The way small business entrepreneurs raise capital to produce almost any new and innovative product may soon be changing.
I have a friend who makes feature-length films, which isn't a rare thing living in Los Angeles, but the way that he makes films may soon be changing. For my friend, the writer-director, there will always be a ready supply of actors, directors of photography, and editors; but now - because of online services that allow businesses and entrepreneurs to use crowdsourcing to fund their ideas - there may always be a ready supply of money to support his artistic vision, too.
In fact, the way small business entrepreneurs raise capital to produce almost any new and innovative product may soon be changing. While the status of the economy is a source of constant debate (are we in a recession? Which dip are we on now? Is there another one coming? Will we ever pop the financial services industry's bubble mentality?), what's indisputable is the effect that social lending services like Kickstarter, Indiegogo, Kiva.org, Lending Club, and Prosper are already having on the small business landscape. Entrepreneurs and creatives aren't the only ones benefiting from the ability to raise funding through these online platforms, though. These services can also provide marketers with more insights into the people and trends that can drive business success.
Social lending services are enabling small business owners and entrepreneurs to tap into the same source of funds that megabanks relied on to cover their bad bets after the mortgage crisis - the average tax-paying consumer. These services leverage the scale of the Internet to enable entrepreneurs in search of funding to aggregate multiple microloans from individual peer lenders. As more smart, driven individuals look for more reliable sources than banks and private equity lenders to help them create the new products and services they envision, social lending services may become more prevalent and more attractive sources of funding. Success stories like the Pebble wristwatch, which raised $3.7 million in one week through the community of peer investors on Kickstarter, will become more common as inspired and empowered entrepreneurs are more easily able to connect with inspired and empowered potential investors using social lending platforms.
Social lending services have grown in recent years, both in number and total funds raised, and continue to bolster a "third way" of business - P2P rather than the traditional B2C and B2B models that are the typical domain of the capital markets. This focus on people can be very beneficial to marketers looking to use the information to gain insights about what's being funded and who's doing the funding. Crowdsourcing through social lending platforms can significantly cut down on the time required to raise capital (as the Pebble example proves). It can also help identify influencers who focus their investments in particular areas or on specific types of projects.
In the world of social lending, we are all venture capitalists (VCs) with the ability to contribute to the development of the products and solutions that we want to see in the market. Peer investors who put their money behind ideas they believe in should be the same people that marketers use to model innovators and early adopters in their consumer research. As a leading indicator (let's call it "Marginal Propensity to Invest"), these peers' willingness to fund projects through social lending platforms makes them an attractive source of marketing data as well as dollars. Demographic/psychographic profiles and preferences of peer investors could suggest which aspects of a product's or service's value proposition are most appealing to specific audiences and clarify how product positioning and messaging to prospective customers should be managed. Peer investors represent informed consumers who "just get it" and could be attractive test groups for segmentation studies and identifying purchase drivers for prospective consumers.
Social lending is a great way to gauge which ideas are attractive to target markets, too. These platforms offer low-cost ways for businesses (like the film industry) to test which ideas are the most appealing to their intended audience; essentially allowing people to vote with their dollars. Sticking with the film industry example, small, independent or "arthouse" films that might not otherwise get made could use these platforms to validate their creative concepts and jumpstart their financing at the same time. Larger studios debating the viability of projects could use the platforms in a similar fashion to gauge interest, create evangelists, and engage fans as co-creators of an experience (possibly for as little as a co-producer credit in the end titles or premiere passes). The opportunities to leverage the community of peer investors as bellwethers and evangelists could apply to several industries and produce unexpected ROI from even the smallest investment.
Social lending is just another example of the Internet's ability to create more ways to connect communities in mutually beneficial ways. Along with the ability to accelerate time to market for innovative ideas, peer-to-peer lending platforms could also offer important insights into the influencers and potential consumers for new products. The opportunity for marketers is to use the wisdom of crowds to find more ways to discover and learn from the ready-made audiences for their products and services.
This Year's Premier Digital Marketing Event is #CZLSF
ClickZ Live San Francisco (Aug 11-14) brings together the industry's leading practitioners and marketing strategists to deliver 4 days of educational sessions and training workshops. From Data-Driven Marketing to Social, Mobile, Display, Search and Email, this year's comprehensive agenda will help you maximize your marketing efforts and ROI. Register today!
McNeal Maddox is a senior strategist, brand development, Digital, at Siegel+Gale, based in Los Angeles. His first experience with brand development came in junior high, when, not content to remain mere consumers of comic books, he and his brother formed their own comic book company. The brand name, logo, and signature style they created were so strong that one of their books is a permanent part of the Lynn R. Hansen Underground Comics Collection of Washington State University Library's special collections archive - and they even sold a few.
Since joining Siegel+Gale, McNeal has worked for several clients including Microsoft, Dow AgroSciences, McAfee, Genworth Financial, Yahoo, United Talent Agency, Activision, and PayPal. McNeal previously served as a project manager at FoxSports.com, where he managed the design, development, and implementation of customized promotional campaigns for major advertisers. He also worked as a web developer at ING Advisors Network.
McNeal graduated from Carnegie Mellon University with a BFA in graphic design, and received his MBA from the University of Southern California.
The Marketer's Guide to Customer Loyalty
Customer loyalty is imperative to success, but fostering and maintaining loyalty takes a lot of work. This guide is here to help marketers build, execute, and maintain a successful loyalty initiative.
The Multiplier Effect of Integrating Search & Social Advertising
Latest research reveals 68% higher revenue per conversion for marketers who integrate their search & social advertising. In addition to the research results, this whitepaper also outlines 5 strategies and 15 tactics you can use to better integrate your search and social campaigns.
Wednesday, July 23, 2014