Tiny companies such as Stratton Management may not have a clue about promoting their funds. Then there's Fred Alger Management, which is taking a Web 2.0 approach.
Most of Alger's funds are sold through financial advisers, so the New York fund company was not accustomed to dealing with do-it-yourself investors—the target audience for its new Spectra Green Fund (SPEGX), launched in January. Working with Google, (GOOG) Alger devised several hundred search terms that track Spectra Green's mission. Those include "green investing" and "global warming."
Google's auction process lets advertisers buy the sponsored links that show up on the top and right side of the page. Costs can really vary: On some days a search word can cost as little as 10 cents or as high as $65 per click.
What Alger quickly learned is that key words like "mutual fund" are too broad and pricey. The best bet is to keep search terms narrow—"alternative fuels" delivered a high 12% click-through rate in mid-February. "The sweet spot is finding a word that is niche enough so that it doesn't burn a hole in your pocket, yet it says exactly what you are," says Alex Bernstein, Alger's vice-president of marketing. While Alger won't say how much it is spending with Google, the tab is expected to be seven figures. So far, the fund has brought in $6 million from green investors.
By Lauren Young