How hedge funds can take a page from the playbook of the Fortune 100

Mon Jun 2, 2014

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Manage your online reputation or the world will manage it for you.


  David Andrew Goldman of Five Blocks

By David A. Goldman

There was a time when protecting your reputation online was one item on a list of priorities for a hedge fund’s management team, usually near the bottom. When considering a hedge fund’s costs and shifting priorities, repairing or improving their online image tended to fall by the wayside until a crisis occurred.

The stakes are higher today. An increasing percentage of hedge fund investment is being sourced from pension funds that are sensitive to "headline risk." Tabloids and even traditional media are always hungry for salacious rumors about hedge funds and particularly their managers. An online reputation that frames the hedge fund and its management in an unfavorable light can cause investors to question whether to invest, taint subsequent media coverage and invite regulatory scrutiny.

In this climate, having a plan and taking an active role in managing one’s online presence is a key marketing strategy. This is particularly true for hedge funds, which regularly deal with mitigating risk. We recently conducted an extensive study of the top 100 hedge funds ranked by assets (sourced from the Absolute Return  Billion Dollar Club), looking at several factors that influence online reputation, including:

• Ownership of their Google search results

• Prominence of the hedge fund’s corporate website

• Prominence of social media pages and the (missed) opportunities that exist there

To place our study of these 100 firms in context, we compared them to the Fortune 100. Although Fortune 100 companies are typically older and more established brands, there are many similarities in the online search results when searching for them online. For both groups, Google search results include a mix of corporate pages, news articles, social media profiles, Wikipedia articles, stock quote pages and other financial profiles. The study’s findings uncovered some untapped opportunities for hedge funds to manage their digital reputations in a manner similar to that of their F100 counterparts.

What can top AUM hedge funds learn from the Fortune 100?

Ownership

A key method to assert control over your search results is to own them, literally. Many Fortune 100 companies own multiple domains that appear prominently in the search results. This ownership unquestionably helps protect their search results from unfavorable news coverage or "activist" blog posts appearing indefinitely. Separate domains for a parent company, its affiliates, its recruiting arm, a philanthropic endeavor, and social media profile pages are all effective and likely-to-rank examples of ownership. Making sure the content on those sites is complete as well as linking between them will ensure that their impact is maximized.

Quick Stats

The average F100 Company owns 2.63 prominent corporate domains, while the top hedge funds show only 1.17 – less than half the corporate presence of F100 firms in their first page of Google results.

While top AUM hedge funds own, on average, 26% of their top 10 search results, Fortune 100 companies own 47%. That’s nearly double.

A primary reason for the substantial ownership for Fortune 100 companies is that Google detects that domains owned by a company – hedge fund or Fortune 100 – are the most relevant content in the search results for the firm. This is because the majority of searches are navigational, so when someone searches the name of a hedge fund Google’s algorithm assumes they may want to navigate to the fund’s website.

Location, Location, Position

The most important aspect of ownership is having a corporate website at the top of the search results. Numerous studies have validated that this is the expected position for the corporate site and that it receives the most attention from searchers.

Further, site links – the links shown below a search result meant to help users navigate your site – are almost exclusively granted to corporate websites appearing in the top of the search results.

Site links also provide another series of anchors (sites owned or influenced by the fund) within the firm’s results page that help the fund take control of the conversation online and prevent negative news from overtaking the fund’s results page.

Quick Stat: While 100% of the Fortune 100 companies have their corporate site as the top result, only 72% of the top hedge funds exhibit this important anchor.

Having a plan to control the way you are perceived online represents a significant opportunity for hedge fund to:

• Brand their search results

• Prevent negative news from dominating their results

• Use owned and controlled sites to direct stakeholders to additional places where the messaging is about the firm's differentiation

Social Media but NOT to Socialize

Another key takeaway from our research relates to the use of social media. Though often used as a way to communicate with target audiences (a role that is far less relevant for hedge funds), another reason for hedge funds to have a social media presence is to exert greater control over their brands online. Establishing and optimizing a company’s social media profile will help to rank it prominently, which will have a positive impact on the company’s online reputation.

Interestingly, for both the top 100 AUM hedge funds and F100 companies, about 10% of their first page search results are from social media sites. While the F100 companies’ social media results are primarily from Facebook and Twitter – understandable given their intent to communicate with a broad audience – hedge funds’ social results are largely from LinkedIn. In fact, across search results for all 100 hedge funds we studied, LinkedIn is the single most frequently appearing domain.

But here’s the kicker: nearly all of those are company pages auto-generated by LinkedIn and nearly 60 percent of them appear to be unmanaged. Yet Google still considers them relevant and important enough to present on the first results page.

Here is an example of an auto-generated, unmanaged LinkedIn company page for a hedge fund:

Contrast this with a fully-managed LinkedIn company page for a hedge fund:

Hedge Fund managers should know this presents a great opportunity. If they leave the LinkedIn page blank, in the future Google is likely to rank the result less prominently – leaving the brand open to unhelpful or damaging search results. This represents a significant branding and messaging opportunity for hedge funds to deliberately craft how they present themselves online, rather than letting LinkedIn do it for them.

Hedge funds are vulnerable to how they are perceived online but they are not defenseless. By taking a lesson from Fortune 100 companies, hedge funds can improve their online reputations and mitigate reputational risk.

David Andrew Goldman is the chief strategy officer at Five Blocks, a technology and digital consulting firm with a focus on online branding and reputation for financial services companies and high net-worth individuals. 

Miriam Hirschman, research manager at Five Blocks, contributed to the research and writing of this column.

See also:  Why hedge funds should care about Google search results

ISSN: 2151-1845 / CDC10004H