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Brands tap crowdfunding

News, 21 February 2017
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NEW YORK: Clorox is among a small number of major brands which have experimented with the use of crowdfunding platforms as a marketing tool to drive awareness, engage consumers and launch new products.

The CPG company's Soy Vay sauce brand, which it acquired five years ago, recently partnered with a start up, Three Jerks Jerky, to seek $10,000 funding via Kickstarter to develop a new Teriyaki flavor and ended with 741 backers pledging a total of $29,094.

That sum is, of course, small change for a business like Clorox, but the money is not where it sees the value of such platforms, according to Adam Simons, head of emerging brands at Clorox.

He told Advertising Age that the unit's strategy included "trying to align our emerging brand with others in the marketplace" and that, in a crowded market, the more exciting developments tended to take place in smaller companies.

"There's so much going on in food and beverage today," he said, "but all the interesting stuff is happening at the under-$25m companies – all the trends, all the interesting flavors, all the interesting business models."

From setting out initially to find a jerky brand with which to collaborate on Teriyaki flavour, "the Kickstarter thing just kind of naturally evolved", Simons explained.

"[W]e said it made sense as an awareness driver, as a way to build one-to-one connections with consumers in a way that's very important to us and, frankly, as a way to cut against the grain of typical product launches in CPG."

Money "was way low on the priority list", he added, as he outlined an additional aim of encouraging an "entrepreneurial and scrappy" mindset.

And that was also an attraction for its partner; Three Jerks co-founder Jordan Baroccas claimed the tie-up was not about the money. "That's not us," he said "We are a young company. We're very entrepreneurial. I think that's something Clorox realized and valued."

An Econsultancy blog noted that brands are increasingly using crowdfunding platforms to get market feedback and validation, but warned that this trend risked diminishing the value of such platforms if big brands overused them.

Data sourced from Advertising Age, Econsultancy; additional content by Warc staff

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