Most GPs will concede the value of the firm's image, even beyond their LP audience. A firm's reputation among corporate executives, deal intermediaries and service providers is key. However, a shop's brand remains an intangible asset, and in most cases, difficult to assess. Cultivating that image involves real time, money and talent. Determining how to spend any of those three resources is the core challenge of marketing professionals in private equity, made all the more difficult by the fact that the role is not well established in this industry (see p. 27).
The art of marketing is to wisely deploy concrete, often expensive tools in the pursuit of something as elusive as the ?right? public perception.
As ethereal as the ?result? may be, there are guidelines for employing those tools in the service of that message. Most private equity marketing campaigns use some mix of the following tools:
The supremacy of the web today as the front of all information means more of a firm's constituents visit the web site first, so this site frequently becomes the cornerstone of the firm's entire marketing campaign. As a result, web site design and maintenance is taking a substantial portion of a marketing staff's time, talent and budget. This article will explore the internet as a marketing channel for private equity firms, as well as the other channels listed above.
In any sort of marketing effort, first impressions matter. In most cases, when people want to research a topic, whether it's the new mole on their elbow or the cheapest flight to Mozambique, they log on to the web first. The many constituents pursued by the private equity industry are no different.
?Investors and lenders and sellers will all tend to visit a firm's web site first,? says Christine Croissant, the managing director of marketing and IR at New York-based Riverside Co. ?As a result, we treat our site as probably the most important tool we have.?
?A web site is just a destination. How you attract quality traffic to the site is as important a component of online marketing as the experience of the site itself.?
With a few exceptions (see feature on p. 26), most firms already have some site up and running. Determining if or how a site should be upgraded is increasingly left to the judgment of the marketing staff. Often when a marketing position is first created at a firm, this is one of the initial tasks the new hire will undertake.
There are books dedicated to online marketing generally and web sites specifically, but the process can be simplified to addressing four elements; talent, content, posting and tracking. Given the technical skills required for each phase of the project, sourcing the right designer is a common first step.
Designers on parade
With the sheer volume of web site ?designers? available, tapping personal referrals may be best. ?We vetted the resources and ideas of about 10 vendors. It was a combination of working with an outside PR agency that had their own rolodex of preferred designers and looking at sites we liked and calling the firms to see who had done their sites,? says Rebecca Vanderlake, the director of IR, marketing and communications of Chicago-based Wind Point Partners.
Once a designer is chosen, the parameters of their contract need to be determined. Several designers explain that they start with a flat fee with terms for when the task has sufficiently grown to be billed hourly. Some designers will keep the initial fee low, assuming a minimum of drafts for each phase, from proposed graphics to betas, or test versions of the site. Marketing execs stress that given the often flat hierarchies at private equity firms the approval process can be long and complicated even if the site isn't, so many drafts of each deliverable should be built into the flat fee.
With the designer's contract signed, the next step often involves drafting the text. ?When writing for web sites, brevity is key,? Croissant explains. For the sake of time, categories such as 'investment criteria' and ?professionals? should be approved ahead of the text so that the designer can start on the structural map of the site as the language is perfected. This structural map is known as a ?navigation tree,? a hard copy that shows how all the pages link with one another.
?You've got to build a site with the idea that someone's traveling through the site, not simply reading pages posted online. The idea is to allow a smooth route from one idea to the next,? says Martin Cardoe, the marketing director of London-based 3i.
The navigation tree can be an unwieldy document for the partners to review, so some designers suggest that the marketing executive, or whoever is their principal contact, approves the tree and the partners view the beta site first. One marketing executive suggested having third party reviews of the beta site from friends of the firm, either an investment banker or current LP, to offer some a fresh perspective.
posted in terms of content. Today's crowded web requires equal attention to how the site is posted. Michael Gaiss, a senior vice president of Highland Capital Partners, incorporates ?search engine optimization? (SEO) techniques to insure that they're among the search results when relevant market participants are surfing for information on them, or their portfolio companies. Many designers will address this in the site's architecture, but it's worthwhile to stress the priority of this.
?A web site is just a destination. How you attract quality traffic to the site is as important a component of online marketing as the experience of the site itself,? explains Gaiss.
Many marketing executives suggest conducting sample searches on various search engines by using part of the firm's name or relevant combinations of broader terms such as ?middle market? and ?private equity? or the firm's industry focus like ?oil and gas.? Designers may know the programming that optimizes the search, but firms can verify whether that optimization is working.
Even with that sterling site posted and the test searches done, the web site will remain a work in progress. Wind Point's Vanderlake and her peers update their site with press releases and portfolio companies as necessary. What event necessitates such an update is traditionally decided with input from the IR and PR staff as well.
Tracking the guests
Making certain the site stays relevant is one priority but a task often neglected is reviewing the site's visitors. One of the technologies available today is the ability to track who is viewing what elements of the site. ?Tracking readership is a vital aspect of 3i's online campaign,? says Cardoe. ?In this way, we're able to discern just how deep their delving into the site, and what specific element is attracting their attention.?
Highland's Gaiss tracks readership daily: ?The first thing we look at every morning is our web site traffic through our analytics software. For example, yesterday we had over 1,600 unique visitors to www.hcp.com.? The quality of that traffic information depends on the sophistication of the tracking tool. Designers should communicate what data on visitors can be tracked, and offer options for upgrading or tailoring the tracking function to the firm's priorities.
Most firms maintain some retainer fee with the designer to tackle tracking readership and updates, depending on their own IT capabilities. Updates can often be executed by the in-house IT staff, or the tech providers already under contract, though such tasks are not.
Elevating the ?emailer?
Beyond the firm's web site, there is the use of emailed correspondence, or ?emailers? on a given deal, a new hire or some given topic. 3i uses the emailers for a variety of purposes. ?We will circulate a deal alert, and maybe package up an ecomm on a region or sector,? says Cardoe.
Marketing execs distribute these emailers over a wide circulation including investment bankers, lawyers and other deal sources as well as LPs, both current and potential. ?Even if they don't read it in its entirety, it's a great way to make a brief, informative connection with your network,? according to 3i's Cardoe.
There is a tendency to make emailers unwieldy, especially those on a given industry or sector. Most marketing executives warn that emailers shouldn't be confused with white papers. Few recipients will scroll down their BlackBerry screens to read 3,000 words on why oil equipment is all the rage in Latin America. Hefty graphics should be avoided as well, given that Treos and their like don't tend to render them easily. ?Let it be simple, without too many links,? suggests Cardoe.
Many agree the most successful of these tend to include one or two market observations or a succinct report on deal close or exit.
Production of these emailers need not require a graphic designer given the recommended simplicity, but the distribution, if over 100 to 200 individuals, is best done with a delivery service that includes some technology to avoid spam folders.
Although there are contrarians (see box above), most executives stress how vital the right web site is to any campaign. ?Our other primarily offline marketing initiatives such a events, speaking, media relations, database marketing, and innovative programs, all contribute to and amplify what is being done online,? says Gaiss.
Long, long ago, when ?my space? referred to one's parking spot, and ?googol? was an enormous number, there was the brochure. Even with the speed and ease of online options, the printed deliverable remains a facet of many campaigns.
One marketing executive explains that given the costs of reprinting, brochures tend to describe the firm in the broadest of terms, with folds in the front or back to insert single sheets on new staff and deals. More often than not, the brochure will build off the web site's text, font and imagery as it's frequently the most updated language to be approved by the partners.
Many firms employ a single designer to coordinate the brochure, web and logo production to insure a common look to the deliverables. ?Consistency of brand is important. We plan for our marketing platforms and materials to be consistent in tone, message, and appearance. They also are designed to leverage each other where possible, such as links to our web sites in our printed materials, online Event Calendars, etc.,? says Gaiss.
Beyond consistency in look, content is the key question when producing printed materials. Most marketing executives are turning to printed materials for two purposes: to add context to quarterly activities and to demonstrate expertise in a given geography or industry.
All the news that's fit to promote
Wind Point Partners does an annual general mailer to put the year's activities in the context of their investment strategy. Vanderlake explains: ?We review the transactions we completed with a focus on displaying consistency. We like to stress three critical elements in every deal: a top caliber CEO, a solid platform to build from, and a distinct plan to create value in a three- to five-year timeframe. With this, we're demonstrating our strategy and defining the types of deals we're looking for.?
In producing these newsletters, some will rely on the in-house communications staff to provide content, while others will commission freelance writers. Regardless, the look, feel and editorial focus should be approved by the partners, with the rest of the process from writing to proofing to printing under the aegis of the marketing staff. Given the lean operations of most private equity firms, it's sometimes best to outsource the writing and have the marketing executive serve as editor of the publication.
Part of the crafting of a private equity image is thought leadership. With the increasing prominence of operationally focused funds, displaying a sure grasp of an industry is vital. White papers can do a lot to demonstrate just such expertise, but they tend to be antithesis of most marketing tools; unwieldy, jargon heavy and by their very name, not terribly colorful. It's those very qualities that lend them their credibility.
That doesn't mean they can't be employed with savvy. In many cases, an outside academic or analyst is commissioned to produce the piece, and returns with their findings in suitably dry form. Firms will often cherry pick certain findings and have their PR resource generate a release that summarizes a few newsworthy points. The entire white paper is then posted as a pdf on the firm's site.
One marketing executive admitted that it's more the existence of the white paper that creates that impression of expertise, rather than its actual quality. Few market participants have the time to read such a document in its entirety, but a white paper with some worthwhile conclusions can imply all the right things about a firm. Few executives suggested mass mailing these white papers, but merely dedicating suitable resources to promoting the findings.
Taking the podium at any of the leading private equity conferences can do a lot to make a GP feel among the industry's elite. However, several marketing executives explained that such events weren't a focus. Instead, GPs went to events within the industries relevant to the firm's investment strategy.
You've got to build a site with the idea that someone's traveling through the site, not simply reading pages posted online.?
?We focus on entrepreneurial venues and events in the industries that we specialize in and where we can connect directly with the founders and management of prospective portfolio companies,? says Gaiss. Speaking at energy or manufacturing conferences creates a dialogue between a GP and potential targets. The conference serves as a friendly atmosphere to demonstrate a vision of the industry as a whole, and position the firm as a collaborator with management.
?I want GPs talking to a collection of oil and gas executives, not an audience of their competitors,? says 3i's Cardoe.
In most cases, winning spots at these conferences is a matter of calling the organizer and making the case for why a partner should address their event. The unforeseen cost is in producing the slides and writing the speech. Frequently a communications staff will draft this, but it will take someone's time to write and the partner's time to polish. The only way such engagements are worthwhile is if the presentation is both substantial and compelling, and that takes some combination of time and money.
It's my party
Events wholly sponsored by the firm can be useful for sourcing as well. For example, New York private equity firm Quadrangle Group, a media specialist, hosts an annual media conference.
The best of these events need to provide a genuine value for attendees, forego chest thumping for thoughtful analysis, even if the firm is footing the bill. The branding of the event should be apparent, but low-key, with a focus on what the event will provide participants.
This value can be a guest speaker of some note, or a topic of particular interest, such as upcoming regulatory changes. ?We host CEO summits and forums, industry roundtables and other entrepreneurial focused events. We continue to see tremendous value in bringing together our network and ecosystem for the benefit of the companies we back, or those companies we someday might,? says Gaiss.
Marketing executives stress that some of the most successful events are fairly small gatherings. A cocktail hour or breakfast event is easier to commit to than an all day conference. Many suggest starting with a one or two hour event, and forty to fifty attendees. That said, event planners often cite a 10 percent attendance rate, so if the target is fifty attendees, 500 should be invited.
Regardless of the actual attendance, marketing professionals find tremendous value in a proper follow-up effort. Forwarding a transcript of the keynote speech or a copy of the speaker's presentation to all invitees can build interest for the next event. ?We send out letters summarizing the event to everyone we invite, not just those who showed up,? says Cardoe.
Given the industry's reliance on networking for reputation building, there's little use for traditional advertising as part of a broader marketing campaign. Witty billboards won't convince that middle market manufacturer to sell his interest to a given firm. That said, tombstone ads in publications are fairly common to remind LPs, investment bankers and other intermediaries of a firm's activities and capabilities.
If there's any debate surrounding the use of tombstones, it concerns where to place them. Some argue that anything less than the Wall Street Journal isn't a worthwhile way to note that acquisition or that fund closing, though more commonly, the ad is placed with one of the leading private equity journals, and naturally a few come to mind.
Beyond the traditional tombstone, there is the ?gangstone? which is the box consisting of several tombstones. ?In some ways this is an effective approach to showing the breadth of our investing activity,? says Marcia O'Carroll, vice president of marketing at Boston-based TA Associates. One executive saw some value in placing gangstones in trade magazines covering sectors that fall within the firm's investment focus.
Some firms have found non-tombstone ads in key publications to be an effective way of communicating values and strategy to a given audience. After all, many people still find print publications to carry a certain gravitas lacking on the internet.
In implementing any of these initiatives, there's a tendency to treat outside resources as either a place to offload the entire project, or micromanage them to the point of taking more time than if it was kept in house. Striking a balance between the two is naturally no easy task.
Most professionals relied on outside counsel for PR or technical expertise, specifically for their online campaigns. Many didn't feel they understood all their options on the web to decide on the best web elements to use. Few tapped outside marketing firms of a generalist bent though, especially if they had an in-house professional assigned to task.
Marketing executives will often tap outside PR, not marketing help. That's largely due to the relationships with journalists that an outside agency has the luxury of cultivating. Those relationships are also why so many firms will rely on local PR firms when they expand geographically.
?They are our first point of contact for the media,? explains Phillip Bassett, a partner at London-based Permira.
The degree to which firms will collaborate with these outside agencies varies. Permira's strategy is to tap agencies in an ?advisor? capacity, whereas TA Associates treats the agency as an extension of their own office. ?We're in contact daily. It's as if they're sitting in the office with us. Outsourcing has proved to be an effective approach to managing the PR process for us,? says O'Carroll.
Others are far less willing to employ agencies. ?We have a very distinct culture that we try to convey and it's difficult for an outside shop to understand our culture within the larger private equity space, so you veer between PR gurus with a fixed view because they've worked with so many firms, and the less experienced, that don't understand the industry,? explains Vanderlake.
Online marketing: the future is now
This includes:The firm's web site and emailed communications or emailers, such as email updates on a deal or new hire. Cost considerations:Posting text on a few web pages is inexpensive, but tapping the medium's strengths requires outside expertise. Designer contracts usually offer some mix of flat and hourly rates, with many maintaining a marginal retainer fee for maintenance. Additional software may be purchased to better track visits to the site. Large scale email distributions with graphics can best be delivered using a service which prices by number of recipients.
Web site? We don't need no stinkin' web site!
For all those advocates of treating the web site as the basis for the rest of the marketing campaign, some leading firms still treat them as an afterthought, if they build one at all.
If one plugs in the words ?Thomas H. Lee? into their online search engines, they get directed to a perfectly competent site for?Thomas H. Lee Putnam Ventures, a venture affiliate of one of the most venerable private equity institutions in the history of the asset class. Yes, Thomas H. Lee Partners has no web site.
?We're in the process as we speak,? explains Hoby Cook, the firm's VP of IT. ?Over the years when everybody in the industry was in a rush to get a web site out, the results were really nothing more than a brochure. Our present effort has transitioned from that thinking to ?what are we going to do?? How should it look, what information will it contain? We've been challenged to agree about the form and function. At a certain point, it almost became sort of a plus, became sort of a elitist thing that we didn't even have a web site. Now of course that's changed. Given the sheer density of public information being generated about private equity firms, we need to exercise control over our story on the web to the greatest extent possible.?
Thomas H. Lee Partners is hardly the only notable firm without a web site. Other firms without the web presence include:
Ripplewood: When searching online for the firm, the results include a press release from companies purchased by the shop, and a release from DMLT announcing the firm launched their Investment Café product. There's no site at the moment.
Centerbridge Partners: A compelling case for launching a site? the first search result for this new firm is a site called unconfirmedsources. com, which appears dedicated to blunt political satire. The site reports Centerbridge is funding the Iraq war, in return for a percentage of the country. Centerbridge does have a web site, but it only displays the firm's logo and address.
Apollo Management: They have no site, but they have their own entry on Wikipedia, the online encyclopedia. Among the search results is ?Apollo Investment Management? a firm dedicated to Asian equity plays, launched by Claire Barnes, not Leon Black.
Printed materials: old-school standbys
This includes:Brochures, white papers, hard copy newsletters, fact sheets and postcard announcements. Cost considerations:Design cost may vary depending on the complexity of the deliverable, but number of pages, paper weight and colors will impact printing and shipping as well. Shipping hard copies can be costly, especially with international recipients. Drafting the editorial content can burden current staff as well and is often outsourced to freelance writers or academics, depending on the piece.
Conferences/Events: shindigs for sourcing
This includes:Speaking engagements, sponsoring third-party conferences and events sponsored by the firm exclusively. Cost considerations:Depending on the stature of the conference and the firm in question, many speaking engagements do not require a fee from the firm. However, producing slides and drafting a presentation will take resources from in house or an outside provider. Sponsorships of conference vary on the stature of event and level of visibility. Firms looking to host their own events should consider the costs of renting space, invitation costs, food, beverage and fees for a third-party speaker to attract participants.
Advertising: above all, proper placement
This includes:Tombstone ads and other print advertising Cost considerations:Not all private equity firms use print ads, but many do post tombstone ads in trade or financial publications to commemorate acquisitions, exits and fund closings. Costs for placements vary widely depending on the stature and circulation of the publication.
Many private equity communications professionals are charged with also building the brands of portfolio companies. A new service is targeting this trend. Earlier this year, UK-based ad agency M&C Saatchi announced the launch of Accelerator, a boutique shop dedicated to servicing private equity-owned businesses at a GPs' pace.
The new agency will offer streamlined branding to a portfolio company that commences as soon as the firm closes the deal.
?Accelerator's approach matches the style of private equity management- making things happen fast, more efficiently, removing processes that corporates can get bogged down in,? explains David Kershaw, chief executive of M&C Saatchi.
Those ?processes? are essentially the chain of approval, which by communicating with a company's new owners directly, is compressed dramatically. Accelerator mimics the flatness of a private equity firm with a few senior partners, avoiding those same layers of bureaucracy on both sides of the collaboration.
?We arrive with our own 100 days plan to mirror the firm's own plan upon deal close,? says Kershaw. That plan includes stiff implementation metrics, with the first ?on-air? spot to arrive in 50 percent of the industry average.
GPs will be glad to see Accelerator's compensation strongly linked to results, with decreasing operational costs in progressive years of the private equity firm's ownership of a company, offset by an exit fee linked to the incremental value created at disposal.