Another unexpected impact of COVID…
I was talking to an industry friend recently and we were trading ideas about my last thought piece, The Great Unbundling Begins. We talked about unbundling, what services were ‘worth’ now, and whether clients would ever bundle again, or if they preferred an unbundled world. One thing we both agreed upon is that unbundling is likely driving downward pressure on services, with some services suffering more than others.
After the conversation, I was stuck on two additional thoughts, which formed the genesis for this piece: with the removal of travel, and the natural audience constraints it provides (geography), what will the impact be on marketing, and how will the little guys (small corporates) get noticed in this new world?
Let me explain, and then share my thoughts.
When I speak of captive audiences, I’m talking to what life was like before COVID, specifically around corporate (and to a similar extent, analyst) marketing. I talk about “corporates” in this piece, but the exact same arguments hold true for analysts as well. As corporates and funds largely met in-person pre-COVID, there was a natural ceiling on how many corporates were in any given city at any given time, and how many funds were available to meet with said corporates in that city at that time. For the corporates, they enjoyed having a captive audience: while fund managers didn’t have to meet with them, there were only so many corporates to see on any given day, so they could only choose from that list.
Take the analogy of a movie theatre. When you go to a movie theatre, there are only so many movies playing: maybe 5 to 10. While you may not love any of them, you have to pick one – you simply don’t have unlimited choice. That’s one of the reasons why some movies get attention (when they really shouldn’t) and some movies get missed (when they really shouldn’t) – especially around the summer, during blockbuster season. Where you are, and who is there with you, really matters.
That was the state of corporate marketing/corporate access pre-COVID. There were only so many movies playing: you either chose one from the shortlist, or stayed at home and ate ice cream in your pyjamas.
Enter the digital era of corporate marketing, thrust upon the industry by the last catalyst anyone would have expected: a pandemic. Now, instead of having to choose from what’s in town, funds have a virtually unlimited list of corporates that are ‘marketing’ all over the world at once.
To revisit our movie theatre analogy, it’s like Netflix was just introduced (without those pesky geographic limitations) to corporate marketing. Funds aren’t limited by who’s in town anymore – they are only limited by their ability to align their sleeping hours with the timing of corporate marketing anywhere in the world. Funds can now meet with corporate leaders from all over the world, without having to leave the comfort of their home offices.
I believe that this dynamic will change a lot of the aspects of how the industry works – and it will change it in ways I haven’t fully had the time to appreciate – but I do have a few thoughts.
First, I’m not sure how the smaller corporates will get noticed. Before COVID, you may have been able to time your visits around when the major corporates weren’t marketing – making you the only show in town (or at least having less competition). If that didn’t work, you could always go to second tier cities, and face significantly less competition (but also a significantly smaller pool of funds). There were ways to get noticed because physical proximity and timing mattered. They were natural limiters, and used correctly, could grant any corporate a captive audience. With the advent of digital corporate marketing, neither of those hold true any longer. You’re not competing for mind share with the other corporates marketing in the same city at the same time anymore – you’re competing with anyone marketing anywhere in the world. There is only one dimension of competition now: the time slot.
Second, the unbundling, to bundling, or wherever we end up, has left smaller corporates in an ever tougher position: the brokerages who show them around and set up the meetings really can’t get paid for it anymore. In an unbundled world, small corporate meetings really don’t justify their cost in terms of revenue available to the facilitating brokerages. While I can’t give you a fully scientific answer on pricing, I can tell you that I’ve had conversations with funds and brokerages where small corporate meetings may not be worth more than $100 to clients. At that price point, it’s almost impossible to justify the time and effort required to facilitate those meetings, especially when you can take all the other meetings you’re setting up which garner a much higher price point, and offer them to anyone in the world.
Third, Brokerages are going to have to change their approach. It’s not about building a calendar to have a company in City A for X days, then City B for Y days – it’s about building a digital calendar that can be offered up to the entire client base (depending on the relationship). It’s going to get harder for them to show ‘up and coming’ corporates around – in the past, you could fill in some down time in a city or region with them – show the new corporate client around, build the banking relationship, and show a few clients an up and coming firm. In today’s world, with an endless supply of corporate meetings, I’m not sure how you squeeze those small ones in, and even if you can fit them in, I’m not sure how they will get noticed.
Fourth, Funds are going to have to adapt to the new normal, and are likely loving it (for the most part – I’m sure everyone’s missing the ‘conferences’ down in Florida and Miami, but are happy to skip it this year). All joking aside, funds now have access to more meetings, corporates, and management teams than they likely ever have had in the past. Additionally, they won’t have to travel to make those meetings, allowing them to more efficiently and effectively use their time. No travel, more meetings, and no limitations based on where your fund is located. You no longer have to wait the entire year for that major corporate to visit. You can now access them much more frequently.
Fifth, all communication is digital. I can only assume funds are going to be recording every meeting they’re having (in case it’s valuable for the future, or they want to share it internally). Transcripts can be easily created/distributed. Everyone will be more guarded about what they say/ask. Making a conversation digital simply changes how we interact with it, and how we experience it – look no further than the consumer internet to see how much it’s changed. That is going to happen to corporate marketing as well (corporate TikTok?).
With all that in mind, the recent changes to MiFID II unbundling make even more sense – of course they need to allow bundling for any companies below $1B in market cap – otherwise, these companies would get zero attention, and zero coverage, in an increasingly global, always connected world. There is only one dimension that these small corporates can use to distinguish themselves from the larger firms as everything goes digital, and that is price, and the price that will work best for the fund managers attending is “free.” Brokerages will figure out how to capture the value somewhere else.
In this era of reduced travel, corporate marketing is changing massively. One could argue that many of these changes are overdue, but like all change, I don’t think the industry fully appreciates what the knock-on effects are going to be, and what the impact will be across the spectrum. With everything going digital, and the supply essentially increasing 100x overnight (as what was once a localized event is now a globally streamed event) we’re just getting started in seeing that change.
It’s thus no surprise that the current strategy at most firms is “send it out to everyone, and see what sticks.” It’s no wonder that email volumes are skyrocketing – everyone is just adapting to the new world. If there was ever a time to get smarter about how you leverage email, that time is now.
So, when you host your next webcast with a corporate or send out the next invite, think about these changes, and what they will mean to your corporate marketing strategy. A lot is going to change, and as always, those who adapt, survive.
Best of luck out there,