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Johnny Carson drew 8.5 to 10.4 million viewers a night. But his audience ballooned to a stunning 19 million viewers for the final week of his show in May 1992. Today, the Late Show with Stephen Colbert is lucky to pull in 1.5 to 3 million viewers a night. Though America’s population has grown by nearly 90 million people over the 30-year period, that growth has been dwarfed by the explosive proliferation of entertainment options since Carson left the air.
Entertainment preferences have fragmented, which has been mirrored across our society. The advent of the internet, big data, personalized advertisements, and highly specific information channels has broken the audience for everything from talk shows to financial advice into ever-shrinking splinters. The idea of broadly appealing advertisements has similarly shifted from the default setting to an unprofitable fossil. Businesses seeking new customers must look in smaller and smaller crevices of our culture to succeed, and financial advising is no exception.
Though this still-developing reality presents more than its share of challenges for financial advisors looking to expand their scope, it is one that we will have to confront.
Broad appeal is a thing of the past. It’s time to find your niche.
Why advisors need to employ niche marketing
Niche marketing is a name for highly targeted advertising that narrows down an audience to a small and very similar set of potential customers based on predetermined criteria. The power afforded by Google, Facebook, and other advertising platforms allows businesses to send personalized ads to groups of people based on any combination of geographic locations, interests, values, ages, income levels, educational levels, and dozens or even hundreds of other factors.
While it may seem as though finding such a distinct set of potential customers to target would be more difficult than simply sending out marketing emails or buying airtime on local radio stations, the opposite is true. Ads that target broad audiences must simultaneously entice and not offend or deter groups of people with little to nothing in common with one another, resulting in the bland and ineffectual advertising that consumers loathe and ignore in equal measure.
Say your firm specializes in identifying and investing in companies with high ESG ratings. Reaching a broad audience would require advertising that barely touches on ESG for fear of alienating any less interested consumers who might see it, reducing your appeal. If you had some idea of what an ESG-conscious audience might look like, on the other hand, you could tailor your advertising to emphasize your specialty and make a more convincing appeal.
Identifying your niche appeal
There are several steps a niche-curious firm must take to locate and target the right customer base. TV or radio commercials are too expensive and too broad to achieve the specificity you need, so take your appeal to the internet. Before you do, however, you need to either conduct some research yourself or engage the services of an outside marketing agency to find who you want to target and where they spend their time.
The ad-targeting tools provided by Google Ads and Facebook make it relatively easy to identify demographics, preferences, age groups, income brackets, and so on. But it will take some time to figure out how large your potential market is and how to reach it.
If your appeal is very narrowly targeted, you may find that there aren’t enough eligible consumers in the area for you to turn a profit. If it’s too broad, you may end up spending more on ads than you’ll earn in new business. Identify which platforms your desired customers favor – you aren’t going to reach a young audience if you only advertise on Facebook, for instance – and factor the relative ad cost and user base into your analysis.
Once you have found a potentially profitable market for your services, design ads that will catch the eye of the consumers you’re aiming to attract. If you belong to the same cohort as your ideal audience, try your hand at it yourself. Otherwise, hire an advertising agency to design the collateral.
Generality Is dead. Niche marketing is the future
The increasingly fragmented market and society guarantees that niche marketing is the way of the future. Many smaller, less expensive ads targeted to different segments of the market are preferable to big ad pushes, and there’s little chance that trend will reverse. It may take a good bit of work to set yourself up for this new advertising landscape, but it will allow you to find customers who truly gel with your ethos – the customers who will stay with you for years and decades to come.
Matt Reiner is a CFA, CFP®, and partner at Capital Investment Advisors, a $2.8+ billion RIA in Atlanta. Reiner is also CEO of Wela Strategies, a sister company to Capital Investment Advisors, and is the founder and CEO of Benjamin™. Benjamin is an AI technology created by Reiner after seeing the gaps in technology used in his own firm. Reiner's true passion is using his vast experience to coach other advisors across the country, helping them evaluate their firms' practices and find the best strategies for future success. To reach Matt Reiner, visit www.MattReiner.com.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
