Statistically speaking, the use of video content has the potential to increase website traffic by as much as 41 percent, this according to an Aberdeen Group study cited by the Content Marketing Institute (CMI).
More to the point, the CMI article suggests that video increases conversion rates by 100 percent, a statistic based upon studies conducted by Eyeview, a video marketing technology firm.
Given these findings, one might reasonably expect to see the increased use of video on hedge fund sites. However, this is not the case.
Hedge Fund Marketing
The passage of the JOBS Act (Jumpstart Our Business Startups Act) led to a relaxation of the rules governing advertising by hedge funds. Arguably, one would have expected to see robust marketing campaigns evolve in the five years that have elapsed since the industry was “unchained” from advertising restrictions.
Two obstacles stand in the way of meaningful progress. The first is the unavoidable fact that regulators continue to “nitpick” many hedge fund marketing strategies. That which was initially perceived as a promising tool for hedge fund growth, instead became yet another regulatory minefield to navigate.
The second obstacle, very much related to the first, is the continued burden of targeting any marketing effort only to those who meet the definition of a qualified investor.
Clearly, these obstacles continue to depress any thoughts of developing marketing strategies that veer away from the traditional, pre-JOBS Act norms. After all, hedge funds have a decades long history of attracting investors without a broad-based public marketing campaign. Understandably, most hedge fund managers cannot find a compelling argument that favors assuming the financial and regulatory burden that new marketing strategies would bring to the fund.
While the industry’s reluctance to expand its marketing strategies is understandable, the fact remains that large swaths of potential investors are being overlooked. One can make the argument that there is insufficient outreach to hundreds of thousands of qualified investors.
In fact, at the end of 2016, there were 9.4 million Americans with a net worth of between $1 and $5 million, 1.3 million individuals with a net worth between $5 and $25 million, and 156,000 households whose net worth exceeds $25 million.
The hedge fund industry continues to grow, not only in terms of assets under management, but also in terms of the number of hedge fund firms. In the face of increasing competition between hedge fund firms for traditional investors, one can make the argument for hedge fund firms developing marketing campaigns that target the demographic illustrated above.
Is Video the Answer?
The inclusion of video in marketing campaigns may or may not be successful for hedge funds. The larger question is what can the industry develop in the way of a marketing strategy to tap the vast potential that exists in the 10.8 million millionaires that live and work in the United States?
Answering this question correctly may well chart the future of the hedge fund industry and ensure its continued growth.