As the hedge fund market prepares to advertise and attract more of the general public into its previously exclusive arena, advertising experts are urging the sector to reveal more of its inner workings than most managers will at first feel comfortable with.
Madison Avenue executives are suggesting that hedge funds consider highlighting the ideas behind some of today’s advertising lingo: the funds should aim for “transparency,” “access” and “performance,” in contrast to the reputation the funds have now of exclusivity, secrecy and exclusion.
"They have to find a way to be more transparent," said Rob Reilly, chief creative officer of Crispin, Porter & Bogusky, a unit of MDC Partners Inc. "They need to be honest and show how the money is made and how their process works."
It may take some getting used to on the part of hedge fund managers, but in today’s world businesses cannot disclose too much, says Reilly. As an example he explained the advantages of a recent ad campaign by Dominos Pizza, Inc. The pizza company played on information that consumers were not so happy with the taste of the product, so the ad campaign promised a new and tastier recipe.
"Being quiet used to be seen as a competitive advantage, but Madoff changed that, and being unknown and unheard of is no longer acceptable," said Allen Adamson, a managing director at Landor Associates, a branding firm owned by WPP PLC.
Bernard Madoff changed attitudes about disclosure after he was caught masterminding a multi-billion-dollar Ponzi scheme. Madoff pleaded guilty and received a 150 year sentence in federal prison.
Mr. Reilly added that hedge funds drop the word “hedge” from their name, because of the negative connotations that word inspires.
"In advertising it's all about using words that sound solid," he said. "Words are everything."