On the heels of the SEC's approval of groundbreaking regulation, communicators should be gearing up as our industry braces for the entrance of a new, emerging market of clients: alternative finance firms.
A few weeks ago, the Jumpstart Our Business Startups Act, or JOBS Act, was passed by the SEC, allowing private issuers (hedge funds and private equity firms for example) to advertise and promote their performance via paid, earned, and owned media channels for the first time. This is a major sea change for the marketing laggards of the finance world -- particularly hedge funds, which have shunned the limelight and traditionally paid their advisers to keep them out of the press.
In other words, the JOBS Act will be a catalyst for funds to invest in marketing and communications -- in many cases for the first time. So will we be seeing hedge fund or private equity fund ads during the Super Bowl? Unlikely, but we will see very big changes. The funds that take notice and plan for change will win and the others will be left behind.
This is a significant development for PR agencies that were classically hired by these funds to play defense or simply to make the press go away. Now PR agencies will be hired to be offensive and help funds build brands. In other words, this whole class of financial firms represent an emerging market for agencies operating in a mature communications market. The JOBS Act ruling will certainly attract new dollars into the PR field. But don't get too excited yet. Hedge funds and alternative finance firms will embrace the new world order slowly and conservatively. And they will want firms that can work across the marketing mix -- not just in media relations.
These developments are also significant for in-house positions, where we are seeing hedge funds snap up CCOs and CMOs for in-house roles. Progressive, larger funds like Citadel, DE Shaw, Elliot, and the like have been building their in-house talent for years, but according to my recruiting friends, the mid-sized players are also actively hiring or at least contemplating the future.
A client of mine once said about agency growth that if you're growing, someone else is shrinking, meaning market share is simply passed from one firm to another. It is nice to see emerging markets in our field. Although this market won't represent the opportunity social media did, for savvy entrepreneurial players who understand financial services communications, this market is poised for growth.
Jennifer Prosek is the founder and CEO of Prosek Partners.