Friday, 28 April 2017
Last updated 5 hours ago
Apr 6 2017 | 5:52pm ET
Editor’s note: It’s no secret that the environment confronting alternative investment managers is challenging: asset growth is difficult, pressure on fees intense and redemptions are making headlines every day. As traditional approaches to raising capital become less effective, writes Meyler Capital CEO Kyle Dunn in this contributed article, there are five things managers can do to stand out from the crowd.
IT’S TIME FOR CONTRARIAN MARKETING
By Kyle Dunn, Founder & CEO, Meyler Capital
Hedge fund and private equity executives are exasperated.
Asset growth is erratic, passive investments are grabbing attention and assets, redemptions make headlines, fees are under pressure, performance is only just beginning to show signs of life, and competition has never been greater.
Even positive news is couched in negatives; a recent headline in The Wall Street Journal provides the latest example: “Pension Fund Sticks with Hedge Funds as Others Flee” (22 February 2017). The industry has a negative reputation and most media outlets – even dedicated business content providers – publish articles they believe readers are expecting.
As a marketing agency exclusively serving the alternative investment sector, we talk to hedge fund and private equity executives every day. They know that what they currently do – and have been doing for years – to raise assets isn’t working. Performance is regressing to the mean. Asset managers are clamoring over themselves for the same investor dollar. Investors have too much choice, and in today’s environment it’s hard for any fund or manager to stand out. Technology platforms compound the problem: it was hard to delineate between 10 funds, let alone 500 in a single portal.
But while managers know that their current marketing is not working, they don’t know what to do instead. Going forward, what will differentiate one manager from another? Who will get the money? It is time the industry admits that “good performance” is now nothing more than the price of admission.
The way out of this exasperation is becoming clear -- marketing will separate the winners and losers. It is the only thing that can.
But it’s not marketing in the conventional, traditional sense as defined by years of “best practices” in this sector. It’s time for Contrarian Marketing in the alternatives space. Contrarian marketing is about building audience instead of chasing transactions; layering information precisely, rather than pummeling people with decks; communicating consistently – not just when raising money, and putting marketing technology to work so hedge funds and private equity managers can focus on managing money. And completely integrating all of this with the fund-raising function.
Done correctly, prospective LPs will start presenting themselves to you.
Here are five things you can do today to stand out, be remarkable and raise capital more effectively.
1. Track your video plays. Still think video is “too retail’? Look at the websites of the titans in this industry – they disagree with you. But it’s more than just having quality, compelling video content – once you’re able to track and analyze how people are interacting with those videos you can identify those prospects who are ready to engage in a dialogue.
2. Transform Your CRM Into Marketing Analytics & Automation. You can’t be an effective marketer if you are not capturing and interpreting online data: you need to know who is visiting your website and what they are doing. You can also offload many routine communication tasks to an MA platform – once again freeing up more time to manage your portfolio.
3. Shred your marketing deck. Too drastic? Shred every other page; it probably won’t make a difference in how the information is perceived. Start with a clean sheet of paper: define your value proposition; identify your edge; state three reasons why someone should invest with you. That’s the essential part; you can add the bios and the historic performance information – but those pieces won’t differentiate you if the essential part isn’t crisp and memorable. Of the 50 decks we’ve reviewed in the last six months, on average we cut them in half with no perceived loss of content and much enhanced user experience.
4. Mobilize Your Communications. The way people absorb information has changed and is changing. Most allocators don’t have time to read dense marketing decks. Mobility is a necessity, so content must be optimized for mobile consumption. Don’t assume that the person reading your material is sitting at a desk; it’s just as likely that the information is being viewed while that person is in motion: is your approach equally as agile?
5. Integrate marketing and fundraising. No one wants marketing materials; they exist in order to facilitate a capital raise. But the converse is also true: without contemporary, purpose-built marketing tools the capital raise will be a long, laborious process – which may ultimately lead nowhere. You need an integrated approach so that the marketing tools complement the human capital raising talent – and that talent is fully versed with how to get the most value out of the tools.
If all this is contrary to what you’re used to doing, ask yourself: Are traditional marketing strategies working? Are you building a brand along with a track record? Are you achieving the AUM growth and stronger investor relationships that you want? If the answer is no, it’s time to try something different – something contrary to what hasn’t been working.