Art as An Asset Class with Masterworks’ Executive, Michael Wenner

There are few things in life that are not volatile. The stock market rises and falls, much like a pendulum swinging from left to right. Crypto is viewed as a rocket ship, but it’s returns remain mostly inconsistent, and the housing market has seen its fair share of crashes over the years. But if you’re looking for one asset class that bucks the trend when it comes to volatility, fine art might just be it.

For centuries art has been seen as an avenue for the rich and famous to flex their wealth, but Masterworks believes it’s business model of allowing everyday consumers to invest in multi-billion dollar pieces of art, is shattering that glass ceiling and democratizing art for all.

“We consider ourselves fiduciaries or financial advisors. We're doing that because art is a very confusing and brand new asset class. We're the only ones enabling access to this $1.7 trillion market. From a suitability standpoint, to let someone Yolo their life savings into a Banksy is not something that we want our customers to do. We don't think it makes sense for someone that has a $5 million retirement portfolio to put in a hundred dollars. So we'll tell that person, just keep your money; keep the cash; put it in stocks. So we're really getting people, not only to understand what is art as an asset class, why is art important, but to make sure they're investing responsibly and investing a part of their portfolio, that actually makes sense.”

Michael Wenner is VP of Marketing and Director of Business Development at Masterworks, a platform that lets everyday consumers invest in pieces of art such as Banksy, Kaws, and Basquiat. Michael joined me on this episode of Marketing Trends to discuss how Masterworks is using centuries of data to its advantage to not just identify which pieces of art the company invests in, but also why they are opening that data up to everyone. Michael also dives into why he is bullish on content marketing, and how Masterworks views itself more as a financial institution rather than an art gallery.  Enjoy this episode.

Main Takeaways

• Data Strategy: When you need to get the attention of your prospective audience in a big way, you need to offer them something that is useful to them. Creating a large set of data about your field or industry that you can leverage to engage clients and leave a good impression with them is a great way to make a splash. 
• Marketing a new asset class: Education is the keystone of grounding a good marketing campaign for a product or service that doesn’t have a market yet. You’ve got to get creative and think about what you can do to bring value to your potential consumers.
• Content Marketing Doesn’t Work: There is an argument to be made that annoying your customers, and prospective customers with an array of content emails, that can trigger bounce rates to go up, is not worth that loss. Those email addresses represent dollars and you should take every opportunity you have in front of your customer to serve them with your products. The most effective approach can be that of brute-force. Be direct with your potential clients; do whatever it takes to get their emails.

Key Quotes

“We always talk about how Facebook it's such a great platform, that people have given so much information about themselves. LinkedIn is giving you much more relevant information. You can tell exactly how wealthy and how successful someone is. So we don't really do role-based targeting or job-based targeting, but it's really incredible that by what you're able to do by brute force. [Linkedin’s] technology's obviously not as good as Facebook, but you can figure out how to set up targeting campaigns. You can get to the wealthiest, most successful people on earth. It’s going to cost you, but if you can convince them it's the best way to do it.” 

“We consider ourselves fiduciaries or financial advisors. We're doing that because art is a very confusing and a brand new asset class. We're the only ones enabling access to this $1.7 trillion market. From a suitability standpoint, to let someone YOLO their life savings into a Banksy is not something that we want our customers to do. And we also don't think it makes sense for someone that has a $5 million retirement portfolio to put in a hundred dollars. So we'll tell that person, just keep your money; keep the cash; put it in stocks. So we're really getting people, not only to understand what is art as an asset class, why is art important, but to make sure they're investing responsibly and investing a part of their portfolio, that actually makes sense.”

“Our data science team has been doing incredible things. We have the largest proprietary data set of art market returns. We took 50 years of art auction results that were all published physically in the Sotheby's and Christie's pamphlets. We had a team of about 25 interns go in and [enter], this piece of art was bought for this and then sold for this. And we created this huge database to bring it all together. No one else had done it because it's a pain [to do so].. So we created this database, and our data science team was then able to look at using A.I., all these different, fascinating insights, which artists markets are returning the best, which years within those artists markets, even which type of art. We were able to single out contemporary art, post-World War II art, coming from this time period. We're seeing that it has this type of returns.” 

“You look at is as art or it's a $1.7 trillion market. And until Masterworks, there was absolutely no way to invest in it. hose who did want to enter it,, who wanted to build a diversified portfolio would need tens of millions of dollars. You could buy one piece. And if that one piece went down in value,you'd spend a million dollars on it and you weren't diversified, it's not really a secure asset or a strategic asset class.” 

“Our goal is to educate people on art as an asset class. If people get excited about investing in art and they Google it, we're the first search result and we always will be. We are so happy to give our research away. We're working with other banks in investment platforms to educate them, give them all of our data, give them our price database, show them how different artists markets have different loss rates in different correlations, because we want to educate everyone. Not only are we getting new people into the asset class, but we're also growing it at the same time. We can actually have a huge impact on the market and we consider ourselves one of the top buyers in the art market.” 

“I used to do content marketing and I really disliked it. e just don't think that has any value. I'll tell you why: our user base is very interested in two things, diversity and returns. Diversity, meaning investment diversity diversification. So when we email them we want to give them those two things. We only email people with new investment offerings. We don't want to bug them. Something that's really important to us is our email list. So if we're sending content (which we have in the past, and that gives us higher unsubscribed rates.) We're just not going to do it. We think of our email list as currency. If we're going to do something to devalue our currency, we're not going to do it.“

“I see NFTs not having a similar impact. I do not believe NFTs are a strategic asset class. Strategic asset classes are ones that have been around for awhile. It can be part of a portfolio. NFTs have a false sense of scarcity. You're basically putting a JPEG on the blockchain and calling it scarce, even though you don't own any of the IP. I am short on NFTs.”. 

Bio

Michael Wenner is Vice President of Marketing and Director of Business Development at Masterworks. Michael began his career in finance doing sales and trading for five years. Near the end of this time, he started shifting towards doing more marketing, especially digital. He started a newsletter called MarketSnacks that was eventually acquired by Robinhood. Then he went to work in FinTech at YieldStreet before stepping over to Masterworks. 

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