Crain News Service
Institutional investment firms, unlike their consumer counterparts, have relied almost exclusively on off-line marketing and customer service tactics.
Many of the biggest and most influential U.S. asset management companies - including Merrill Lynch & Co., Morgan Stanley Dean Witter & Co. and Putnam Investments - are gearing up to launch Internet-based efforts.
With these companies pouring tens of millions of dollars into portal launches, Web marketing sites, private communication links and site enhancements such as streaming audio and video content, consultants and executives at the companies themselves are betting the industry will be changed forever.
"It's an area that hasn't been tapped into yet," said John Payne, an analyst with Cerulli Associates Inc., a Boston-based financial services consulting company.
Spurring the surge in build-outs are the need to satisfy customer demands, dramatically increase marketing reach and decrease labor costs. "Asset managers can talk to (institutional investors) without needing to make 20 phone calls," said Mr. Payne.
Money managers are concentrating on Web content in their marketing efforts.
For example, New York-based Merrill Lynch & Co. later this year plans to launch an institutional investor portal with the working name Direct Markets Online. The venue will aggregate all Merrill's institutional offerings, including the company's Liquidity Management System, under one Internet roof.
The portal will significantly help institutional marketing for the company, said Michael Packer, managing director-corporate and institutional client group for Direct Markets, which is Merrill's institutional electronic-commerce unit. "We can send one message about our intent," he added.
Customer demand for aggregation has been a driving factor in Merrill Lynch's launch of a portal. "Clients want to see their business as part of an overall relationship" with Merrill, Mr. Packer said.
Over the coming year, Merrill will further customize portal content to increase marketing and customer service, he said. "It's targeted marketing in a gradual one-on-one scenario."
Merrill Lynch is developing its portal with assistance from several Web heavyweights, including Microsoft Corp., Redmond, Wash.; and Cisco Systems, San Jose, Calif. Mr. Packer, declining to reveal budgets for the portal project, said, "it's a substantial sum."
Audio at Morgan Stanley
Meanwhile, Morgan Stanley's MSDW Investment Management Group, New York, likely will introduce Internet audio content over the next few months, said Eileen Barron, principal-electronic commerce.
The company also is considering delivering customized content over ClientLink, the company's private customer Internet communication link. Currently, MSDW Investment Management mainly offers research, which is not necessarily customized, over ClientLink.
"Becoming transparent improves our level of client service and is our most important goal now," said Ms. Barron.
MSDW Investment Management's audio rollouts, which may be customized for clients, are meant to improve customer intimacy. Internet audio "creates immediacy and personalizes our message," Ms. Barron said.
MSDW is making most of the changes with its in-house technology team. Ms. Barron said she could not supply costs.
Ruth Hughes-Guden, principal in charge of MSDW Investment Management's institutional defined contribution business, said the company also will significantly build up marketing content for plan sponsors in the next few months. She said she could not provide details, citing early planning stages.
"Our first step was to get (the defined contribution site) up and running," she said. "Now we want to incorporate our message."
Privacy with Putnam
Boston-based Putnam Investments plans to introduce a new institutional Web site with features such as streaming video and audio content within the next year. The venue will include a password-protected private link that will allow Putnam to communicate with its institutional clients, said Jane Wolfson, senior vice president-institutional and defined contribution business.
Putnam also plans to roll out a new marketing site for its defined contribution business.
The site, which will go live later this fall, will provide marketing and educational content for prospective and current clients, said Ms. Wolfson. Fund performance information, Putnam investment philosophies and defined contribution industry news will be included.
Putnam is building the site internally. Ms. Wolfson said she could not provide costs.
Online State Street
State Street Corp. institutional subsidiary State Street Global Advisors, Boston, within the next quarter will introduce Internet-based, private client-communication links for pension consultants, said Peter Bennett, principal.
SSgA will offer consultants product information, including fund performance, and client reports. Most of the enhancements are being made in-house, Mr. Bennett said, but he declined to supply exact costs. "It costs north of $1 million on some of these things and, with globalization, it only increases," he added.
Other money managers are taking Internet marketing approaches that are intended to serve as cyberspace marketing pitches for their institutional offerings. For example, A I M Management Group, Houston, plans to launch a portal in the next six months designed for marketing the company's services to institutional investors.
Mike Rome, senior vice president-institutional marketing manager for A I M Fund Management's institutional group, said the portal will include regularly updated market commentary. For example, the site may contain information on Federal Reserve Chairman Alan Greenspan's latest speech, Mr. Rome said.
The portal also will allow A I M to tell institutional investors how it is reacting to market activity, said David Bachert, product quality supervisor. This will allow the company to quickly relay its marketing messages, Mr. Rome added.
Some managers, meanwhile, are planning their first forays into Web marketing with sites geared toward giving clients expansive information on products and services.
Templeton Investment Counsel, Fort Lauderdale, Fla., just launched its first institutional investor Web site. The venue is intended to serve in part as a marketing post that will offer information about the company's institutional funds and sales forces, said Denman Zirkle, executive vice president-institutional marketing.
Still other institutional money managers think the best way to market themselves over the Internet is by building up site functionality. For example, New York-based Deutsche Banc Alex. Brown within the next quarter will introduce an Internet feature that allows its clients to get an independent evaluation of the portfolio Deutsche is managing for them, said Matthew Carrara, managing director-institutional equity derivatives.
Deutsche is considering a global print campaign to accompany the rollout, Mr. Carrara said.
While the money managers either declined or could not supply Web budgets, Dan Latimore, director of eStrategy at Cambridge, Mass., consulting firm Mainspring Communications, said managers are spending prodigious sums - "in many cases, in the eight-figure range."
Other consultants said managers' deep pockets have allowed them to hire and keep a lot of top-rate Web development talent in-house.
"Business is driving the technology," said Radu Pasovschi, a Putnam Investments veteran and currently senior vice president for Radnet, a Wakefield, Mass.-based Internet developer for money managers.
Still, some industry consultants expect the longstanding, hands-on, marketing approach will die hard. The attention "institutional customers typically demand cannot be easily provided over the Internet," said Mr. Latimore. "But information transparency and transmission will become easier and cheaper."