Margin calls: How to show MarComms’ value

2024 is set to be my year of international conferences and trade shows.

From the Far East (April, October) to a couple of hundred miles from the US Pacific Coast (September) with a stop in the Med (June) and Benelux (May) en route. I will have spent more time on the road this year thar ever before.

Suffice to say, I have not seen much of these epic global locations, nor have I necessarily travelled in great style. And for those totting up my carbon footprint. I’ve taken public transportation in situ, which has meant both a brief chance to sight-see and a fantastic opportunity to get lost in different languages, And it’s not just me. The Institute of Practitioners in Advertising’s Bellwether Report for the first quarter of 2024 found marketing spend is increasingly being directed towards event-led activity.

My latest sojourn was to an asset and wealth management evert, which from my hazy recollection, at least – used to be known as much for its carnival atmosphere as its content.

This year, however, the mood music had distinctly shifted, with champagne corks no longer popping until well into the afternoon.

In asset management, like many other areas of capital and financial markets, the game has changed, according to many of the sessions at the event. Partnerships, alignment and eking out mare from both are key to victory in a sector that had, until very recently, been confident of its own continued success.

But working those connections are only likely to tinker at the edges as the underlying business models also need attention and this is where marketing and comms should sense an opportunity.

EY, one of the event sponsors, told me its research had shown operating margins across the top 20 global asset managers had fallen from a historic 35%-40% to around 27%.

While, compared to many real-world examples, 27% is no small beer, for an industry that has revelled in having the budget to sponsor top sporting and cultural events and travel the world without enjoying local public transport, this reduction has come with quite a jolt.

Also note that this 27% is not a whole-of-industry average. EY’s specialists warn of a “swampy middle” that is operating on much thinner margins and needs to rapidly refocus to survive.

According to EY’s findings, which were echoed on both the panels and around the beach club buffets, specialism and scale-or sometimes a combination of the two are the only games in town.

“Stop trying to do everything,” EY’s people said. From offering every strategy to carrying out every function in the value chain, there is a very dim future for the one-stop-shop approach to investment.

Instead, investment businesses need to stand out; show their specialism. Against a burgeoning backdrop of DIY options or a basic lack of visibility and/or trust, they need to connect with the buyer or end customer and explain the ‘what’, ‘why’ and ‘how’ with impact and conviction. And this is where marketing and comms can really show their value.

Product teams, investment strategists and salespeople are all vital to discussions about focus, demand and capabilities, but it is the projection of a company’s reinvigorated direction to the outside (and buying) public that is really going to nail its transformation. In the pages of Financial Promoter, at FP Live!, and in all our interactions with the industry, we hear how reaching up and getting buy in from the boardroom is vital, both for a campaign’s success and how this success is attributed to the right team.

It is also crucial to have this reach when the axes start swinging as costs are cut according to a much-reduced piece of company cloth.

Outside of investment management, while the margin issue may not have (yet) crystalised, I would be surprised if similar studies are not being conducted in other parts of our sector and stern boardroom conversations being had. Across the whole spectrum of financial services, specialisation and scale are key, but demonstrating these characteristics in a crowded market that is often chasing the same money is vital.

So, as I prepare my carry-on for a packed H2 schedule of expo halls and “Is this the bus to the airport?”, I’m looking forward to meeting many new professionals who are articulating and communicating their specialism and scale, and reconnecting with old contacts at the Financial Promoter Awards in November – on home turf.