Will Hedge Fund Advertising Affect Brand Cache?

Just recently, the SEC lifted its ban on alternative investment vehicles advertising to the general public as amendments to Rule 506 of Regulation D, and Rule 144A went into effect on July 10.
jobs.

 

Mandated by the Jumpstart Our Business Startups (JOBS) Act, these new rules will make it easier for companies and private investment funds to raise capital by engaging in broader communications and marketing efforts. The only hitch is that these issuers take reasonable steps to verify that purchasers of the securities are accredited investors.

 

Without getting into the legal ramifications of what constitutes “reasonable steps to verify,” although securities law firm Paul Hastings does a pretty good job of highlighting some of its key elements, the new rules seem to be a positive step for hedge funds and alternative investment vehicles looking to capture freed-up investor cash as a result of the economy’s turnaround.

 

Changes to these rules have been in the works since April 2012, when the JOBS Act was signed into law. While some alternative investment funds already have been exploring advertising options, very few have rolled out larger marketing or branding campaigns. (Pictured right: Agriculture Secretary Tom Vilsack of the United States Department of Agriculture explaining the American Jobs Act.)

 

Not everyone may look at the new rule as a positive change. The exclusivity of these types of investments has created a certain cache among would-be investors, sort of like a country club-atmosphere, allowing only those with the “right” pedigree to gain access.

 

Maybe this is an extreme analogy, but there is some truth in jest. It’s probably a safe bet to say that an established $10 billon hedge fund may not be putting up a Facebook page. However, newer or lesser-known funds will be using the new rules to generate brand awareness among qualified investors. The result will force many of the firms not wanting to advertise to do something, especially since they will be overshadowed by funds that are marketing their investments more broadly.

 

Therein lies the quandary. Too much marketing will create brand dilution that will negatively affect perceptions among existing and prospective investors. Too little advertising just won’t generate attention. Finding the right mix of traditional and social media will be the correct strategy, although this will be extremely difficult in today’s Internet-based media landscape.

 

Positioning fund managers as experts across financial media and investor platforms sounds like an effective strategy and a good place to start, so does an ad in Forbes or the Wall Street Journal. The key here is to create or maintain cache. Otherwise, we’ll see more funds commoditized, possibly even banner ads on Google touting the latest alternative investment vehicle. Ok, maybe a stretch, but let’s see what happens anyway.

 

– George Medici, gmedici@pondel.com

 

 

Industrial Might to Fiscal Blight

The financial collapse of Detroit is certainly sad, Detroit as the home of Motown now has the dubious honor of being the largest American city ever to seek bankruptcy protection in court. What’s even sadder is that the fiscal realities of this once proud city were ignored for so long, its demise was death by a thousand cuts.

 

Detroit’s woes didn’t happen overnight. It started in the early 1970s when the foundation and builder of the city, the car industry, took a one-two punch from the oil crisis and a deep recession. This opened the flood gates for a mass exodus from the city and the population began falling sharply. As Detroit residents began to flee the city, the tax revenue, of course, went with them. A city of 1.8 million in 1950 is now home to 700,000 people, as well as to tens of thousands of abandoned buildings, vacant lots and unlit streets.

 

By all accounts, the head-in-the-sand mismanagement of politicians and union officials is well documented. For decades, it seems, the fiscal numbers set off alarms bells, but in a political philosophy that has become all too commonplace, Detroit’s leaders lived in a state of denial, kicking the can down the road, hoping that some magical solution would suddenly appear, instead of admit that the city was dying.

 

It’s a harsh truth, but Detroit got what it deserved. It has been taking on water for decades and was feckless in plugging the holes. Bankruptcy is a painful chapter in Detroit’s story, but it is, as the governor of Michigan said, also an opportunity to stop 60 years of decline.

 

Let’s hope that Detroit, and other municipalities flirting with the same issues, remember the past so they’re not condemned to repeat it.

 

– Ron Neal, rneal@pondel.com

Waking Up Out of Context

 

My wife, Rose, recently appeared on a Good Morning America segment about fertility and women waiting later in life to have children. Rose is a fertility lawyer, specializing in surrogacy, sperm and egg donation, adoption and a burgeoning array of other legal intricacies involved with fertility treatments.
 
The producers said she was an ideal fit to respond to an article in The Atlantic that essentially rationalizes why it’s OK to have children later life. Another aspect of Rose’s appeal: She is 33 years old and more than eight months pregnant.
 
Before saying yes to the producers, we considered the implications of Rose going on national TV to serve as a counterpoint to The Atlantic article. Rose meets myriad women on a daily basis who have waited until their late 30s and 40s to have children and subsequently endure months, if not years, of unsuccessful fertility treatments. In addition to the tremendous emotional toll of such treatments, there is also a significant financial burden.
 
Rose felt she could provide some context to the story by encouraging women to seek advice from their doctors earlier in life before age-related infertility becomes an issue. As her doting public relations specialist/husband, a spot on GMA also seemed like a good way to drum up some awareness about her practice.
 
So, she agreed to participate, and a day later GMA was staging our house for the interview. The camera folks took the requisite pregnant-lady-in-nursery b-roll, and the reporter asked copious questions about Rose’s practice, scenarios she encounters and why women shouldn’t wait until later in life to think about pregnancy. All in all, Rose was satisfied with the whole experience, and we stayed home to watch the segment the next morning.
 
After three teasers of Rose staring goo-goo eyed at onesies, GMA finally aired the segment. They opened with an interview with The Atlantic writer discussing why the decline in fertility over the course of a woman’s 30s has been overblown.
 
And then came Rose’s 15 seconds of inglorious fame.
 
Basically, GMA identified Rose as a pregnant woman who didn’t wait until her 40s to get pregnant, and that was it. There was no mention of her law practice. No mention of her experience working with women who struggle with infertility. No mention of our own infertility scare. Instead, Rose was reduced to some random pregnant woman waiting for a baby.
 
It is difficult for me to opine on this subject without my protective daddy-to-be instincts kicking in. But as a former reporter and communications executive, several pieces of advice come to mind for all future GMA subjects:
 

  • Make sure producers fully understand how to identify you on camera;
     

  • Ask questions about how you will be portrayed in the context of the story;
     

  • If you are misrepresented or quotes are taken out of context, follow up with the reporter and producer to ensure clarification is made on-air and online;
     

  • Write a blog post articulating why you were misrepresented and share the post across social media channels, including the media outlet’s Twitter handle;
     

  • And perhaps most of all, try to ensure your PR executive husband, wife, partner or professional is not out of town (as I was) on the day of your interview!

 

Evan Pondel, epondel@pondel.com