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Anyone who has been using social media for any period of time will be aware of UGC (user generated content) and crowd sourcing, many businesses source information about their brand this way, it gives them feedback about products and services as well as answers to questions about possible new products. You are getting responses directly from your customer base, it’s a win win situation.
Many people respond to these requests for information out of a brand loyalty – particularly if it’s a brand they have used for a long time, some respond as a genuine wish to have their voice heard, and others because of inducements, such as ‘complete our survey and you could be in to win an voucher to your favourite store’. This inducement or reward system is by far the most popular reason for involvement and although this model of ‘something for something’ is not new there is a whole new platform where incentive, combined with a level of philanthropy, is starting to make its mark on the social scene, and that is crowdfunding.
Crowdfunding which is also known as crowd financing, equity crowdfunding, or hyper funding started as far back as 1997 when fans of a band raised money to pay for them to tour. This was carried out without the band’s knowledge and has seen fans finance several more of the bands projects over the years. There have been other single projects over the years that have utilised this type of funding model to help launch their projects. More recently platforms dedicated to assisting project owners find supporters have launched, including ArtistShare which launched in the early 2000’s and was the first platform for music projects. Popular creative projects site, Kickstarter, is limited to US based residents, and recent stats show the site has funded over 250 million dollars worth of projects. New Zealand residents are offered a similar opportunity from local site Pledge Me, which uses the tag ‘funding Kiwi creativity.
One of the newest kids on the crowdfunding block is Sportfunder, a crowdfunding platform dedicated to sports related projects. Although the site is still in ‘start-up’ mode, it boasts some high profile friends and projects, and with the ability to fund projects in many countries throughout the world, it’s in an enviable position of being able to offer global projects and global funding allowing sports players to collaborate with sports enthusiasts to achieve their sports related goals.
So how does crowdfunding work? Most crowdfunding platforms work on an ‘all-or-nothing’ funding model where the project creator sets their minimal funding target and if that is not reached then the supporters do not pay and the project receives no funds. This model actually protects both parties. If the project requires $5,000 and the fundraising only reaches $2,000 then the project owner cannot be expected to successfully complete their project with insufficient funds, in turn the supporter is not making a payment towards a project that will not get off the ground.
As eluded to earlier, there is a level of incentive or reward combined with an element of philanthropy when it comes to sponsoring projects. Each project offers the supporter a reward in return for their financial contribution. Rewards vary from project to project and depend greatly on what the project is for and the level of ‘exposure’ the supporter will get. Some recognition may be in the form of a social mention – the value of this depends on the profile of the project owner. A tweet from a local amateur athlete will have less value than one from a high-profile professional sports star, so the rewards are set commensurate with the value of the donation and the value of the reward. Rewards are also often aligned with the project itself. If you were to sponsor a project raising funds for a local school team to compete overseas you could expect part of the reward to include a picture of the team at the event, perhaps with the team members holding up placards with ‘thank you’ written on them. Other funding rewards could be naming rights to the event, your logo on their clothing, a mention on their website or social network, or branded clothing.
Of course, social media plays a large role in this type of fundraising, therefore having a credible online profile, a strong social network, and a professional website will help the project owner in creating the necessary social buzz to raise the profile of their project and therefore help them achieve a successful outcome to their fundraising endeavours.
Cue Social Media offers social media and online marketing services to help you with your crowdfunding project.
About Author: Cue Social Media was founded by Sonya Cole, out of a passion for all things ‘social’ – media, networking, branding & ‘ising’. Backed by a strong business administration background & six years as a search engine web marketer combined with an infatuation for technology, gadgets and everything digital, her wish is to cultivate a passion for social media in others. Sonya is also a founder of Social Media Taranaki.
