3 years ago
( this post is a part of the "Taskfunding challenge series" )
In this series of posts I want to talk about the business model challenges that I have been/am currently working through with the development of Taskfundr.
Today I am going to write about the problem of "Why would an Angel want to give their hard earned money"...
When creating a campaign for a charity the Angels' investment is primarily based on giving. The fact that they are able to get an awful lot back from their donations in terms of brand association, awareness, recommendation etc is an added bonus.
Now move this into the profit-making world and imagine an Angel is now donating to a cause other than a charity - let's say they are giving money to a local student to open a bookshop. Now when looking at the investment the Angel is thinking less about the altruism and more about the real world return.
I will illustrate the problem with an example campaign...
An example campaign:
- RECIPIENT X is looking to raise £5,000
- ANGEL A is willing to give £5,000
- For simplicity the campaign consists of 4 x 30 second video tasks:
- 2 videos about RECIPIENT X valued at 50p each
- 2 videos about ANGEL A valued at 50p each
- To reach the target 2,500 users will need to view 4 videos each
Please note - in this example we are not focussing on the benefit to the audience (the taskfunders) as that will be covered in a later post in this series.
The recipient is the charity
If RECIPIENT X is a charity then ANGEL A does pretty well. They have donated £5,000 to a great cause, are able to account for a charity contribution and receive 5,000 video views about their activities.
Based on a very good market CPV rate of say 30p for completed, targeted videos this would give ANGEL A around £1,500 video advertising and the not-so-easy to quantify benefits of brand association etc in exchange for their donation.
(I would also argue that using the market CPV is not quite right as the brand alignment and also the method of deployment of these videos is completely different to normal advertising - these are being "pulled" and not "pushed" and hence should have a much higher CPV)
The recipient is the student
Now let's look at this when RECIPIENT X is the local student who wants to open a bookstore. ANGEL A still wants to be philanthropic and is giving money to the student as they believe in her idea, but they are more inclined now to be looking for a solid return or at least comparable rates to other advertising channels.
With a successful campaign RECIPIENT X does really well. They get £5000 without any repayment. They also receive £1,500 of video marketing as well as the viral benefits of their campaign. They raise awareness and get a nice marketing boost to their new bookstore launch.
But here's the problem. ANGEL A also gets £1,500 in terms of current comparable market rates as well as some kudos for helping local business etc. This leaves a negative return of -£3500 in quantifiable ROI. So now they are probably thinking - where else could I have put my £5,000 and what would I get back in return? A targeted video campaign? A local press campaign? A Facebook campaign? Perhaps even most of the above?
This is the sticky bit - the ROI and importantly the reasons for the ROI alter dependent on the individual campaign. What needs to happen for this transition into an alternative crowdfunding platform is the value proposition for Angels investing needs to be massively improved.
Thinking about solutions
Well one of the first fixes that springs to mind is optimising the focus of each task (videos in this case) dependent on the individual situation.
What I mean is - let's take the case of the student campaign above - if ANGEL A and the student agree then the focus of 75% or even 100% of the advertising could be engineered towards ANGEL A. This could work in some cases, but the inherent problem is now the recipient is not benefitting from exposure and awareness from the campaign. It's also like to fall flat as a campaign as now it just feels like an advert.
The next solution that springs to mind feels smarter. And I also believe could really help from an "alignment" point of view.
Let's say in the student example again that ANGEL A is a local college for instance. Perhaps now ANGEL A & the student (RECIPIENT X) could come to an agreement that should the campaign be successful, then the new bookstore will offer 20% discount to all the students from ANGEL A's college.
In the above situation RECIPIENT X now gets their backing and some exposure and ANGEL A gets a much better return on their investment. This can obviously be negotiated, but it would also be nice to build some examples/ideas etc into the platform to encourage new relationships and reasons for pairing with an angel/recipient.
Another important factor to consider is the genuine value of the advert. Using market rates for CPV is a benchmark, but let's say now that one of the adverts is a personal recommendation from the recipient - this changes the value completely.
The trust from a recommendation and genuine enthusiasm for ANGEL A (don't forget this is the reverse side of getting your "alignment" right) is invaluable and will provide a much deeper bond with ANGEL A's offering. This is waaaaay better than targeted marketing as it comes with emotional attachment.
Let's also say that now that one of the tasks is not a video, and is instead a "Check-in" at ANGEL A's college or scan a QR code on ANGEL A's prospectus. These customer acquisition costs will be far lower than current market rates meaning they can be offset against the video.
In fact my current thinking is that the platform itself simplifies "campaign design" and associates potential ROI against each type of task. Then when putting together a campaign the stakeholders of a campaign can agree the components that will best suit their individual needs.
I also like the idea that the platform allows some form of trade-off as that is the ideal situation in any marketplace!
So this dilemma, although not currently fully resolved is pushing the concept further. Obviously before the "win/win/win" scenario can happen these trade-offs need to be marginalised and I believe that with a little more input and thinking there is a beautiful middle-ground that can be reached.
Until next time! …
If you are interested in any of the ideas that I have talked about or want to get in touch about helping, launching a campaign etc then send me a tweet @jimhilluk.