Toy-Fair Lesson: Crowdfunding Is Much More Than Child's Play

The Value Goes Far Beyond Startup Capital

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The High Roller
The High Roller

Much has been written about the disruptive power of crowdfunding. Websites such as Kickstarter and Indiegogo have given innovative products a viable alternative to traditional funding models. But a recent walk around the 2014 New York Toy Fair revealed a much more important value for opening up your product to community investment -- social engagement that puts traditional social platforms to shame.

Take, for instance, the story of the High Roller. This adult-sized "Big-Wheel-Like" toy took to Kickstarter in 2011. Founder Matt Armbruster not only built up the funding he needed to launch, he also committed to the follow-through. He connected with his highly engaged audience throughout the production process via email and blog posts, creating a wealth of rabid fans along the way and continued product buzz three years later. As one advocate put it, "It's genius. Social is baked in. You're always recommending to your friends, because who wants to ride one of these things alone?"

Then there's the new startup, SoapSox. In any other scenario these plush bath toys that have a pocket for soap would have been just another cute idea that was quickly forgotten. But the crowdfunding campaign by Ray Phillips and Alvin Uy allowed them to tell a backstory. Their heartwarming tale about how these toys were developed to help make troubled kids in a southern California group home feel more comfortable is inspiring. Now a financially invested audience is not just recommending a product prior to launch, they are part of a continuing story and ongoing dialog about helping kids in distress.

Even this year's Toy Fair "Innovative Toy of the Year" the Zoomer, developed by growing toy powerhouse Spin Master, was almost Kickstarted, according to one company spokesperson. The company didn't need the funding, but the way that many smaller companies were building community and advocacy with Kickstarter prior to launch was highly appealing.

While Facebook Pages are having their organic engagement erased by the "Zuckerbots," and Twitter impact has become increasingly more difficult in the flood of social narcissism, crowdfunding implements a time-honored method of ensuring connection: it asks you to invest with cash.

Crowdfunding expert and founder of, Clay Hebert, says, "Crowdfunding backers aren't passive customers or just warm leads gathered via a landing page. They're the very first people who trust you enough to give you money -- often before your product even exists."

"Free" may be the most powerful word in marketing, but it holds no intrinsic value and drives no loyalty. This is why marketers roll their eyes at sweepstakes and giveaway audiences. Tactics like sweepstakes drive mass trial or awareness, but deliver no brand affinity. They basically create a bad list of names with low conversion potential. But a "customer" is a person who has invested money in you. Their decision to buy is a vote for you to succeed. In some cases their reputation may even be attached to your success. After all, no one wants to be the guy who voted with dollars for the now useless HD DVD format.

Crowdfunding doesn't stop there, though. Not only are you raising your hand as a future customer, you are also given the status of "investor." It's not a true investor relationship. There are no shares exchanged or contracts to notarize. But it does create a sense of ownership that is rarely achieved by other marketing tactics.

Of course, in a world that measure social success by millions of "Likes" and thousands of retweets, most crowdfunding efforts may seem quaint. Many crowdfunding efforts only directly touch a few hundred or less people. Even the most popular efforts usually top out at less than 100,000 backers. Direct commenting on your posts is generally light as well. But these backers will many times advocate for your idea as vociferously as if they were working right beside you. That's the kind of engagement that actually adds value to the bottom line -- and it's the kind of engagement that continues to elude most marketers in social marketing today.

Hebert says, "Many brands struggle and spend vast amounts of money on traditional and new media to try to find those first critical evangelists. Crowdfunding can be a magical shortcut."

Thinking of crowdfunding as merely a means for small companies to raise cash is a shortsighted mistake that established brands would be wise to correct. Experimenting with sites like Indiegogo, Kickstarter and others is an opportunity to create a genuinely valuable community of early-adopters and opens opportunities for influencer marketing that other social tactics can't begin to match. Because while building mentions and recommendations from an audience that "likes" your product is good for awareness, hearing those same recommendations from a person who buys-in, sight-unseen, is the kind of thing that loosens our wallets.

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