Technology

Big Versus Small In Social Media - Part 1

Harriet Davies Editor - Family Wealth Report 13 February 2013

Big Versus Small In Social Media - Part 1

In the first of a two-part feature, this publication explores how small and large wealth managers alike are making use of social media channels in advertising and marketing.

New media could level the playing field in financial services when it comes to advertising and marketing, giving a boost to those smaller firms who can get their strategies right. However, large players also have tricks up their sleeves, say marketing experts.

For the wealth management industry, social media and the prevalence of blogs and online content has forced a famously closed-door and personal business into a period of self-reflection about the way it wants to interact with clients and be perceived by the public.

Why market at all?

The concept of branding and marketing in wealth management is an interesting one, for, while those embroiled in the industry may forget this, many of its finest brands are unheard of beyond a small clique of those in the know.

One could argue that that’s because it’s a highly selective business; some firms are in the enviable position of preferring to turn clients away than worry about bringing them on board. But that is likely to be the exception. On the other hand, a strong brand does not equal a mass brand (such as Rolls Royce), and, for a wealth manager, while not everyone is a prospect every prospect is important. And when it comes to being known, nowadays, marketing experts are agreed that having a strong web presence is essential.

“The name of the game with the web is discoverability and content,” says Stacey Haefele, chief executive of HNW, Inc. “When someone is searching, are you there?”

“Where do you find your content if you think of buying a new car or going on vacation?” says Jimmy Moock, vice president, financial PR at Gregory FCA. “I go to Yelp. Everything’s online.”

Not everyone has come around to that way of thinking, though. “Clients still ask me: is this story going to appear in print?” says Moock. “And I say, well, I really don’t care if it does or if it doesn’t, because the easiest way to make sure it reaches as many eyeballs as possible is the online version.”

A boon to small firms?

This could open up the marketing and advertising space within financial services. Wealth managers may bemoan such developments: there are barely enough hours in the day to do “real work”, let alone maintain a corporate blog, a Linkedin profile that’s more than your name and connections, and an interesting yet inoffensive Twitter feed and Facebook profile, and that’s just for now, but it’s worth bearing in mind the bigger picture of all this.

For years, one of the greatest gripes about the financial services industry generally has been the sheer size of a number of institutions within it – nearly all of which compete in the wealth management space. That size brings colossal marketing and advertising budgets. In 2012 the Wall Street players spent around 2.5 - 3.5 per cent of revenue on advertising and marketing, according to their financial reports. That worked out to a whopping $2.2 billion at Citigroup, $1.87 billion at Bank of America, and $2.58 billion at JP Morgan.

They also have access to advertising talent from outside the wealth management industry. For example, last year BNY Mellon brought in the global executive director of advertising and branding from General Electric Company, an ex-Leo Burnett employee who had run accounts for huge global brands, as its chief marketing officer.

When it comes to the budgets of big versus small firms, “you’re talking about the Hamptons versus a handful of sand in terms of the battle that they’re up against,” says Moock.

The web has changed the game when it comes to marketing and advertising though. As Moock noted, expensive mediums like print and TV have accessible alternatives. And this is at a time when a significant proportion of industry assets are held with independent firms and the dynamics of the industry are changing dramatically.

“I think that the web represents a big opportunity for everyone and really levels the playing field,” says Haefele. “Smaller firms have a leg up because they can be a bit more nimble.”

“The small players now have a unique opportunity,” says Scott Graflund, a partner at FallLine Strategic Advisors. However he adds: “What I would say is the big players do too…to take their great brands and bring them down to a local level.”

Financial services “at odds” with the power of the web

Unusually though, this is one area where it’s harder for larger firms. Partly this is because social media, one of the most powerful marketing tools on the web, is best used as a personal medium, says Haefele. “Canned content” turns people off. “It’s tough; it’s the challenge of mass customization,” she says.

As advertising legend David Ogilvy famously said: "You cannot bore people into buying your product; you can only interest them in buying it." He reasoned that the volume of advertising seen by the average consumer causes them to screen most of it out; only an interesting advert can get past this. The problem today is much greater: statistic vary hugely, but the number of marketing messages a consumer sees today is in the many thousands.

Standing out from this chorus is hard, and probably impossible using canned content. But there is a good reason for this anodyne content: it is the only way of imposing the control that social media takes away – a lack of control that grows with the number of employees.

“In this new social world the opportunity is about the viral nature of what technology allows people to do, but it’s also the risk of how companies that have traditionally been able to really control the message face. So it’s the tension between those two,” says Graflund. “It’s just really interesting how financial services, with its regulatory requirements, are so at odds with the power of the web.”

Indeed, regulators are “just looking for an excuse to turn their attention to a big enterprise,” says Haefele, and every social media alert from FINRA “raises as many questions as it answers.” Some firms “have looked at that and just said no,” says Graflund.

There is some movement here though. Firstly, says Haefele, many firms are using trial groups as a way into social media use. Secondly, what FINRA wants to see is track record and procedure, says Haefele. “Establish a precedent, establish a point of view, then put down a track record.”

What’s more, tools are emerging that are making more possible. Graflund says that new CMS vendors allow the distribution of firm content as well as almost instant approval of advisor-created content. “[This] allows individual advisors in small towns anywhere to get back to a central group that has workflow tools to rapidly review and push that back with approval,” he says.

This localization means the brand can be conveyed through “carriers” to disparate locations and social groups.

“With the right tools big firms can have that small firm feel with that global brand behind them,” says Graflund. “Firms that have the right tools are going to be the end-game winners.”

The second part of this feature will be published tomorrow.

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