Crowdfunding Promotion ROI – Crowdfund Buzz



Crowdfunding Promotion ROI

Crowdfunding Promotion ROI – Has Anyone Determined the Value of Pi?

In my nine years at the helm of Crowdfund Buzz, one burning question from prospective clients overshadows all others; “How do I determine crowdfunding promotion ROI?” Just like Satan, this question takes many forms such as “What’s your success rate on crowdfunding film projects?” or “How many shoes campaigns have you succeeded at?” or “How much experience do you have with StartEngine (or WeFunder or Republic…or…)? And while these numbers games are interesting, they are pointless.

Why? Calculating a success rate or crowdfunding promotion ROI or compiling any sort of statistics isn’t possible. Anyone that gives you the kinds of percentages you’re asking for is lying to you by giving you useless, meaningless numbers.

Let’s Take a Good Hard Look at Reward Crowdfunding

Constructing a spreadsheet to track such data is impossible. Think about it.  How could any PR firm or ad agency do that?  For example – with independent films – we would need to subdivide that one category into several subcategories – drama, sci fi, action-adventure, comedy, documentary, etc.

If a drama film did very well because of the actors or the cinematography or the director that would slant the stats of that one film compared to another film project by a first-time amateur with a cast from the local high school’s drama club.

When both film projects are grouped together in a proposed drama category the statistical outcome would show a 50% success rate.  And if it did, what would that statistic tell you about Crowdfund Buzz?  That we’re only half successful in promoting drama film projects? That would not be telling the whole story because so many other factors wouldn’t and indeed couldn’t be accounted for in the stats. That’s the crux of the problem when it comes to attempting to establish crowdfunding promotion ROI; endless variables that change from campaign to campaign.

Crowdfunding Promotion ROI

Slava Rubin, the co-founder of Indiegogo described this notion perfectly a long time ago…

2013 was a banner year for crowdfunding as we saw the world grow increasingly comfortable voting with their dollars to fund what matters to them.

Nothing has changed since. Long story short; we promote and advertise crowdfunding campaigns extensively.  What happens after that is, to a greater degree, out of our hands.

Figuring Out Equity Crowdfunding Marketing ROI is Worse.

All of the unknown variables in trying to establish crowdfunding promotion ROI are even worse in equity crowdfunding.  Why? Unlike reward crowdfunding where the money at risk is generally lower and the dollars raised are directly linked to product/service sales (will these vegan sneakers squeak while I walk? Is this hot sauce so hot I’ll need physical therapy, psychological therapy and/or dental reconstructive surgery? Will this short film bore me to sleep? etc.) equity crowdfunding opens the door to risk and reward on a grand scale…. making money. Or losing it.

The sheer quantity of deciding factors is breathtaking.  Here are some of them:

  • Do the founders know what they’re doing? The management team?
  • Is the company’s product/service desirable? Is there a market for it? Is it just a copy cat?
  • Do they hold any patents and/or trademarks?
  • Is the company pre-revenue or are they already generating income?
  • What’s the valuation? Ridiculously too high or reasonable?
  • If the CEO or a founder is on a call with a would-be investor can they close the deal because they are a sales champion or will they sink it because they suck at sales and can’t close an umbrella?

Remember: This is not a complete list.

Are you seeing the problem with establishing crowdfunding promotion ROI now?

Our services and our abilities to reach potential backers and investors always works. We succeed in raising public awareness to massive numbers of people every time.

Here’s the clincher; what all of those crowds of folks decide to do with their money is out of our hands.  Contrary to the urban myth; marketing and PR professionals do not have powers of mind control.

Let’s get some crowdfunding promotion ROI insight from Caleb Naysmith, an active and vocal equity crowdfunding investor:

Not all companies deserve to be funded

Now, to get this out of the way, not all companies deserve to be funded. If a company is just a plain lousy investment, then this doesn’t apply. Some companies are just such bad investments that I wonder how they even got on these platforms, more or less why founders stuck with the companies. That being said, how much a company raises are rarely determinative of how much money they raise. I have seen tons of companies that are absolute dog water get fully funded into the millions and amazing companies that barely raise enough to cover the cost of their raise. In theory, better companies might be able to raise more money if they advertise, but that’s rarely the case.

Every crowdfunding campaign is a ballot open to a vote.  We WILL bring people to the campaign but the people themselves are the ones who decide how they will vote; whether or not they will back the crowdfunding project.  Any sort of statistical analysis is meaningless when it comes to trying to measure human emotions and why people make the decisions they do in buying a product, paying for a service or investing in a company.

Crowdfunding Promotion ROI

Let’s Look at This Just One More Way

If we were to try and track the statistical outcomes of promoting a technology product we’d have dozens of sub categories; iPhone accessories, WiFi devices, Bluetooth devices, hardware accessories, software, wearable technology, etc.  Under the software subcategory there would need to be a sub-sub category list such as financial software, games, productivity, mobile apps (with a sub-sub-sub category of Android or iPhone).

That’s on top of any attempt to address all of the wild variables.

We can’t correlate or calculate this massive amount of data. Nobody can. The largest advertising companies in the world like Google and Facebook to the New York Times or even a local newspaper can’t provide a success rate.  It’s literally impossible. The same holds true for ROI.  crowdfunding promotion ROI cannot be calculated until your campaign starts which generates the statistics that make ROI calculations possible.

Send an email to Google or Facebook or The New York Times or any other company and ask them for their success rate or ROI.  They will not be able to give you one or even any vestiges of trace data that might make an educated guess possible.

And even if this kind of data could be tracked and was tracked, the mathematical result would be meaningless as every product in each proposed category would be different.  If the success rate for a vegetable slicer is 90% compared to a hypothetical success rate of 40% for investing software can one conclude the vegetable slicer is a better product than the investment software? Could it be inferred we’re more successful in promoting kitchen appliances than in promoting software projects?

Like I said, Facebook can’t provide this data.  Or Google.  Or Yahoo! Or the local money mailer coupon guide, radio station or even the biggest TV channel in America. That’s because it simply can’t be done.  Not by us or by anyone.

We will provide you with the best possible crowdfunding advertising and public relations coverage and promotion of your campaign to help your campaign succeed.  What people decide to do is up to them.