The first time I heard a company suggest that they were going to do a crowdfunding campaign not to raise money but to raise awareness, I thought it was one of the stupidest things I had heard in a long time. Since then I’ve heard it often enough to confirm that stupidity is one of the most contagious phenomena out there. And just because a lot of people think it’s a good idea doesn’t make it so.
Viewing crowdfunding as a substitute for marketing, or even as an effective marketing channel, ranks right up there with “We’ll do a viral video” in its betrayal of a complete lack of understanding of how marketing works.
Now, don’t get me wrong. Some crowdfunding campaigns have generated enormous attention for their sponsors. A Kickstarter campaign that broke all records was the Gangnam-calibre equivalent of a viral video for Waterloo entrepreneur Eric Migicovsky and his Pebble watch. (Although, as I recently tweeted, crowdfunding advocates — and people who think crowdfunding = marketing — really need to stop citing Pebble as an example. Nobody was more surprised than Migicovsky when his campaign, with its original target of just $100,000, ended up reeling in more than $10-million.) His fame has grown to the point that he is literally the poster child for wearable computers.
On the flip side of fame’s fickle coin, there are many other examples of a crowdfunding flop bringing (perhaps) unwanted attention. The biggest-ever Kickstarter effort, the Ubuntu Edge smartphone, fell spectacularly short of its audacious $32-million-goal, collecting much less than half that sum, all of which had to be returned to more than 27,000 backers. The jury is out on whether all the attendant publicity did more harm than good for Canonical, the British computer company behind the Ubuntu OS and its thoroughly publicity-savvy founder and self-funded space tourist Mark Shuttleworth.
Here’s the thing, though. Both these examples — and they are the extreme, beyond-outlier exceptions that prove the rule — delivered a publicity bonanza that would be impossible to anticipate and almost impossible to replicate.
Pebble was a genuine, viral, runaway train. Even though Migicovsky did everything right in mounting an excellent crowdfunding campaign, its success owes everything to that chaotic, unpredictable, glorious tendency of the Interwebs to occasionally seize onto something and turn it into the thing of the moment.
The Ubuntu campaign, I believe, was a deliberate publicity stunt. Which looks like I’m disagreeing with my original premise. Not at all. It was a publicity stunt driven by a high-profile entrepreneur with an audacious, attention-grabbing proposition. Most critically — and here’s where you really need to pay attention if you think crowdfunding in isolation equals effective marketing — it was accompanied by a full-court press on every other publicity generating lever available to the modern marketer.
Crowdfunding in and of itself is a dodgy proposition. According to the site’s own numbers, well more than half of all Kickstarter campaigns fail to meet their objectives. Two-thirds of those that fail don’t reach even one-fifth of their target, and fully 10 percent never receive even a single pledge. Those that do succeed usually have a compelling value proposition — something that all good marketing campaigns crave — and the crowdfunding effort is fully backed by a solid, integrated, multi-dimensional marketing campaign.
The bottom line: If you’re a tiny little unknown startup that thinks it can raise its profile through crowdfunding and nothing else, you need to understand that a successful crowdfunding campaign is the outcome of a great marketing effort, and not the principle ingredient in one.