Fringe Benefits of Crowdfunding

The influence of the crowd transcends their cash contributions.

As more companies, artists, and developers consider crowdfunding their next venture, it’s not always the allure of easy cash drawing them in. Crowdfunding offers a variety of advantages over and differences from traditional financing methods. For many content producers, it’s a dream come true: capital to create outside media bureaucracies and hegemony. But even when crowdfunding isn’t the easiest or quickest way, it might be the best.

Your supporters are your greatest asset

The process of raising crowdfunds parallels the PR campaigns you’ll run later. When you embrace crowdfunding, your project begins its life with a small army of supporters who each have a vested interest in its future. Even if they aren’t able to receive a share of profits, supporters contributed because they wanted to see your project fulfilled. If you already have a publicist, great. If not that’s fine too. Most small projects can’t afford sophisticated PR or advertising to compete with blockbusters, commercial software, or major fashion houses. Properly leveraging the extended network of your supporters makes that a smaller problem. You’ve taken the initiative to solicit donations and investments from strangers via the web. Now take it a step further. No one ever accused a crowdfunding entrepreneur of being afraid of a little DIY. The same tools that help you get funding can help you convert your one-time supporters into lifelong customers, consumers, followers, and friends.

Marketing and PR firms spend more time and money each year trying to reach target demographics and potential supporters for their clients. Organic supporters are the hardest to find and most valued. A customer who buys your product because it’s cheaper, closer, or backed by more advertising can easily be lost later. Someone who bought in before the project started because they love the idea will stick around longer. Moreover, people travel in packs, and their relationships crystalize digitally in the form of social networks. It’s always getting easier to share a new song, product, or clip from a new movie online. What’s more–if you employ digital distribution, purchasing your game, single, or novel is just a click away.

Most social platforms offer built in support for users to share their favorite books, movies, and media. Reach out to your users through your Facebook and Twitter pages and take advantage of their news feeds. Most crowdfunding platforms encourage regular status updates on their sites, many of which push to email. Facebook friends and Twitter followers are great, but sometimes you need to cross the digital divide. Try creating a street team to promote your event or product in different locales.Supporters will want to know if you’re screening at a theater, book-signing, or playing at a venue near them. Offer extra incentives like a supporters only dinner, free t-shirt, or poster if they RSVP to your event.

Beyond digital

Perhaps the most significant and least discussed advantage of having several hundred fans is their buying power. It’s easier to book a venue, distribute a film, publish a book, or sell software when customers have already lined up. Their presence demonstrates broader interest to partners and affiliates, and can help you fill seats when you need bodies at a show. Most importantly, depending on the model and platform you’ve selected, they may not have bought your product yet. In many cases supporters are entitles to a gratis copy of the album, book, or film, however some platforms do not offer all users, especially those in lower contribution tiers, copies of the work. Even if all contributors are guaranteed a copy, be sure to promote the option to pre-order for their friends and family, possibly with an investor discount. At the very least, working in high volume on your first production run lowers unit costs and increases margins for the future.

If you’re crowdfunding, you probably already have a handle on digital media. Traditional print and television outlets shouldn’t be neglected either. Your online supporters help here too, albeit passively. Large follower lists make life easier for reporters looking for a quick story. Your hometown local paper or tv station might run a story on the sudden and unexpected success of that crazy idea you’ve had since high school no one believed in. If you’re touring or screening in a new town, you can drum up interest with a human interest. Readers of traditional media are more likely to be impressed by “10,000 views on YouTube” type claims than digital elites.

Whether digital or physical, almost all forms of media sales are tracked extensively. Try to structure your releases and coordinate supporter purchases to take full advantage of top-10, 40, and 100 lists. If your application is released free to users, make sure they all download on launch day. A few days on iTunes, Amazon, or Billboard top-selling lists can generate geometrically more sales and help with rankings for years to come.

Contributors’ journey  shouldn’t end after clicking ‘donate’

Engaging contributors throughout the creative process and after completion must remain a primary focus. These people are more than just essential to your future success. You owe them. You had a dream, they made it happen. Now it’s time to pay up.

Supporters might also help you land your next job. Demonstrate an impressive online following and the label, studio, or VC that turned you down last time might just take a second look. But if crowdfunding worked once, why not give it another go. You’ve already generated a list of not only your first project’s supporters, but everyone who discovered it after funding was complete. People who came to you shows, read your book, downloaded your game, or came to your shop will all want in on the fun. Certainly not every customer will contribute, but converting them should be your next goal.

When the crowd isn’t enough

Traditional investors have hidden advantages as well. Many a startup has accepted investments from high-profile firms when they could have gotten by without it. Being labeled a Y-Combinator, or Sequoia startup means a lot to some people. If you know early on that you’ll need another round of financing or a distribution deal, maybe a traditional model is a better fit. Even if it’s just a check to you, future investors may be swayed by your past supporters, which isn’t to say $8,000 or $10,000 raised online isn’t impressive, just consider your audience. Being in the cool kids’ club looks different to different people.

Not everyone will have the same view of crowdfunding. As it enters the public consciousness undoubtably some will be of the opinion that crowdfunding enables projects that were denied financing for a reason, that big media and big banking knows better. Public perception might take a while to come around, but while some might not regard YouTube as cinéma vérité, that hasn’t hurt its traffic. Projects financed by people who need to see them succeed will always be closer to those people’s hearts. Crowdfunding offers creatives a way to connect with people who care as much about their work as they do. Those connections run deeper than dollars and cents, and will only grow stronger if encouraged.