Questions for Hedge Funds to Answer before Running Ads

Advertising is expensive. Just like buying a new car, you don’t just give your money to a car dealership before knowing where you will park your car, why you need the car, and where you will drive it.

Advertising also requires you to answer some questions if you want to get the full benefit from your ads. The following is a list of questions every hedge fund must answer before running an advertising campaign, whether in be on the radio, through direct mail, or online.

1.     How Will We Store the Names of Respondents?

Not all the people responding to your ad will be immediately interesting in setting up a meeting with you. In fact, most won’t. Most will be contacting you for more information. This is something you must know before you run the ad. And, knowing this, you need to have a plan for how you will collect these peoples’ and institutions’ information. Without collecting this information, you’re letting many of your already qualified leads slip away.

2.     What’s the Follow-Up Procedure?

Ideally, your advertisement should request the prospect to contact you for more information, as asking for a meeting after a single advertisement is like striking up a conversation with a woman at the grocery store and asking her to come back to your place (she still has groceries to bring back to her place!). Likewise, your prospects are responding to your ad to find out more, not to jump into bed with you. You need a good follow-up procedure that can educate your prospects in a way beneficial to you. Make this a system and have a specially prepared set of materials ready to send your prospect.

3.     How Will We Position Ourselves as Industry Leaders?

You should create the advertisement with the mindset that you’re not the only hedge fund advertising in your chosen media. Therefore, in your ad, you will have to position yourself as the top authority in your industry so that your ad wins the attention of any potential investors willing to contact a hedge fund for more information. Positioning yourself as the leader in your industry is easy. You only need to properly define your industry. For example, instead of being the “#1 Hedge Fund” (which you aren’t), become the “first hedge fund for upper-middle-class investors looking to invest in the technology markets.” The more specific your industry is, the easier it is to be the authority in it. With the advertising regulations imposed upon hedge funds, you have to be more creative here than simply promising good returns on investors’ portfolios.

4.     How Can We Give Our Prospects the Right Expectations?

One reason for low response rates in financial advertising has to do with lack of clarity. Too many funds and financial companies talk only about their product, ignoring the process that the prospect must go through to understand and finally purchase the investment. Plan beforehand the process that follows the advertisement campaign. Lay it out in a clear way for the investor. For example, “Contact Us” is unclear. Instead, opt for, “Call our toll-free number below to request free information on our fund. You will receive the requested information in the mail 7 business days after leaving your address with us.” The latter leaves no doubt as to what a prospect can expect. In my experience through dozens and dozens of online tests, this clarity alone can double or triple response rates.

5.     How Will This Advertisement Connect to Our Others?

If you’re running multiple ad campaigns, you can save yourself a lot of trouble by having a single endpoint for all the campaigns, such as a phone call. This should be a no-brainer, but too many of my clients have insisted on setting up different routes of access. This tends to end up as a logistical nightmare. If your goal is to test your ads and know where each phone call is coming from (e.g., you’re running two ads in the same magazine and want to know which ad is generating more leads), you can set up two phone numbers that route to the same phone. You can still track which number was called without having two separate phone systems. See your advertisements as part of a bigger funnel; you needn’t rework the entire funnel system every time you switch water sources.

6.     How Can We Automate the Process?

The answer to this question isn’t one you need to immediately act upon. However, you should know in advance how you plan to automate the advertisement-to-follow-up process if your ad is a hit. Set up the system in a way that can be easily automated. For example, if you are positioning an employee in front of a phone to take addresses from interested investors, you should have a way to remove that employee, such as by running the calls to a voice recording that asks investors to leave their addresses. Once you get big, you’ll find that you have ads spread out all over the place and don’t have the time or manpower to deal with all the different leads you get. Think big when you’re small: Plan ahead for automation.

7.     How Can We Prevent Prospects from Looking Up Our Competitors?

This is often a hard question to answer, but with proper positioning and creativity, you can often find a way. Fighting against your competitors should be done in a professional way, especially in the financial industry where everyone’s ready to sue at the drop of a hat. In general, the best way is to present yourself as an impartial (as impartial as you can be, anyway) investor-advocate. In this way, you’re the first stop for information on choosing a hedge fund. For example, you can offer an advocacy whitepaper or book and state, “read this before you invest in a hedge fund!” You can even claim to send leads to a more suitable hedge fund if your hedge fund is not right for them. Of course, once they talk to you, they’ll realize you’re the right hedge fund for them (provided your educational materials are doing their job).

8.     How Can We Remarket from This Ad?

Remarketing is an excellent form of both advertising and branding. In remarketing, you re-expose your hedge fund to prospects who have recently seen an advertisement for your fund. This re-exposure breeds familiarity and puts your fund at the top of the prospect’s mind when he thinks “hedge fund.” It can also bring lost prospects back. When you run an advertisement, think of possible remarketing opportunities. For example, if you plan to run ads in two trade magazines, back-to-back, and find that these two trade magazines have an overlap in readership, consider switching the back-to-back ads to simultaneous ads. Many theoretical marketers would argue that such a strategy is wasteful because “you’re paying to reach the same audience twice.” But I can tell you from five years of practical (not theoretical) online remarketing experience that the money spent on remarketing has a higher ROI than money spent on advertisements directed at a “fresh” audience. Remarketing really works, and you should plan to remarket whenever you have the chance.