10 Most Interesting Digital Advances: #2 Crowdfunding

The smart watch, Pebble, took the tech startup world by storm when it received over $2.6 million in only three days of being on the popular crowdfunding site, Kickstarter. This was a new record set only after Doublefine raised over $4 million in 30 days. These numbers are staggering. And while they are excellent forms of funding, innovative companies are now using crowdfunding models to change the way they market and do business entirely. With the recent legislation passed by the government to make crowdfunding more effective, companies have had multiple doors of opportunity open. And they have not been overlooked.

The world of crowdfunding has disrupted the way innovative marketers reach their target markets and expand their business model. Now, product launches are being delayed in an effort to use these popular sites to gain traction early on while also earning money – a concept that would have been unthinkable only a year ago.

· No public relations firm required –When a company places a new project on one of the many crowdfunding websites, they receive automatic exposure. With the explosion of this form of not only funding but also marketing, reporters know where to look to find the most innovative and compelling stories for their readers. They scour the crowdfunding websites daily in search of the latest and greatest ideas, such as the highly publicized Ninja Blocks, or the video game funding success Wasteland. Often times, this can lead to even more exposure in the marketplace than the traditional marketing model of investing hefty fees up front in public relations firms that promised exposure at a much slower rate. Now, startups are saving significant dollars on public relations and instead using crowdfunding sites to gain early recognition in their industry.

· Rewards that go viral –Offering shares to be a part of a company is a thing of the past. Now, companies are rewarding their customers. This terminology and interaction is the new way marketers are developing a loyal customer base early on that will help their product go viral. When a person gets a reward, such as the popular cosmonaut, a stylus pen given to over 5,600 people, they share their excitement over the product and use it in front of their friends and network of people. This usage and public sharing of excitement is a new form of viral marketing that has proven to be extremely effective.

· Recognizing consumer interests –When you log on to a crowdfunding website, you can break down projects into the most funded, and the staff picks. These are the projects that have created the most buzz in the crowdfunding world. Because there are very few demographics and no one distinct group of people who use these sites, it is safe for marketers to assume that the most popular projects are the ones that a large majority of people are longing for. Getting to know where people are contributing is a new form of market research that allows marketers to get to know consumer demands and alter their messaging accordingly.

· Messaging gets personal – Projects that have sales jargon and fail to identify the benefit to the recipient up front typically don't make it to the site, or if they do, they do not succeed. One example of a successful company who clearly defined and showed the benefit of their product was the coffee jouiles project. This product was created by people who simply wanted to keep their coffee hot for longer and meets a very real need that any coffee drinker can relate to. Some of the most successful projects are those that get even deeper into people's emotions with a personal story behind them. One of the most touching, and well-funded projects, was the theft resistant bicycle light. This was created by two men whose best friend was killed when his bicycle light was stolen and he was forced to ride home in the dark. Creating an authentic message is vital beyond crowdfunding websites. Doing testing and research on crowdfunding websites gives marketers the opportunity to find out early on what triggers people's emotions to cause them to act.

· Partnership opportunities –Businesses also use crowdfunding sites for strategic alliances. Companies who see a successful product on a crowdfunding site that would fit well with their business offering can develop an affiliate or partner relationship. Crowdfunding is becoming a new portal for companies to find potential partners more effectively because of the increased transparency in business model plans and product offerings.

Crowdfunding is one of the newest and fastest growing trends in the digital world. Innovative marketers have recognized an opportunity and are taking advantage of this new portal to reach more potential customers and develop stronger business partnerships.

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