Sites like Kickstarter and Indiegogo have become a very helpful way to land enough funding to bring a new product to market. Entrepreneurs post their items, promote them, and hope they reach their goal within a short period of time. But as crowdfunding becomes a more trusted marketing channel, brands are promoting those campaigns with more conventional marketing tactics once reserved for big established companies.

Many of the companies behind big  crowdfunding success stories are now using PR agencies, billboards, refer-a-friend promotions, and large digital advertising campaigns. One campaign even featured a celebrity endorsement for the first time ever on a product crowdfunding campaign. Vanilla Ice appears in a Pet Jellyfish Tank campaign on Kickstarter, praising all the features of the jellyfish to his fans. These projects demonstrate crowdfunding has become a fully accepted business strategy, even for more established brands with larger marketing resources.  Perhaps it won't be long before we see a crowdfunding campaign with a super bowl ad.

The Crowdfunding Advantage

In addition to the exposure a crowdfunding campaign brings, it also helps businesses bring in money for pre-orders before they commit significant time and resources to the manufacturing process. The products that do the best through these sites are those that are groundbreaking, like innovative gadgets that people want to have before anyone else.

"Venture capitalists and angel investors really like to look and see how they do in a crowdfunding campaign before they invest in these companies," says Mark Regal, Head of Accounts at Celery, a firm that helps companies deliver pre-orders for crowdfunding campaigns. "It's a good way to prove out your idea with user testing and market testing."

Marketing and Crowdfunding

However, for a crowdfunding campaign to be truly successful, entrepreneurs must put effort into marketing it. During its 2012 campaign, Pebble invested money into a billboard on Highway 101 and both Coin and Sondors Electric Bike hired firms to help with their marketing. These outside promotional efforts bring new eyes to businesses' crowdfunding efforts, allowing them to reach people who wouldn't normally be browsing Kickstarter or Indiegogo for great new gadgets to fund.

Brands are even getting creative in the way they launch crowdfunding campaigns. Some brands are using refer-a-friend promotions, where they offer customers an incentive to bring another customer to their products, to build their customer bases. Peak Design is one of many brands choosing to team up with influencers in their own target markets to draw backers to their crowdfunding campaigns.

Gaining Momentum

Regal is impressed that crowdfunding seems to be gaining widespread acceptance across all demographics. What was once limited to gadget lovers now appeals to senior citizens and young buyers. He's noticed that the resource is especially beneficial for promoting hardware, with popularity expanding each year.

"It's used as a tool for these guys to get all the hardware components figured out," Regal says. "It helps them as they're trying to figure out the next step of growing their business. It also helps for marketing purposes as it gives them exposure. That use to be very difficult to access."

Fulfillment Challenges

As easy as it has been for startups to land new customers through crowdfunding, they still face many of the same challenges they always have. As orders pour in, entrepreneurs are challenged to fill those orders in a timely manner without overspending on manufacturing and shipping. Since many of them are new to the process of fulfilling orders, they can easily find themselves forced to fill a large number of orders in a short timeframe. Regal and his team help those businesses fulfill all of those pre-orders.

"More and more people are understanding that hardware is difficult to get out," Regal says. "These companies are new to creating mass quantities of a product."

From filmmakers to product manufacturers and beyond, crowdfunding is a great way to introduce a new product to the world. Entrepreneurs can measure interest in their creations and demonstrate that interest to potential investors, helping them gain the momentum they need to keep growing. As brands increasingly discover ways to connect their marketing campaigns with crowdfunding efforts, competition for attention on crowdfunding platforms will likely only continue to heat up.

Published on: Nov 25, 2015