Crowdfunding is by definition, “the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.” Kickstarter, Indiegogo, RocketHub, Hatchfund and Onevest are among the major crowdfunding platforms where companies can ask for donations and consumers can safely donate money. There, project creators can create a profile with an introduction to their project, a list of rewards per donation, images and even a brief video. Each campaign is set for a monetary goal and a fixed number of days. Once the project is launched, each day will be counted down and the money raised will be tallied up for visitors to follow on its success. Below we share some insight and advice on using crowdfunding to support your arts business.
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One of the biggest misconceptions about creating a successful crowdfunding campaign is that it’s as simple as hitting submit, and will instantly go viral. While this has happened to some brands, the majority of projects will require a considerable amount of effort on the part of the project creator. Utilizing social media, creating email distribution lists before the project launches, and contacting local media are all necessary steps to take if you are serious about your goal.
A common failure of Kickstarter campaigns is that project creators often don’t realize the intense amount of work required throughout the campaign to make it successful. You will be talking, emailing, pitching, tweeting and posting daily to meet your goal. If managing your Kickstarter campaign doesn’t become your full-time focus throughout the campaign, then odds of success decrease dramatically. You can significantly increase the likelihood of success if you build an audience before you even post on Kickstarter.
Here are some steps you can take when cultivating supporters directly online:
- Build an email list
- Get support from friends and family
- Let your supporters know what you are working on
- Get funding commitments from those who show interest
Doing the above will allow you to have success early in your campaign, and will make others more likely to give. Campaigns that have early success have a stronger likelihood to get picked up as a features project, particularly on Kickstarter.
Here are some points to remember when cultivating supporters NOT directly connected to you online:
1. They connect to the greater purpose of the campaign
2. They connect to a physical aspect of the campaign, such as the rewards
3. They connect to the creative display of the campaign’s presentation
Each campaign should contain a powerful reason behind the idea, exciting and unique rewards, and an eye-catching display. Video definitely plays a huge role in this last point. In this age of the digital reign, many consumers will stop reading your campaign if they don’t connect to the video, making video the true gateway to your proposal.
Part II: Getting Started With Crowdfunding:
Funding through Kickstarter is about getting support from the crowd: Instead of traditional investors, crowdfunding campaigns are funded by the general public—and they’re paying, in part, for access! So answer questions, post videos, offer creative prizes, give shout-outs, and be invested in the success of the campaign by interacting with the people who are funding the project. It’s their excitement that brings in more supporters. It is of paramount importance to gain a following, line up press and gather your first backers before launch. Otherwise, the chance of your campaign succeeding is slim.
Cultivate your audience and key supporters beforehand. Your first audience is key for generating buzz, showing legitimacy and sharing your purpose. Make sure that before you go live, you’ve reached out to supporters to back you so you can launch with a bang.
Typically, most successful projects receive about 25-40% of their revenue from their 1st, 2nd and 3rd degree of connections. This means friends, family, work acquaintances—and their extended networks. Once a project has seen some traction, unrelated consumers begin to support campaigns they believe in. The idea is to create a compelling message that readers will be drawn towards. By focusing on a bigger purpose, and the driving force behind a brand, project creators will be able to create a unique community of like-minded individuals.
Once you have reached certain tipping points (30 percent, 80 percent), it is quite likely that your campaign will close. It’s still important to keep pushing! Remember, it’s a numbers game at the end of the day. You’ll be racing to see how many people you can contact in those 30 days.
In the draft and planning of your campaign, the following tasks are necessary in getting started:
- Keep your campaign under 30 days. While your funding round can last anywhere between one and 60 days, a longer campaign doesn’t necessarily mean people are going to give more. In fact, statistically, projects lasting 30 days or fewer enjoy the highest success rates. Shorter projects set a tone of confidence and help motivate your backers to join the party.
- Make a budget and include it on your campaign page. It doesn’t have to be super detailed, but a budget will show potential backers that you’ve done your homework. Because Kickstarter uses an all-or-nothing funding model (i.e. while you can raise more money than your target, if you fail to hit it you’ll walk away with nothing) your funding goal should be the minimum amount necessary to execute your project. (Don’t go too low, however – remember, you are responsible for delivering rewards to your backers if your campaign is successful. Consider the costs of offering each reward. Presumably, you’ll use some of the money raised on Kickstarter to make that happen. Plan ahead and budget accordingly for these costs.) In addition, Kickstarter suggests you leave a monetary cushion to pay, well, Kickstarter. The crowdfunding platform applies a 5 percent fee to the total funds raised on successful campaigns, and there are additional credit card processing fees and tax fees.
- Offer a lot of small rewards. The most popular pledge amount is $25, while the pledge average (for big and small pledges) rings in at just $70. Make sure the affordable perks don’t run out too fast, or you risk losing potential backers who can’t afford steeper offerings.
- Reach out to people you know before the launch. For most projects, support will come from the people you know, so reach out to friends, family, relatives, co-workers, acquaintances etc.– anyone you think would be interested and/or supportive in your project to drum up pre-launch buzz. Once the funding window opens, it’s important to reach the 20 percent benchmark as soon as possible; That percentage is a crucial tipping point — while 10 percent of projects never receive a single pledge, 80 percent of projects that manage to raise more than 20 percent of their goal end up being successful.
- Send out tailored messages. Don’t spam your entire contact list with the same rote message. Kickstarter recommends breaking your social network into subgroups and customizing your message for each one. Will your older, conservative relatives react to the same call to action as your college aged nieces and nephews? Probably not.
- Follow up individually. It’s the next natural step after customized group messages, especially for important potential backers right before the launch. Try highlighting very specific things about the project you think each individual might like.
- Creative and interactive rewards – get people behind the scenes, make them feel like they’re getting exclusive access. Tailor awards your audience and friends.
- Devise a social media plan prior to campaign launch and take into consideration the various platforms and how they will be utilized to reach their specific users
- Devise a newsworthy angle to get the campaign in front of press to increase coverage and expansion of campaign reach