What makes for a successful ETF launch?
If the panel I recently moderated at the annual Global Indexing and ETFs conference – and my own professional experience – is any indication, there’s no simple answer to this question.
Considering Gregory FCA is a top 5 PR firm when it comes to working with ETF issuers, it made sense for us to have a hand in the conference’s discussion surrounding the environment for these products. With Christian Magoon, founder and CEO of Amplify Investments and an ETF industry pioneer, and Financial Products Research CEO and ETF Business Review founder Rob Ivanoff sitting alongside me onstage, the conversation quickly shifted toward how marketing can make or break the success of a newly issued ETF.
With 284 exchange-traded products launched in 2015 and 132 new launches so far this year, differentiating your fund when bringing it to market is a challenging task. Not only are there a limited number of truly innovative ideas, but the top 10 issuers are bringing new products to market at a faster rate than the upstarts and boutiques in the ETF arena. The cards may appear to be stacked against the smaller-sized ETF issuers looking to break into the limelight as most firms do not have the advertising budget of industry giants like Vanguard, nor a celebrity endorsement like Kevin O’Leary’s suite of products from O’Shares Investments.
These obstacles aside, space remains for new ETFs from smaller players to infiltrate the crowded landscape. However, it requires a coordinated attack with the right marketing, distribution and media-relations weaponry. As noted by Magoon and Ivanoff during the recent ETF panel, and as evidenced by Gregory FCA’s countless successful ETF launches, there are a few surefire tactics ETF issuers can use to make a splash in the sea of competition.
1. Ensure your ETF represents something new
ETFs are a dime a dozen, and unless your idea inherently captures the attention of investors with a unique value proposition, it will be a difficult sell in such a congested arena. Look for different trends in the investing world. What’s in vogue right now? Find a product capturing the momentum of the day and ride the wave of AUM growth. We witnessed this opportunism firsthand with the launch of PureFunds’ cyber security ETF and with Alerian’s first-to-market MLP ETF, AMLP.
2. Explain or demonstrate the novelty and its value
Investors and the financial media alike want to hear a good story. Ensure the novelty of your product can be illustrated in a way that resonates with the investing community. A product developed solely for the purpose of being unique is not enough. It must embody a rising trend or popularizing strategy that delivers value in order to capture attention. Look for holes of opportunity in the market where people want to invest but lack a cost-efficient vehicle to do so, as the aforementioned Magoon has done with his firm’s Online Retail ETF.
3. Coordinate marketing and sales efforts
Your marketing and sales efforts need to seamlessly coincide throughout every stage of a product launch. Purchase software that pinpoints investors holding similar securities to those in your ETF and target them with your marketing materials. Distinguish your product with affinity groups by catering your messaging points and value proposition to their specific needs. Both efforts need to be firing simultaneously before and after the launch to ensure your product gains traction on the open market.
4. Build credibility through media relations
With so many options to pick from, retail investors can have a hard time choosing from the pack. For example, more than a dozen dividend-oriented ETFs have launched this year alone. Nothing differentiates your product and builds credibility in the minds of investors quite like seeing it discussed in reputable financial media outlets. I’ve seen volume shoot through the roof after a single CNBC appearance. A healthy spike in volume can lead to the creations that can move an ETF from the precipice to the penthouse.
While each of the above tactics performs its individual function in a successful ETF launch, the alignment and coordination of these collective efforts serve as the adhesive holding the entire strategy together. That’s where the power of public relations representation comes into play.
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While ETF pioneers are busy pitching, rebalancing and maintaining the product, teams like ours sync the messaging, marketing and media relations efforts into a cohesive, buttoned-up attack.
With the competitive landscape stacked against new entrants, some help along the way can bolster the chances of success for your next ETF launch.