How to Apply Affiliate Marketing to Crowdfunding Campaigns

Raising money has never been easy, no matter the brilliance of the idea behind the campaign. Even though history knows quite a few extremely successful crowdfunding campaigns – on Kickstarter alone, there are over a dozen that raised over $10 million – tech enthusiasts alone may not be enough to raise the funds you need. 

But you can make it easier with affiliate marketing.

Despite the overall boom of affiliate marketing – think of myriads of YouTube, Instagram, and TikTok influencers promoting products to the left and right – it’s still heavily underused in crowdfunding. Meanwhile, the right affiliate network or independent affiliate program can help you reach the required minimum overnight – sometimes, literally overnight.

Read on to learn more about how to use affiliate marketing in your crowdfunding campaigns.

The Legal Side of the Question: Full Disclosure Required

First things first: make sure to study the rules of your crowdfunding platform. At the very least, it will likely require disclosure of affiliate links, while some, like Kickstarter, may prohibit affiliate commissions on pledges. Sometimes you might need a workaround.

Speaking of which, you can use a pre-landing page to generate donors outside the platform, and use affiliate management software to track your affiliates and reward them for off-platform conversions that later turn into pledges. 

Anyway, make sure to respect the platform’s rules at all times. Non-compliance may lead to a lose-lose, from financial losses to campaign termination to legal action.

Affiliate Marketing for Donation vs. Reward vs. Equity Crowdfunding

The type of crowdfunding largely determines the limitations you face when launching an affiliate marketing campaign. Donation crowdfunding, where donors don’t expect anything in return, is generally less restrictive, whereas equity crowdfunding, where donors receive a share in the company, is heavily regulated by financial authorities including the U.S. SEC and the FCA in the UK.

Affiliate Marketing for Donation Crowdfunding Campaigns

Donations without expectations often turn affiliate marketing campaigns into ambassador campaigns. In such campaigns, you usually pay flat fees to affiliates who may also get some PR, recognition, and other non-monetary rewards. The main driver is storytelling, so you might want to look for influencers, NGOs, and community leaders with great storytelling skills.

However, affiliate links must still be disclosed and transparent. Overcommercialization, on the other hand, might cause legal problems and alienate potential donors.

Affiliate Marketing for Reward Crowdfunding Campaigns

In reward-based crowdfunding campaigns, you don’t provide direct financial incentives; instead, you offer early access to the product, service, or exclusive experiences. Payment-wise, you may pay for leads or conversions, such as email signups, app downloads, account creation, etc.

In reward crowdfunding, you try to create a surge in donations to convince the platform’s algorithms that your campaign is worthwhile. Once it’s in the spotlight, things get easier.

• Channeling traffic to a pre-landing page is an effective way to organize reward-based crowdfunding. You can collect email sign-ups in exchange for early access to the product and other perks, and then reroute the traffic to the crowdfunding platform.

Once the campaign is live, you can use your pre-built email list and influencer announcements to generate a surge in donations. From here on, you support the momentum by sharing other content, such as behind-the-scenes and teaser content.

Upon campaign completion, you can redirect traffic once again to, say, your Shopify store, where affiliate commissions are allowed. Then it becomes a fully-fledged affiliate marketing campaign with a full scope of incentives for affiliates.

Affiliate Marketing for Equity Crowdfunding Campaigns

Unlike reward-based crowdfunding, equity crowdfunding involves offering securities or convertible notes in exchange for an investor’s funds. In other words, donors own a share in your company, which means you’re looking long-term in the first place.

• In the U.S., eligible companies may raise up to $5 million annually from investors through SEC-registered broker-dealers or funding portals. The industry is governed primarily by Regulation Crowdfunding under Title III of the Jumpstart Our Business Startups (JOBS) Act of 2012.
• In the UK, privately-owned companies can raise up to an annual £8 million.
• Across Europe, platforms recognised under ECSPR can be used by companies raise up to €5 million per year.

Check for limits in other countries where equity crowdfunding is allowed.

Here’s how you can tailor your affiliate marketing program to equity crowdfunding:

• Recruit expert-level affiliates with aligned audiences, like investor podcasters, fintech bloggers, or bigger LinkedIn groups for B2B affiliate marketing
• Create ready-to-use, legally vetted promotional assets, and consider implementing multi-level attribution to help more affiliates recoup their efforts.
• Provide incentives for high-volume referrers, like an extra commission for those who collected over $50,000 in pledges.

Additionally, you might want to use a fraud-prevention tool to screen incoming traffic in real-time and filter out irrelevant, low-quality, and fraudulent leads.

What To Look for When Setting Up an Affiliate Marketing Crowdfunding Campaign

There are two things you should consider in the first place:

• Commission size. For a pay-per-sale affiliate crowdfunding program, you need to set the right commission size and structure. While commissions vary from around 5% to 20% across industries, it’s important to gauge the competition. Look for similar crowdfunding initiatives and their commission rates, and be aware that higher-than-average commission rates correlate with higher fraud risk.
• Traffic limitations. Based on the legal rules and requirements of the market you’re in and the platform you’re using, you might have to limit traffic from specific locations or sources. For example, you might not want to pay for social media traffic or other sources that have proven ineffective for your type of campaign.

Also, you have to set up a cookie window and provide creative assets for affiliates so they can get started right away. For example, you might want to design ready-to-use forms to qualify donors on the fly.

Large-Scale vs. Micro- vs. Nano-Influencers and Affiliates

One of the less conventional yet no less effective affiliate marketing strategies you can take for crowdfunding is shifting the focus to micro-influencers and even nano-influencers and affiliates, especially if you want to minimize commissions while engaging the right donors.

The rule of thumb is that smaller affiliates have limited yet more well-defined audiences, with higher engagement and conversion rates. So instead of splurging on big Instagram accounts or famous TikTokers, it might make sense to diversify into partnering with expert-level content creators who naturally gravitate towards the product you’re going to build.

The Bottom Line

Affiliate marketing for a crowdfunding campaign might speed up the fundraising exponentially – the right campaign might help you collect the required funds in hours – but you have to make sure you’re on the safe side legally and have designed your affiliate marketing program correctly.

Make sure the necessary limitations and guardrails are in place. Research the market to identify a reasonable size of commission, zero in on reliable traffic sources with potential donors, and – most importantly – get professional legal advice to be safe at all times.