Financial commentators often use a baseball analogy of “What inning are we in?” to describe a point in a cycle.
Stocks and corporate credit are in the “later innings”, according to some, based on their near-decade long runup, while blockchain technology and its applications have been in the “early innings” for a few years now.
However, for digital marketing in asset management, the game hasn’t even started. We’re in batting practice, if anything, and those not taking practice swings run the risk of falling behind.
Ironically, financial services was one of the first industries to embrace the digital revolution, investing large sums in high speed connectivity for faster trade execution, which now is measured in nanoseconds. But for an industry known for seeking out edge, many asset managers have been complacent when it comes to marketing. Instead, business development professionals have relied on analog dialogue with pre-existing relationships and blast emails for the relationships they hope to develop.
Lower Fees, Higher Competition Drive More Creative Marketing
The digital revolution has upended business models in many other industries, and asset managers are now confronting this reality. Low-fee index products now attract the bulk of fund inflows and due to trailing market dynamics, are generating solid returns. This further strengthens the need for differentiation in order to justify higher fees. This is forcing executives to rethink the old model of reaching investors one at a time, an expensive endeavor involving lots of flights, hotels, steak dinners and conference fees.
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The power of digital has afforded companies in all industries to reach their desired audience at scale, and with consumers now tied to their phones this reach is consistently available. These consumers include investors and asset allocators. Their day-to-day involves constant defense from cold calls and meeting requests that should be obsolete in today’s digital world. As investors spend an increasing amount of their day on digital platforms, asset managers are presented with the opportunity to consistently reach this audience. Furthermore, they can do so in a way that aligns incentives through a mutually efficient workflow.
Using Artificial Intelligence and Machine Learning to Increase Efficiency
AI represents the next massive frontier for maximizing engagement between a financial organization and its client. The adoption curve has certainly started but we aren't even scratching the surface of the potential.
To use an analogy with familiar names, the “FANG” giants (Facebook, Amazon, Netflix and Google) built their empires knowing exactly what customers want, when they want it, and what they want next - based on their past behavior. This personalized approach, powered by artificial intelligence and machine learning, has propelled these companies to widespread consumer adoption and stratospheric valuations. Today the financial services industry is presented with these same opportunities, and just like in these other industries, the reduction in operating expense associated with more efficient marketing will result to decreased cost for the consumer and increased margins for the manager.
Asset managers have seldom used this tech-enabled approach, leading to many wasted hours among sales and marketing teams. If prospects have shown interest in certain segments of the marketplace through platform behavior, they are likely worth reaching out to. Similarly, if readers responded more positively to a certain blog post or video or white paper more than another, such information will help inform future content marketing efforts and resource allocation. The products s that these professionals are marketing have millions of dollars and thousands of hours invested in their development. Shouldn’t the same process follow in marketing?
Why Haven’t Asset Managers Done this Already?
The reluctance for the industry to adopt systematic, digitally-assisted marketing programs based on evidence is not much of a surprise. Once asset managers have achieved a certain size and established reliable distribution channels, they are often loathe to change something that does not appear broken. In particular, executives who come from an investing background may not see an immediate ROI on building out such an effort.
The good news is that turnkey products exist to make tracking content marketing initiatives easier. Investors are already flocking to such platforms to get all their information in one place as it is, so that previously unavailable scale is already built in.
Looking Ahead to 2018
If 2017 was batting practice for digital marketing among asset managers, I’m comfortable calling 2018 the first inning. In a business predicated on scale, the largest players, who collectively manage trillions of dollars, are all investing in these tools to cement market share. The greater business landscape is littered with victims, thus the smaller managers cannot afford to let the digital revolution past them by.