Fan Funded: The Most Exciting Thing in Marketing Today
There's a type of fan funded marketing being done online, especially on social media, that is actually changing the way companies are built, and not nearly enough people are talking about it.
One of the things that's really worked well to get my attention as a consumer has been Facebook ads. Marketers have been able to dial those in to my personal interest with shocking accuracy. A lot of the time companies reaching me via Facebook are ones I've never heard of before. And often, they don't even have a product to send me yet. ... But they can still sell it to me!
That's the really exciting thing to me. Platforms like Kickstarter and Indiegogo allow companies to launch without a product, without a lot of funding, and essentially presell enough product (with add-ons and kickers to boost order value) to guarantee the success of their first product.
I didn't actually end up buying one of these speakers, but only because the best speakers I currently own are probably the ones in my TV, so I'm not the kind of audiophile who can justify (to his wife) spending $300 on a speaker.
The marketing was done entirely through social media, Indiegogo, and word of mouth, and it had me totally sucked in. I was an inch from pulling the trigger, and I still might.
That marketing campaign created over $62,000 in funding, all of which represents various kinds of presales of the main speaker and various perks/upgrades. That's more than enough to reach their goal and launch the company.
Think of what Princeton Audio did there. Too often we look at crowdfunding as nothing more than a donation engine. But that's not really what's happening here. This is the new face of social marketing, call it "fan funding," and it is so powerful that it can actually let you use marketing to launch the company.
That's really a 180-degree turn on the traditional way start-ups grow. Usually you come up with an idea, bring in a partner, bring in angel investors, then venture funding ... all the while trying to develop your product and make some revenue on it. Marketing is secondary because your early goal is to get investor funding.
Fan funding lets you do the opposite. Instead of investors, you attract a fanbase, and that's a marketing foundation that can carry your company for the long run.
The power of the fan funding/social media marketing platform in this case was enough to get to me, a guy who sees thousands of ads a day and doesn't even own a stereo, to seriously considered buying one of these high end speakers. (I would love to know what in my Facebook profile tugged their ads in my direction.)
Princeton is hardly the first company founded on crowdfunding that's gotten my attention, either. Just a few months ago I did buy into a product called Cthulhu Wars by a man named Sandy Petersen.
You probably don't know Petersen, but he created one of the most successful cult roleplaying games out there: Call of Cthulhu. It's a game that's hung on around the edges of the tabletop game industry for decades, profitable at times, running on sheer determination at others.
The problem with Call of Cthulhu has always been that it's a niche product within an already niche market. So it's expensive to produce it, and then it's tough to get into enough game stores for their players to see it, and then it's very expensive for those players to actually buy. You lose a ton of customers along that sales pipeline, and there's so many barriers going through the channel that logistics has crushed the company at times. And their marketing has never been terribly impactful (I bet you've heard of Dungeons & Dragons, but never Call of Cthulhu).
Petersen wanted to make his dream game, a sort of magnum opus: A $200 board game (that's approximately triple the price of your average board game in that category today) with huge, detailed plastic figures, high quality pieces, engrossing backstory ... there's no way something at that price point could have been done in that industry the traditional way.
So Sandy created a new company, Peterson Games, and launched a Kickstarter for Cthulhu Wars.
Cthulhu Wars launched with 4,300 backers and $1.4 million in backing (i.e. presales). Now they're working on "Onslaught Two," and they're launching it the exact same way. It already has 4,400 backers and over $1 million in presale funding.
More importantly, in the process of building that crowd backing, Petersen created a dedicated, even rabid fan base.
A couple weeks ago, Gary Hennerberg wrote about how important it is to create "raving fans." I've never seen anything create raving fans like these crowd funding campaigns.
So how big can this whole fan-funding thing get? Lets talk about Exploding Kittens.
It launched with $8.8 million dollars in funding and over 200,000 active customers.
Oh, and they did more than enough of that in less than a month. The project launched in January 2015, and it had 100,000 backers and over $3 million in backing before the end of that month. Yes, that was enough to launch the company. Also a record.
Think about that: Starting your company with an existing customer base of over 200,000 people, not to mention all the email addresses and leads you can collect during that process.
In an old life I used to cover the table top gaming business. I am certain that $8.8 million made Exploding Kittens one of the largest game companies by revenue in the world.
Now Exploding Kittens had some very powerful tools at its disposal. The Oatmeal Web comic is an online institution with over 3 million Facebook followers, 523,000 Twitter followers and Inman is a wizard at making content go viral. He did the art for the game, and promoted it to his enormous following of fans, personally vouching for it (and by all accounts it's a great game, so this only increases his credibility).
The lesson there is that just because you're using a cutting edge viral marketing strategy doesn't mean you should do it on a shoestring budget. Lee and Small went out and partnered with a celebrity, and it paid off big time (for that celebrity as well, I think). When I said your marketing should have the motto "Characters Welcome," this is exactly what I meant.
But OK, these projects all had huge launches. But does it last?
Let me tell you about this "bullshit" Cards Against Humanity pulled.
Games were an early winner on Kickstarter. Back in 2012, "a party game for horrible people" called Cards Against Humanity launched with 758 backers and $15,570 in presales. Since then the game has taken off.
But how loyal have those backers remained?
This Black Friday, Cards Against Humanity put boxes of "nothing" on sale as a sort of protest against mindless consumerism. The "nothing" was not a euphemism, they were literally selling boxes of nothing.
Cards Against Humanity sold $54,000 of nothing on Black Friday 2015.
But hey, that's only $54,000 worth of nothing. What if they sold crap? I mean, actual crap. Bullshit, in fact.
Really. Here's an unboxing video if you don't believe me (I'm not embedding that here, and I don't recommend you watch it. You've been warned.)
If you don't see the marketing power in a new strategy that can found companies marketing-first, drive you millions of dollars in guaranteed presales, and give you the ungodly ability to make $50K selling absolutely nothing (or even more selling bullshit!), I can't help you.
It's a whole new world, and as marketers, you literally have all the tools you need to take power.