How much money should be spent on paid advertising for a crowdfunding campaign?

March 28th, 2015

It seems some campaigns spend nothing and some have extensive retargeting and paid ads, I'd love to hear what the community thinks is the right amount to spend on paid advertising for marketing. I'm working on a hardware product, 200-300 price range with minimal margins for the campaign itself. Ignoring budget here as this is a large part of the budget, which is why I'm trying to assess how much to put away for it.

Imanuel Larcher Marketing Coordinator at ContentVia

March 28th, 2015

It is all relative to your own business, it's goals, objectives, and budget. This is a question that needs more details to be answered correctly, but the short answer Should be no more 10% of your goal.

Robert Hoskins (4,400+)

March 28th, 2015

A basic way to calculate a marketing budget. We'll say that a campaign has a fundraising goal of $30,000 and the average perk of $50. This means that 600 perks need to be sold at $50 to hit the goal.

An average marketing campaign, regardless of whether its social media, PR, email marketing, retargeting, etc., has a typical click through rate to a campaign of 3%.

Of the 3%, 1/2 to 1% actually convert and make a donation. I would share a link with you to a spreadsheet that makes this easy, but the nazi's that run this group don't allow knowledge sharing or URL links to be posted in discussion groups.

Too bad because normally I would share a spreadsheet that makes it very easy to calculate that you need to reach a universe of 2,000,000 target customers in order to drive 3% (60,000 visitors) to a campaign URL and hope for a conversion rate of 1% (600 donors) to purchase a product $50 to hit a $30k goal.

The reason social media and PR is so popular is because you can reach a lot of people with keywords and SEO'ed press releases that can hit these numbers at very cost-effective price.

Chris Carruth VP/Director. Strategy | Business Development | Operations | Product | Solutions

March 29th, 2015

I spent quite an amount of time looking at this as a funding solution and backed off, for a few reasons, not the least of which that a crowdfunding campaign is real work, real hours, and must be actively planned and "buzz" built for 2-3 months before you go live..to be effective.

Re promotions costs, if you have a large network personally or collectively with the other team members, much of the ad costs can be reduced as a result of running a robust "pre-launch" networking campaign. And most will tell you that if you can't fund 60% of the target goal with friends/.families you probably won't make the goal at all. There are other options to KS which allow you to keep what you raise, so if you are not network intensive I would look at those as well.

Yes, a wearable watch raised $20m, yes a guy raised money for making potato salad, yes, a guy raised $$$ for producing an electric bike, etc...but the average amount raised is around $5k..these other cases are NOT the norm.

Not meant to scare anyone off..some campaigns are successful..just my personal viewpoint.

Alon Goren Founder and CEO at InvestedIn.com and 805 Startups

March 28th, 2015

No paid advertising unless you're a well capitalized company using the crowdfunding campaign strictly for marketing purposes. Otherwise, the juice is not worth the squeeze... -A

Robert Hoskins (4,400+)

March 28th, 2015

The use of paid social media sponsored posts is probably one of the most cost-effective advertising campaigns that can be used to support crowdfunding campaigns. LinkedIn and Twitter are very expensive, but Facebook is one of the most cost-effective and successful marketing campaigns on the planet.

Trevor Collins Crowdfunding Entrepreneur & Co-Founder of 100 Danish

March 28th, 2015

Hi Joel, a bid determinant of this answer comes from the price point of the product you're selling in the crowdfunding campaign. Do you have a specific product you're considering launching, or mind sharing a rough price point?

The thing about running paid ads to a Kickstarter, for example, is that measuring your Cost of Acquired Customer is extremely tough. It's very much like sending traffic into a black box. But if you have a high price point and corresponding margin, plus collect data before the campaign, plus build custom audiences you have confidence in, paid ads can be totally worth it.

Nicole Donnelly Creating HappyCampers Every Day

March 28th, 2015

I've contacted many of successfully funded teams to see how they did it and most often they use a kickstarter specific marketing firm and pay $30-40k to have them run promo on it. I know of one where he did it in house but had investors lined up to fund it prior to launch. If there's a successful campaign that you like, if you call them most likely they'll tell you exactly what they did :) Sent from my HappyPhone www.HappyCamper.world

John Skelly Founder, CEO at GasAnywhere

March 28th, 2015

Everything depends on context. What are your goals? What is your realistic budget? What's the price point for each unit sale? Is this strategic or simply tactical rev gen? Give us some context so we can add some value here, please.

Joanan Hernandez CEO & Founder at Mollejuo

March 30th, 2015

Hello Robert,

Please share your spreadsheets. URLs and links are allowed here.

Cheers!

Trevor Collins Crowdfunding Entrepreneur & Co-Founder of 100 Danish

March 30th, 2015

Thanks so much for shedding light on your price point and type of product.

I'd be happy to jump on the phone for 15min if you want to ideate on strategy or talk further about my personal experience with paid FB ads. I just finished consulting on the Kabaccha Shoe campaign - http://kck.st/1M4baOS - which raised north of $400k and was the most-funded shoe Kickstarter in history. (I mentioned this offer in another thread, which is good for any other FD'er)

We had paid ads running for most of the campaign and the effect was helpful to sustain momentum over the longer 40 day campaign. For us, it was a big matter of capital we had in the bank and how things were trending at any given time. Note, though, that the shoes were offered a price point and margin that could allow for a $50 cost per customer, which can be achieved via FB ads after ad optimization. But even saying our cost per customer was roughly $50 is almost impossible to say. Teasing out data for what conversions come from the paid ads is tricky and difficult because of Kickstarter's limited analytics.

How much money should be spent on paid advertising for a crowdfunding campaign?

The 6-Month Lean Marketing Plan for Any Startup