ETF platform InvestEngine is building its marketing strategy around influencers rather than broad spectrum advertising, its chief marketer says.
Created by the founder of Gumtree and launched in July 2021, InvestEngine is a platform allowing retail investors to invest in ETFs at a low cost. The start-up positions itself more against mainstream businesses such as Vanguard and Hargreaves Lansdown than against trading platforms like Freetrade or Robinhood, majoring on a wider choice of ETFs and better user features.
Unlike these brands, however, Head of Marketing Adam Lees says InvestEngine is not interested in mass-targeted advertising. This is based on the recognition that building a brand would take huge time and expense if it was done purely through a traditional advertising route.
He says that the brand does not go “toe to toe with Vanguard on a brand advertising perspective, but in terms of actual share of voice in the community that we want to be in.
“Because we’re not focusing on mass advertising, because we’re not spraying and praying, because we’re very focused with our marketing efforts, it means that our average portfolio size is about £8000 per client and growing on a weekly and monthly basis.”
InvestEngine looks to use influencers, partnerships and word of mouth to talk directly to communities of investors, which is where around 60% of its customers come from.
“We’re looking to get proper investors and we still think a lot of those proper investors revert to their communities to understand about investing, so we’re talking in those communities.”
He adds that he doesn’t “want to give [the likes of Vanguard] ideas but that’s where they should be talking.
“But they can keep chucking their money into advertising if they want to do that.”
This mindset has informed InvestEngine’s approach to partnerships. InvestEngine works with established names and brands such as the ETF issuers, asset managers, accountants, personal finance bloggers and comparison sites.
Word of mouth and referrals is another pillar of the strategy, or as Adam puts it, “people telling their friends and family that they like InvestEngine rather than us having to convince them they should like InvestEngine.”
A key part of the approach is demystifying ETFs and explaining how they can deliver a low-cost way of diversifying investments, particularly at a challenging time for investments generally. During the Covid pandemic, with the help of huge quantitative easing programmes from the central banks, stock markets boomed and many people with excess savings decided to pour them into investing. This trend abruptly reversed in 2022, when inflation and the resulting interest rate rises began to bite, sending markets plummeting.
“A lot of people who may have been investing for the first time and experiencing those investment apps would probably have been burned either by maybe getting into crypto or getting into trading or being overexposed to single stocks and things like that,” says Adam.
“And that’s where ETFs and the price point we’re at is a perfect fit for an investor. I think if we’d been around slightly sooner, we’d have seen significant success on top of the success that we’ve already had.”
As crypto and stock picking have become less enticing, Adam sees the narrative shifting more towards ETFs and that kind of investment. He notes that InvestEngine is not targeting speculative capital. Investing “is not trading,” he emphasises.
However, there is a low general awareness and understanding of ETFs in the marketplace, with 50% even of InvestEngine’s own clients not having heard of them. The approach is an educational one: for example, putting ISA-related content on comparison sites and driving them to start an ETF discovery journey.
“There’s still a long way to go in terms of people recognising that what they can do with an investment trust or with a mutual fund, they can do with an ETF for cheaper, with greater transparency and accessibility.”