Asset management firms have never been known for edgy marketing and advertising. Their reputation has always been staid and stoic.
But the industry is getting ahead of the curve by embracing social media to communicate with investors and financial intermediaries. Asset managers' social media efforts are being carefully integrated with other marketing efforts, and a majority expect social media will become an increasingly important way to communicate with their customer base in the years ahead.
In Money Management Executive's first annual Social Media survey, conducted in April via Zoomerang, 60% of the 45 high-level executives who responded said their firm is using social media.
Twenty-five percent of these executives who participated in the survey were chairmen, presidents, CEOs, COOs or other C-level equivalent, 31% were SVPs, EVPs, VPs or equivalent, 19% were directors; 19% were managers and 6% were partners. All executives of influence.
The majority of these professionals work at mutual fund companies (38%), followed by broker-dealers (19%), registered investment advisors (19%), service providers (12%), insurance companies (6%), banks (6%) and other, namely law firms, trust companies and asset managers (25%).
The most popular social media outlet is LinkedIn, used by 77%. That is followed by Twitter and Facebook, with 64% using each. Thirty-two percent have an internally generated microsite, 27% use YouTube, and 14% use other outlets, namely Wikipedia, Scribd, Slideshare and blogs.
Which forms of social media communication outlets are they using? The most popular form is e-newsletters (60%), followed by videos, blogs and e-mail blasts (each used by 50%), discussion boards (15%) and instant messaging (15%).
What do all these efforts add up to? More exposure.
So far, asset managers don't expect social media to generate an immediate return on investment or sales, with 68% viewing it as another branding tool and 50% using it for advertising or promotions. Forty-five percent disseminate market commentary and news on social media, 23% use it to recruit employees, 14% use it for internal corporate usage, and 5% use instant messaging or chat rooms to provide customer service.
While only 5% of respondents are able to deliver e-commerce or direct sales via social media, a large number, 41%, are able to generate leads through it.
Who are they targeting? Forty-three percent are reaching both consumers and businesses, and 29% apiece are targeting either just consumers or businesses.
As far as how they are managing their social media program, it's very much an internally driven effort. Fifty-seven percent are integrating their social media communications with other marketing and advertising efforts, and the same number, 57%, have built it internally. Quite a number, 38%, promote specific individuals or voices on their social media outlets, such as portfolio managers, CEOs or advertising spokespeople. Only 10% have used an outside vendor to build their social media platform, or use outside vendors or contributors or content.
To comply with regulations for social media, 70% have developed internal rules and policies, and 30% work with an outside vendor.
Budgets, so far, are low. The majority, 53%, spends less than $50,000 a year on social media. Thirty-five percent spend between $50,000 and $250,000, and a scant 6% apiece spends up to $500,000 or between $500,000 or $1 million. No one is committing more money than that.
That is likely to change within the next three to five years, however, with 17% expecting their organization's budget and resources allocated to social media to "increase considerably" and 56% expecting it to "increase somewhat." Seventeen percent think it will remain the same, and 11% think it will decrease somewhat.
Most of the asset managers who responded are new to social media, with 75% using it two years or less (40% for two years, 35% one year or less). Only 15% have been active on social media for three years, 5% for four years, and 5% five years or more.
And the penetration, so far, is low, with 53% receiving fewer than 1,000 page views on their social media site a month. Twelve percent each receive up to 5,000 page views or up to 10,000 page views. Six percent receive between 10,000 and 20,000 page views, 12% between 20,000 and 50,000 page views, and a mere 6% are getting 50,000 hits or more.
Nonetheless, 47% of asset managers view social media as a "valuable" tool and 35% view it as a "somewhat valuable" tool in terms of generating sales, interest, brand recognition or advertising impressions. Only 18% think it is "not very valuable." No one thought social media is either "highly valuable" or "not at all valuable."
In the next three to five years, however, that is expected to change dramatically, with 35% expecting social media to be "very important," and 41% anticipating it will be "important." A minority, 12% apiece, think it will "not be very important" or "not at all important."
Indeed, MFS Investment Management is using social media to reach financial advisers and investors.
"We view social media as the way to reach and engage the next wave of investors, Gen X and Gen Y, while still allowing our distribution partners to have the primary relationship," said Bill Finnegan, director of retail marketing at MFS. "We see a ton of upside to social media. Ultimately, it is where the world is living today, and it is a great way to connect quickly with people and build brand loyalty."
MFS' goal in using social media-Facebook, LinkedIn, YouTube, Twitter and iTunes-is to promote its brand by offering key insights into investing in the markets, as well as promoting its investor and adviser sentiment survey, Finnegan said. MFS has also found it very useful to embed QR (quick response) codes in fact sheets and prospectuses that link to videos of portfolio managers, particularly because those videos can be constantly updated.
At the end of the day, Finnegan said, "The next wave of consumers are expecting you to have a presence on social media. If you are not in the social media space, you will be left behind."
Financial services marketing consultancy Kasina recently issued a report, "Harnessing Social Media to Drive Business Results," that confirms the growing importance of social media.
"Firms are no longer [in sole control of] their own brands," Kasina said. "Millions of financial advisers and investors spend hours each day recommending, following and sharing information [on asset management firms and products via] social platforms and sites. Social media has fundamentally changed how buyers interact with brands. Modern reputation and brand management demands investment in social media to build loyalty, retain assets and gain market share."
Gregory FCA Communications, a public relations firm that specializes in financial services, also attests to firms' growing appreciation for social media. "We have seen an unmistakable surge in interest from asset investment advisory firms in social media in the past 12 months," said Joseph M. Anthony, senior vice president.
"It has become even more pronounced since December," he said.
Asset management firms typically start with their websites to make them "more social friendly" by announcing their presence on LinkedIn, Twitter and Facebook, Anthony said. Many are also particularly keen on using blogs and videos as "a new medium to disseminate investment commentaries and macroeconomic perspectives that formerly went out in newsletter form," he said.
"Mutual fund and ETF companies see a big upside with social media because it's a way to reach a retail audience without relying on wholesalers and advisers all the time," he said.
"Most importantly for the asset management industry is the ability to monitor website traffic and seek to capture customer information where they can," he said. They can see the impact of their social media presence by reading the discussions posted and "the buzz and thought leadership around certain terms," he said.
As the Kasina report puts it, "Social media is a way to connect with your most loyal customers where they are."
