The key to a successful crowdfunding campaign is to prepare and implement a robust marketing strategy aimed at reaching the target audience of potential investors, informing them, and convincing them to invest. In order to reach as many people as possible beyond the bidding company's circle of contacts (which is still the first and most important pool of potential investors, let's remember), there are complementary strategies to exploit, such as affiliate marketing.
A close relative of referral marketing, affiliate marketing is an extra resource that can be used to expand the reach a company can express by using its database of contacts, doing advertising online and offline. The primary target and focus should remain the customers and potential such of the company's proposed product or service, but to go further and aim for the maximum goal, it may be useful to use the megaphone of affiliate marketing.
What affiliate marketing means
Affiliate is a term for association, collaboration, and refers to the idea of networking. Technically, an affiliate is a business arrangement in marketing between an advertiser (a company that intends to sell one of its services or products) and an affiliate (a person who promotes the advertiser's service or product).
The affiliate's job is to bring visitors to the advertiser's site or app, using every traffic channel available online, paid or unpaid, in order to generate "conversions," i.e., actions by the user, which may consist of the purchase of the product or service but also form fill-ins, content downloads, survey responses, etc.
The affiliate is then paid according to the conversions it manages to generate. Between the affiliate and the advertiser may act a third entity, the affiliate platform, which has the role of impartially verifying the activity performed and reporting on the conversions achieved.
The major difference from referral marketing is that the people involved are paid to be a megaphone for a product/service with their audience and customers, rather than receiving rewards for doing so with their acquaintances.
It is the mechanism behind the work of so many online influencers and many relationships between related companies, not a specific crowdfunding tool: but doing an equity crowdfunding campaign means selling something, specifically a share in the company, so all the marketing and sales strategies apply to it just as in the normal operations of a business.
Crowdfunding and solicitation of public savings
Applying affiliate marketing to equity crowdfunding requires a little more technical shrewdness than doing so in the day-to-day marketing and sales operations of a company.
Equity crowdfunding, in fact, as a proposal to the public to purchase company shares, is a form of solicitation of public savings/investment, with the associated risks for savers. For this reason, in Italy, Consob regulated it back in 2013, and the European Union, today, has established a common regulation for all member states.
These regulations establish the obligation for crowdfunding platforms to require bidding companies to provide all the documentation necessary to comply with disclosure and transparency requirements and audit and certification rules (first and foremost the offering document). Thanks to this, Consob authorizes the offering company and the host platform to promote the campaign: this authorization, however, does not extend to third parties.
Consequently, it is not possible to simply ask an affiliate to directly promote the campaign with its users, otherwise it incurs the crime of soliciting investment for sponsoring third-party financial products.
In addition, conversions could not be tracked, since they would take place on the crowdfunding portal, i.e., a third-party site to the company or affiliate platform.
But there is a solution.
How to apply affiliate marketing to crowdfunding: the front-end product
In order to do affiliate marketing to promote an equity crowdfunding campaign you need to use an enabler: the frontend product.
The front-end product is a kind of bait or ram. Affiliates cannot directly promote the crowdfunding campaign, so it is necessary to provide them with something else to sponsor, with which to push users to the campaign, but in an indirect way. It must be a product/service related to the one normally offered by the company, easy to make and explain, and preferably one that can be offered at an attractive price. The sale of the frontend product need not to generate actual revenue margins for the company, because it is "only" a tool for hooking new potential customers and investors: any losses will be offset by the end goal.
Affiliates involved in the operation can promote the frontend product with their own users and/or social audiences, remaining perfectly within the law. The company, moreover, can directly monitor sales of the frontend product, because they occur directly on its own portal (and not on an external platform).
Every time an affiliate's sponsorship activity generates a conversion and a user purchases the front-end product, the contact information of a new customer, i.e., a new potential investor!
The company, in fact, may use that data to propose the investment in the equity crowdfunding campaign, thus respecting the constraint that it is itself sponsoring its own campaign and not a third party. The user at that point will be a customer of the company, so will be more likely to support its growth, especially if the proposal to invest is accompanied by the promise of dedicated rewards and benefits.
How to find affiliates for crowdfunding campaign
In an affiliate marketing program, there can be more than one affiliate: you can create a network of affiliates to promote your frontend product, thus increasing the resonance of the operation.
However, the principle of "the more the merrier" does not apply, because you still have to consider the costs of this activity for the company within the marketing budget. In order to find affiliates for your campaign, in fact, you need to propose attractive fees.
That is why a selection should be made to identify companies or people who might be on target from the point of view of economic claim. A parallel criterion should be the area of expertise: you should choose affiliates that operate in the same area of your company, because they will have authority to promote the frontend product and will be more convincing, but also because their audience will presumably be akin to that of your company. The contacts obtained, therefore, will be qualified.
Affiliate platforms often also take care of facilitating the match between advertiser companies and affiliates: they offer a space where you can nominate your product to find the most consistent affiliate to sponsor it.
Just as with referral marketing, finally, the company must make the affiliate marketing operation effective by offering new users impeccable customer service and a pleasant and incisive buying experience. This will lay the foundation for taking the new relationship forward and gaining new investors as well as new customers.
Turbo Crowd is also involved in supporting the construction of secure and effective affiliate campaigns and related frontend products: find out what we can do for you by booking a free initial consultation!
