One of the most anticipated votes for the hedge fund industry is happening today when the SEC votes on the JOBS Act implementing regulations (for information on the proposed changes, please click here). Presumably the SEC will allow certain private fund managers to generally solicit which means that managers will have expanded options when it comes to advertising. This is expected to create a new category of service providers to fund managers seeking to maximize visibility.
We will of course continue to provide information on the new regulations as soon as they are released. Below is a guest post from Mark Macias which highlights certain marketing strategies that managers might want to consider after the JOBS Act vote.
How to Prepare for the Anticipated SEC Changes on Hedge Fund Advertising
By Mark M. Macias
Most hedge funds, private equity groups and venture capitalists will be at a disadvantage when the SEC lifts the prohibition on general solicitation, which is expected to occur in 2013. The decades-old marketing ban has prevented many financial groups from developing an online infrastructure that is crucial to marketing a service to investors.
Marketing a fund with the media is drastically different than marketing a product to the public. Credibility must be established from the start before the media will even consider putting your portfolio manager on TV or quoting him as a financial expert. He may manage a $100 million portfolio, but the media is not going to take his word for it without seeing evidence of his expertise. This is why it’s so crucial for all funds to establish credibility now with a strong online presence before the new proposed SEC rules on advertising go into effect.
Here are some marketing strategies your fund should consider as it undergoes an online marketing and media campaign to reach new investors.
First – the media. Credibility matters in life, but it especially matters for journalists. Whenever a portfolio manager is pitched as an expert to the media, journalists will quietly and overtly measure his expertise, integrity and experience in the financial industry. Journalists will want to see proof on why this portfolio manager should be the best expert to add color to the market.
This is why your fund needs to establish a website now to start building credibility in the online world. If a reporter doesn’t see an online presence on your fund, credibility questions will be raised. This doesn’t mean you won’t succeed with a media placement, but it will be a much harder story sell to the media if you can’t support or show why your fund manager is an expert. You can establish credibility quickly by writing editorials on the market and submitting them to influential business news sites, like the Huffington Post, Business Insider, trade magazines, etc. Writing a book on your industry will also give you another avenue to position yourself as an expert. Here are a few credibility questions you should be able to address and answer before your fund pursues media placements.
- What makes you qualified to speak on this topic?
- How many years of experience have you spent in the industry?
- How big is your fund in comparison to others?
- What part of your daily routine is spent reinforcing your expertise?
- What do you know as an insider that other investors would want to know?
Once you establish credibility, how do you get the media’s attention? How do the news producers and newspaper editors decide what to print and publish? Most people ask this question like there is a magical formula that scientifically reveals whether a story should be pursed or scrapped. If it were this easy to identify news stories, you can bet the formula would have been hacked and posted on the Internet by now. The fact is news selection is an art and just like any other profession, involving creativity, opinions and experiences, it is subjective to where you stand.
News is a public service, which means your story must provide a service to the public. It sounds simplistic, but many people don’t grasp that concept. They assume the media is entitled to do feature stories on the public in the name of public service. No, the media is entitled to do stories that benefit and help the public with information that is relevant today. And in today’s saturated media market where ratings and unique viewers drive advertising rates, a story idea will have a better chance of getting picked up by the media if it has an inherent tease value. In essence, this is a story that draws readers in because they are intrigued.
One of the biggest factors that will decide whether a story makes the evening news or morning newspapers involves timeliness. News is from the root “new,” which means you must find a new and unique element to pitch if you expect the media to pursue a story on you or your fund. If your story is old news, then you need to find a new way to spin it by finding an angle that is tied to a timely matter. For example, if you are a Middle East fund, trying to get publicity in the US, tie your fund to a current event. Currently, there are protests throughout Turkey and Egypt. What are these protests doing to the stock market in those countries? How will a new leader in those countries impact the economic stability? How is the (local) currency market reacting on the international stage? Those are all questions you can pose to position your portfolio manager as an expert and in a timely manner. Here are a few questions to help you discover a newsworthy angle for your fund.
- What is different about my fund? How does this personally relate to investors reading this publication? The more you can define it, the better your chances for a successful media placement.
- How does my fund impacted by international events?
- What is the timely element with my fund?
- Is there a personal story to tell about my fund, like maybe the portfolio manager has overcome a personal obstacle or has survived through several decades of difficult financial times? What can we learn from this portfolio manager?
- Is there a new trend arising in my field that will affect the pocket books of consumers? For example, is the rising cost of wheat starting to put a damper on profits for bagel shop or Italian restaurant owners? Will my business soon be forced to raise prices on the menus because the price of wheat keeps rising?
- Does your fund have a direct impact on technology, materials or energy, reshaping the future? If so, what is that innovation and how will it change lives? What trend is it leading?
Finding a unique angle is not as difficult as it may sound. You just need to open your mind to timely events that impact and influence your fund. If your fund is geared towards a niche audience, like cyber security, scan the headlines in the business sections of various newspapers for possible tie-ins to current events.
ABOUT THE AUTHOR
The founder of MACIASPR, Mark M. Macias, has worked inside the newsrooms of NBC, CBS, KTVK, the Arizona Republic and King World Productions. As the Executive Producer with WNBC in New York, Macias approved and vetted story ideas from publicists, reporters, producers and viewers. He was also Executive Producer for a national business show that was syndicated by NBC. You can read more on his PR Firm at www.MaciasPR.com.
Cole-Frieman & Mallon LLP is a boutique law firm focused on the investment management industry. Bart Mallon can be reached directly at 415-868-5345.