A marketing budget isn’t an optional component when raising equity through crowdfunding - it’s possibly the most critical element in your campaign, and the great decider between success and failure.
Equity crowdfunding relies on one thing, and it’s in the name: reaching the crowd. The complex modern task of exposing as many people as possible to your offer requires time, money and expertise. The vast majority of viral content doesn’t get viral out of chance or sheer luck; it was put there deliberately and strategically by someone who knows how. The same applies to the most successful crowdfunding campaigns.
What do I need to budget for in my equity crowdfunding marketing plan?
You’ll be factoring several marketing channels into your holistic plan. These will primarily include:
- Social media marketing
- Web, email and blog marketing
- Paid ads
- Direct outreach
Naturally, direct outreach will be leveraged via your existing network, and email campaigns can be executed for a low cost, so the majority of your marketing expenses will centre around the digital stuff.
But it’s not just knowing and using the various channels - it’s understanding:
- Who your audience is and how they use these channels
- How these channels work holistically together for maximum impact
- How they can be tracked to duplicate success or prompt a change in tack. If something works, do it again! If it’s not working, why? What else can you do?
- When to deploy them. Did you know most successful campaigns raise 30% of their total funding in the first week? Awareness of timescales and investor activity defines effective marketing.
Few founders can be expected to hold expertise in these nuances. This is why most companies conducting a CSF raise will allocate budget to a dedicated agency. In the new era of advertising, where you’re far more likely to see a Facebook ad than a physical billboard, things can get technical fast. Those without a technical edge, risk being outpaced.
Why should I spend money on my marketing campaign?
The great thing about professional digital marketing is that it’s developed into such a science, you can literally see it working. Even better, you can observe the exact correlative effect a higher spend has on higher exposure. This is not some mystical chicanery that may or may not work. A skilled consultant with a strong budget should be able to deliver consistent returns with direct proportion to the ad spend.
Think of your marketing strategy like the foundations of a house. Your campaign doesn’t just need it to survive, it needs it to get off the ground in the first place. You simply can’t get anywhere without it. So (continuing the house analogy here...) would you build a house without first investing in a quality foundation?
Equity crowdfunding is a numbers game, and there isn’t a single founder out there who is popular enough to raise enough capital through word of mouth and a healthy LinkedIn base alone. The good news is, exposure can be bought.
How much should I spend on my equity crowdfunding marketing campaign?
When dealing with trackable numbers, the answer is pretty formulaic. It can be established on the basis of a percentage. Say you want to raise $1,000,000. $100,000 spend is not an unreasonable amount to generate sufficient traffic and guarantee adequate marketing impact.
Even a 20% spend is appropriate (and commonplace) for certain types of marketing activity, e.g. multi million-dollar crowdfunding campaigns, new brands looking to make a splash and develop brand recognition, and established companies that may be struggling, losing to a rival, or undergoing a brand overhaul.
For the average equity crowdfunding campaign, however, we’ve found 5% of your total raise is a sweet spot for marketing spend. So, if you’re looking to raise $500,000, we’d recommend allocating $25,000 to marketing.
We base this number on experience. We can actually calculate approximate uptake based on ad platform metrics (like we said before - it’s not mystical). By using average cost information for the financial services industry in Australia, we can calculate the number of impressions, clicks and conversions you’ll need to achieve your raise target, and then adjust and implement for your campaign. It's important to note that there are a number of external factors that can also impact and influence the success of your campaign, such as your brand presence and following, and your product or service - it could be quite niche or very broad.
And it's not all about investor acquisition – with the PR buzz that is generated, businesses will often see an uptick in customer numbers as well as interested investors.
Is it worth having an agency manage my crowdfunding marketing campaign?
The failure rate for crowdfunding campaigns is somewhere around 70%. Although there can be a variety of reasons a campaign fails, we’d be willing to bet that the percentage would be much lower if every campaign allocated an appropriate marketing spend, managed by a seasoned professional.
Tying together the unique threads of digital and social media marketing requires an agile understanding, real-time market experience, and a data-driven approach. Do not spend your precious marketing funds on paid courses that will “teach” you how to become a marketing guru. Don’t waste weeks on YouTube trying to learn 360 marketing for free (a rabbit hole that’s all too easy to fall down for the ambitious and independently-minded). Don’t drop cash on randomly placed ads without a holistic strategy, or cheap PR firms that will issue stock-standard press releases and little else.
All efforts should funnel into one thing: cohesive visibility. Getting your campaign live and kicking on our platform is the first step we take to achieving that. But this alone isn’t enough to give you the jump on your competition.
Talk to us to find out how we can help.