solution report, and they actually predicted that it was worth 34 billion in 2015 alone. So quite interesting to see what it would be this year when some of the surveys come out.
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A
And so how did you get into crowdfunding funding? What do you currently do within the space?
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B
So I fell into it. I previously would help with production, manufacturing timelines for products, doing product development and PR marketing. If the product isn't ready for consumers and the press, then I wanted to make sure that it was sound and we spent the time on that. And I fell into crowdfunding based off of the previous client that had shown up and said they wanted to do a Kickstarter. And actually after launching that campaign, it snowballed. I was finding a lot of other companies were asking for recommendations and suggestions and help and advice and ended up launching the world's first crowdfunding division of a PR agency. And since then I've. Oh God. I've worked on well over 100 campaigns. But it tends to be quite an interesting area if you have experience in ad spend or if you have experience in PR and marketing. Crowdfunding is a completely different beast. It's very, very transparent. So what that means is I could have an article go out for one of the world's leading mobile companies and I'm not sure if a consumer is purchasing that phone based off of the article, an advertisement, the fact that Ironman is promoting the product where crowdfunding you can see on the back end of the platform where every dollar has come in from. So the measurements and the metrics are actually quite interesting. You can see that Engadget could potentially drive $40,000 worth of funding in one month. Where you can see maybe Ars Technica would would do less than that depending.
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A
On the product so people come to you for guidance on successful crowdfunding campaigns. What do they need to have sorted out before they launch a campaign?
- [08:51]
B
Yeah, there's quite a few things. So before you launch a campaign, really, the page is essentially a giant messaging document. So a crowdfunding campaign should have a video. Ideally the video, it needs to be under three minutes. Once a campaign's over three minutes, there's a massive drop off rate. Kind of the sweet spot is about a minute and a half, two minutes, which it's difficult to bring down a video talking about your pride and joy of a project down to that amount of time, but it's definitely worth it. The page itself needs to be drafted, messaged correctly, your pledge levels. So the pledge levels allow consumers to back it at a certain price point. So maybe a dollar allows me on Kickstarter to write a comment on your board saying congratulations, where $5 I can be given an iPhone case. And $200 I can be given five iPhone cases that are made of pure gold and I get to shake your hand. So obviously what you're delivering to your backers is incredibly important. But probably the most important is the timelines. A lot of companies will draft a page and submit it and post it and think everything is good. But if you haven't taken a look at the production, manufacturing timelines, the cost of those as well, the cost of shipping a physical product can make or break a campaign. If you think you're only going to sell a product in North America and it turns out you have a lot of backers from Australia and Thailand, those shipping costs are going to be a lot higher than we predicted. So the preparation in advance is just essential.
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A
Okay, so when you, presumably when you push these things out, the crowdfunding platforms don't. Do they allow you to focus on a specific geographic area or would that limit it too much? You sort of want to keep it really broad and get investment from what you want. You want people that want it to reach out and hold their hands up, right?
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B
Yeah. So a lot of the platforms will allow you to limit the country that you can ship a product if it's a physical item, if you have an app, for instance, if you're producing some amazing software, obviously you're not limited by geographical location because you don't have to physically ship anything, you just send it across. That said, if you're launching a product, whether it's a sweater, a bag, Android, PC, it's probably worth testing the audience and seeing where your potential sales and your potential customers might Be you potentially could have predicted that North America was your biggest sale, but the reality might be Germany, which then tells you when you launch the product. When you're looking at resellers and distributors, it's probably worth you focusing on that country to begin with.
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A
Fantastic. So what top tips do you have on targeting audiences? Because that sounds like a really key aspect to any campaign.
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B
Yes. So traditionally, I would have said five years ago, pure PR did everything, ad spend would have done nothing. And that was purely because the audience didn't know what crowdfunding meant. So you would have to explain it over and over again. Definitely. The PR is great for SEO reasons. If you have articles that are linking in, it's fantastic. But ad spend can make or break a campaign as well. If you're working on ad spend and you're targeting the right audience, you should be working months in advance if a campaign as well. It's always ideal to have a good email marketing list. For instance, if you're targeting a maker community, you need to make sure that those emails are people that are actually interested in what you're producing. There's no point targeting my mother for your 3D printer if she has no interest and no understanding of the software.
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A
And in terms of countries, I mean, presumably different countries are aligned with specific platforms. Is that the case or is it kind of more of a one size fits all, free for all?
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B
There are definite platforms for specific, specific countries, but because the Internet is so vast and everybody's connected a lot closer these days, it's tough. For example, there's platforms in the uk, but those companies might also be targeting a South American audience, so they'd be more inclined to launch on one of the bigger platforms. So Kickstarter has announced that they're open in Japan, which previously the Japanese audience loved crowdfunding and they loved Kickstarter, but the platform didn't have the capability to bring them in and it had the language barrier and obviously the currency and everything. So a lot of the big platforms are actually opening up into different countries because they see the audience and because the metrics on the back end, they can see who's actually investing in their projects. So normally I would advise companies to take a look at who they want to sell to before they pick the platform. A lot of issues is a company might think that they need to go with one of the bigger platforms and they don't. If you are a maker product, Kickstarter actually has a great maker community. So that's the community that you should be targeting because it's, it's really a pre baked community for you. Whereas if you have a maker product, probably indiegogo would be less of a platform. I would recommend especially if your delivery time is really far out and it's the first campaign you've ever done, the first startup you've ever created.
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A
And so in terms of you mentioned timelines and obviously working out your delivery timelines and what have you, how far in advance should people be working on their campaigns prior to launch?
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B
In your experience, if you're looking at just the PR and marketing, six to eight weeks in advance is how much time you should prepare for that. So within that six to eight weeks you are speaking to press under embargo. So you're giving them the story, but they can't go public with it until they're allotted time. You're drafting the page, the messaging is sound, the pledge levels are sound, you've drafted your updates in advance because it will really, really. Crowdfunding is the longest 30 days of your life. And if you can prepare as much in advance as possible future, you would be very, very happy. So ahead of that, six to eight weeks, if you're doing any sort of ad spend or email marketing that needs to be done far in advance. So I know some companies that are working on advertising campaigns on Facebook and on Instagram, on Google, probably six to eight months ahead of time.
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A
Would that be actually putting ads out or just working on the campaigns and the sequences to get them all lined up and ready to go?
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B
I've seen both. Usually they'll be pushing the ads out to test where their audience might sit, to start to build up an audience, to start to build up fans and followers so that when the campaign does launch, they know what words work, they know what imagery and videos work, and hopefully that can convert to funding and backing from the moment the campaign goes live.
- [16:36]
A
Interesting. And when we caught up, obviously we caught up last week just to sort of discuss this a little bit. One of the things you were really impressing on me was how important your communication processes are and that there's a really strong relationship that you need to build with your backers. Can you just tell us a little bit more about that?
- [16:55]
B
Yeah. With crowdfunding, it's really the first time a regular consumer has access to a founder. An example that I'll normally give is Coca Cola. If I wanted to talk to the head of Coca Cola, if I'm lucky, I might be able to find an email address somewhere in the depths of the Internet. I'll never be able to find a phone number. But no matter how many times I write or I tweet or I call, it's unlikely that I'll get a response. Where crowdfunding allows the community to have direct access with that creator and they have a say in the final product. They can tell the founder if they want the product in blue or in green, if it should have an additional USB port, if it should be available in Germany, and then once it is available on store shelves, you have a group of people that are fiercely protective of the brand and the product because they're a part of it. It's not your product, it's our product, it's our company. And as a founder, it's essential to have that direct line of communication. You need to make sure that your backers and your community understand that you're there and you're listening. Really, you can actually line out the next few years worth of products based off of their feedback and you can create products for them with them.
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A
Amazing. So it really is relationship building on steroids almost. Yeah, I get that. I guess if you know people have put their input into it, you do feel a part of something. I think that's one of the thrills of crowdfunding.
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B
Absolutely.
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A
I know a few of my friends own a few products that they invested in on crowdfunding. Crowdfunding products. They're fiercely. You think they develop them themselves? Actually they're fiercely protective of them.
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B
Even the social side of it, if you have a crowdfunding campaign, you tend to find that your social followers and fans are more engaged than traditional brands. And again, it comes down to them feeling like they are part of the process. They helped make this happen.
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A
So I guess you have to be really careful at sort of managing expectations. Like, you know, if you make certain promises, you've got to almost over deliver on those things, right?
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B
Absolutely. I think that's. You have to, you have to draw a really careful line. It's best to under promise and over deliver, especially when it comes down to the production and manufacturing side of things. The average backer might not actually understand the shipping times, the shipping costs. Third party chipset manufacturer that might be delayed actually delays everything. The cost and the time it takes to ship everything into the port of la, for instance, and then it's stuck at the port for a while before it could be shipped to consumers. So you have to have a line of communication, give them timelines that are realistic, make sure that those timelines give yourself a bit of a butter, period. But over the Course, stay in communication. Let them know how things are going, let them know whether it's on time, whether it's not on time. As long as you're open and honest, the community will respect you for it.
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A
So what can people do to maximize the success of their crowdfunding activities? Have you got any kind of hot tips for us?
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B
I would say the video itself is probably one of the most important parts. So if you could keep that under three minutes, then you're golden. I would say, depending on the audience that you're targeting, ad spend and email marketing is essential. I would not recommend just purchasing a random list of emails. As tempting as that might be. Please don't do it. You have no idea who's on that list. If they're actually viable contacts, if they're interested in what you're producing, if they exist, if they're real. But the email marketing and the social are really, really important. And the social media, if you can start to do some good targeted ad spend in advance, find out where your potential customers might be sitting, then once you launch, you can push it out to them and hopefully have a good return on investment and people actually converting over to backit in the first few minutes or hours of the campaign launching.
- [21:12]
A
And you're a big fan of testing with small budgets in lots of different places to find out what works?
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B
Absolutely. I always get very afraid if a company approaches me and say that they have $250,000 to spend on Facebook and we have a month. So that is a very expensive way to test for an audience. I am a big fan of starting small, pushing the net out, see what works, and then retargeting and fighting your audience that way, it's really the smartest way to do it.
- [21:43]
A
I completely agree with that. And certainly in my experience, particularly with advertising platforms starting small, backing lots of horses, and see which one wins, wins through every time, My guidance would be, okay, it's a budget, but treat it like it was actually money coming out of your wallet. Be equally careful with it and you won't go far wrong. Really?
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B
Yeah, exactly. Exactly. And if you see that there's competitors in the space that have ads on Instagram or on Facebook and actually they're doing really well, then obviously that's where your audience is as well. So it's worth testing it.
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A
Fantastic. And you can poll your audience towards the end of the campaigns. I know it's something you spoke to me about. Tell us a little bit more about that and how people should make use of that.
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B
So during the Campaigns, you can actually post updates and talk about stretch goals and how the campaign's doing and thank your community for their support. At the same time, throughout those updates, you can actually ask really, really good questions about the product and what you're making. So you can ask what colors they'd like to see available, what sizes, anything like that about the product that you could potentially line up for the next iteration or when it's available on store shelves. When the campaign's closed, you can actually do a survey for your audience as well. You can find out where they're based, what their sex is. You can ask them their age. There's a lot of market research you can actually get out of this. And again, it not only helps you as a company for later down the road, but also if you're looking for VC investment, if you're looking at resellers and distributors, you can take a look at maybe their customers and see what actually is a good fit for you.
- [23:24]
A
We've had to build up for our campaign. You know, we've got organized, we've had six to eight weeks of planning and preparation, and we launch it. We have 30 days of craziness, the money rolls in, there's bucket loads arriving every morning, and then the campaign comes to a close. What do you need to have in place after the campaign? Because I found this part of our conversation really, really interesting. I think, you know, you can get too caught up in the wave of success. But how do you capture the raw energy of that wave and keep it channeling through long after that campaign's come to close?
- [23:58]
B
Oh, that is my favorite question. Before your campaign closes, you need to start to naturally move your community over to your website, your social platforms. What happens is, if you have a Kickstarter, for instance, once your Kickstarter closes, all the SEO value sits there. Your community are used to getting updates on Kickstarter. Ideally, you don't have to. Well, you don't want to be updating the community on Kickstarter five years down the road when you're available on store shelves and you're posting on the blog and you're posting it on social media. So the week before your campaign ends, you want to start naturally moving people over to the platforms that you feel you'll be communicating with them. So whether that's Facebook, most people tend to choose Facebook. If you have the scope for blogs, if you can actually, if you know within your company, you can start posting on the blog, on your website. If you feel like you're comfortable updating People there, that's fine, but that really needs to start before the campaign ends. Another point that a lot of companies fail to think about is where are you going to be sold once your campaign's closed? Where can people buy it? Where can they invest in you? Where can they give you money if your Kickstarter closes, they can't give you money on Kickstarter anymore. So you need to make sure that your website has some sort of a capability of generating more customers of selling or pre orders being set up there. You'll find some companies might transfer over to in demand on indiegogo as a bit of a buffer period until they can set up their website. But absolutely before your campaign finishes, you need to make sure that the page is up and running so that you can start generating links over to that. Obviously, if you're pushing links and articles to that page, it's going to be a popular one in terms of the eyes of Google, that's fantastic. We love SEOs.
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A
Okay. And obviously being a veteran with over 100 campaigns under your belt, just interested to know the relationship between ad spend and extensive pr. Do you need huge budgets and extensive PR to be successful in crowdfunding, or is there still room within the space for anybody to have a go at this?
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B
I think there's definitely room for anybody. One thing to remember is that in crowdfunding, a lot of projects, I think actually the majority of them are only looking for about $10,000 and then they're completely successful. So they tend to be small, small campaigns. Obviously the big ones that raise 3 million and 5 million and 8 million are the ones that make the news. And they traditionally are in the tech space, some of them in the film space. Obviously, if you have a combined effort of ad spend and pr, you'll find that you'll actually raise more funds. One is great, the other is fantastic. But combined it just creates this Captain Planet scenario.
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A
But you don't have to spend a lot to be successful.
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B
No, absolutely not. PR is very similar to adspend. It's testing what platforms, what publications are actually driving the funding for your project. And also you can test which countries might potentially be of interest. So you can have an article in Australia, you can have an article in Russia. And if you're finding a lot of traffic is moving over there and a lot of backing moving there, then obviously you should look at those countries as viable resources of where your customers are coming from. And social media can do the exact same thing. You can target different countries and see what actually works. And then loop that into the PR and vice versa.
- [27:32]
A
Where do you think crowdfunding will go next?
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B
I think corporate crowdfunding is definitely growing. There's very large companies that are using crowdfunding less to get a product off the ground, but more to test a market to see if customers are willing to spend money. They can test the different price points it might be sold on. So I think we'll see a lot more of those big companies coming in. At the same time, I think the market's a bit fractured. A few years ago there were over 800 platforms, then there were over 1,000, and they tend to fluctuate. But there's definitely a lot more specialized platforms. There's some for pure startups, some for breast enhancements. There are some for student loans. So I think you'll still see more of those popping up. But definitely self funding is a big area.
- [28:31]
A
Did you say breast enhancements? Well, if you can fund breast enhancements through crowdfunding, I guess the door's wide open for all sorts of creative uses. Really, there is something else, something for everyone. Well, Heather, it's been really interesting talking to you and thanks so much for getting in touch. I really hope everyone listening has learned more about crowdfunding and that some may have been inspired to give crowdfunding campaign a try or indeed improve on what they've previously tried. I've certainly learned a great deal. If you want to find out more about your work and that of Dynamo Communications, what's the best way to get in touch?
- [29:09]
B
You can actually get in touch with me on Twitter, and that's evertinglife. Or you can go straight to the website, which is DynamoPR.com well, Heather, here's.
- [29:19]
A
To the next 100 successful crowdfunding campaigns and we wish you the best of luck with them all and please keep in touch.
- [29:27]
B
Thank you very much.
- [29:35]
A
Thanks for listening to another episode of the Digital Marketing Podcast brought to you by Target Internet. If you'd like to get more information on the show, get hold of back issues of this podcast, or get details on any of the links we mentioned, please visit our website at www.targetinternet.com. if you've enjoyed the show, we would love to read your feedback. Please rate us in itunes or even better, write us a review. Or if you have any questions, please get in touch. We'd love to help.