Crowdsourcing – A Powerful Marketing Tool for Startups

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Guest post by Mark Evans | April 8, 2015

mark evans incubesAt a startup demo event a couple of years ago, I sat beside an entrepreneur who had recently tapped Indiegogo to raise nearly $300,000.

I thought the decision to use of crowdsourcing to raise money was somewhat surprising given the startup could have easily raised venture capital. So I asked the entrepreneur why she used crowdsourcing.

She gave me a one-word answer: “marketing”.

In thinking about, it made a lot of sense to leverage a crowdsourcing as a marketing campaign.

Given the startup was developing hardware, it could provide units to people who supported the crowdsourcing campaign. In return for their money, they received something tangible, cool and innovative.

The campaign not only got the hardware into the hands of early believers, but, as important, the startup did not have to give away equity to raise capital. In other words, the crowdsourcing campaign was a win-win proposition for everyone involved.

This example illustrates the power of crowdsourcing as a marketing tool, particularly for companies that have successful campaigns. They can show the world they are creating something so interesting that people are happily willing to support it.

This creates a brand aura around a startup, which is important given many startups have low profiles, no track records and little credibility. As well, these startups likely have small or non-existent marketing budgets, so crowdsourcing can be a cost-efficient way to attract the spotlight.

A good example is Waterloo-based Polar, which raised $817,164 from more than 14,000 supporters for a modular pen made out of magnets. The success of Polar’s Kickstarter campaign was newsworthy. It was a compelling story about an entrepreneur who was able to finance a project for a product that was interesting and unique.

If Polar had decided to seek media coverage rather than do a crowdsourcing campaign, I would suggest it would have been lucky to attract media coverage. There is just so much competition that a pen made from magnets may have not been sexy enough. But when you are able to raise a lot of money for a pen, it becomes newsworthy.

For now, crowdsourcing is a relatively new phenomenon so there are still good opportunities for startups to leverage it as a marketing vehicle. If a startup can strike a chord with people, it can capitalize on this success to raise its profile and drive more sales.

For startups thinking about using crowdsourcing for marketing purposes, there are a few things it needs to consider:

  1. First, the product has to be interesting enough to rise above the crowd (no pun, intended!) At the end of the day, they are competing with many other startups looking for attention. As a result, the product has to be innovative, different or interesting. And potential backers need to believe the product has enough value to justify an investment.
  2. Second, I would suggest that a good video can play an important role as part of a marketing campaign via crowdsourcing. You have to remember many startups using Kickstarter or Indiegogo, for example, are probably unknown or little known entities. A video goes a long way in showcasing their product so it generates interest, excitement and, hopefully, capital.
  3. Third, it is important for a startup to promote its crowdsourcing efforts as part of an overall marketing campaign. Toronto-based DreamQii, which raised $2.1-million on Indiegogo, raised its profile by going on a press tour in the U.S.

While not every startup can afford a press tour, they need to do whatever it takes to drive awareness of their product and crowdsourcing efforts.

Like any marketing activity, it is important to invest the time, effort and sometimes the money to succeed. Crowdsourcing is an attractive opportunity because it can raise a startup’s profile, attract evangelists and influencers, and put money in the bank for growth.

In other words, it is a marketing opportunity that every startup should seriously explore.

 

mark evansstorytelling for startups

Mark Evans is a marketing and brand storytelling consultant who helps startups and fast-growing companies tell better stories. To learn more about startup marketing and the power of storytelling, check out his new book, Storytelling for Startups.

 

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