Study: Firms ramp up marketing budgets

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More than half of the respondents to a recent private equity survey have increased their budgets for marketing materials and websites over the past 12 months, according to a report released by BackBay Communications and research firm PitchBook. Fifty four percent expect to invest further in those areas in the coming year.

Respondents cited branding as an important way to establish a strong, unique identity in the market, particularly when targeting limited partners, chief executive officers of potential portfolio companies, investment bankers and lenders. With 694 firms in the market, according to PitchBook data, differentiating private equity firms for LPs can be assisted by proper brand management, the study said. 

 

Brands can be very powerful, but it doesn't always have to be high profile. 

Klaus Bjørn Rühne 

However, while firms may plan to invest in marketing materials, the fundamental components of establishing a brand remain generating strong portfolio company returns, establishing a history of investment discipline, building a cohesive firm structure and avoiding “major portfolio company blow-ups”, according to respondents.   

“Brands can be very powerful, but it doesn’t always have to be high profile,” said Klaus Bjørn Rühne of ATP Private Equity Partners in the report. “It is about returns. Some LPs will pick high profile brands because their stakeholders know them, but they may not have good track records. Sophisticated LPs go for returns.”

Despite respondents’ reported interest in stepping up their marketing efforts, only 7 percent said that they regularly engage social media outlets like LinkedIn, Facebook, Twitter or YouTube to increase their visibility. Less than a third of those surveyed, 30 percent, said they would like to use social media in the future. 

BackBay, which specialises in brand management, and PitchBook surveyed 256 private equity professionals for the report, 134 of which were representatives of private equity or venture capital firms. Survey respondents also included 72 investment bankers or intermediaries, 37 service providers, seven limited partners and six lenders.