This is what you’ll be creating:

Step 01

First, create a 700by300px document. Start with the background. Select the Rectangle Tool(M), create a 700x300px shape and fill it with the radial gradient shown in the image below. Lock this shape.

Step 02

Seelct the Type Tool(T) and add your text. Use the Impact font then follow all the other properties shown in the Character pallete (image #1). Select this new text and go to Object > Expand. Fill the resulting shapes with white and place them in the middle of your artboard.

Step 03

Next, you need to cut some small shapes from these letters. Pick the Pen Tool(P) and create some paths like image #1. Select them along with the letters then click on the Divide button from the Pathfinder pallete. Create a new layer, name it “LETTER SHAPES” and move the shapes filled with white (from image #2) inside. Create another layer, name it “FOLDED SHAPES” and move the shapes filled with gray inside. Use the Reflect Tool(O) to move all the folded shapes as shown in image #3.

Step 04

Add these Warp effects for each shape from the “FOLDED SHAPES” layer then go to Object > Expand Appearance.

Step 05

Fill the resulting shapes with the gradients shown in the image below.

Step 06

Duplicate the “FOLDED SHAPES” layer then add these Drop Shadow effects for each shape from the duplicate of “FOLDED SHAPES”.

Step 07

Select the shapes from the duplicate of “FOLDED SHAPES” then go to Object > Expand Appearance. Delete all the shapes from the resulting group, except the “< Image >” shapes. Select them all and group them (Ctrl + G) as shown in image #2. Duplicate the “LETTER SHAPES” layer. Select this new layer and go to Compoused Path > Make. Name the resulting shape “Letters” and move it above the < Image > group. Next, select “Letters” along with the group the go to Object > Clipping Mask > Make. Name the resulting group “SHADOWS” and move it between “LETTER SHAPES” and “FOLDED SHAPES”. Later you can lower the opacity of this group 70% or any percentage you want.

Step 08

Let’s continue with the letter shapes. Make sure that all these shape are filled with white then add a 1pt aligned to inside stroke (R=253 G=253 B=253). Next, add a new fill for each of these shapes then use the liner gradients shown below image #5. Finally add the drop shadow effect shown next to image #9.

Step 09

Select the Ellipse Tool(L) and create a squeezed shapes like the one shown in image #1. Fill it with R=0 G=113 B=188, change it’s blending mode to Multiply then add the Zig Zag, the Roughen and the Inner Glow effects shown in the next images.

Step 10

Reselect the Ellipse Tool(L) and create some random ellipses like in image #1. Fill them all with R=0 G=113 B=188, change the blending mode to Multiply, add the Inner Glow then group all these shapes (Ctrl + G). Select this group and add the Roughen effect shown in the next picture.

Step 11

Finally, open the Brushes pallete. Click on the drop down menu of this pallete and go to Open Brush Library > Artistic > Artistic_Ink. Select the Brush Tool(B) then use the “Fountain Pen” brush to create your text. Select these new paths then go to Object > Expand Appearance. Next, select the resulting shapes and click on the Unite button from the Pathfinder pallete. Fill the resulting shapes with R=0 G=113 B=188, change the blending mode to Multiply then add an Inner Glow like the one used in the previous step.

Final

Now your text effect is done. Here is how it should look like.