The $2 billion (plus or minus) marketing boost that helped mainstream ETFs
How a mandated marketing spend on QQQs grew assets in the Invesco fund while driving ETF adoption overall.
In the last week, I’ve walked through an airport, listened to at least one podcast, and followed the play-by-play of more than one Chicago Cubs game on the radio.
Varied experiences with one constant: there is no getting away from the promotion of Invesco’s QQQs.
That’s what happens when an ETF issuer is required in 2025 to spend a whopping $180 million on marketing.
Background on the QQQs marketing mandate
The Qs were established by Nasdaq in 1999 as a unit investment trust with the unique requirement that a fixed percentage be dedicated to marketing.
In the current arrangement, the trustee (Bank of New York Mellon), the index provider (Nasdaq) and marketing are covered. The fund earns $711 million in revenue, with about $180 million of that allocated to marketing.
As the fund has grown, including dramatically this decade, the mandated marketing spend grew with it. We turned to Gemini 2.5 Pro to model how the cumulative spend swelled over the years. It’s shown below but note the caveats—the most important of which is that this is based on AUM, not revenue.
But there’s been no provision for Invesco itself, for which the $355 billion fund represents more than 17% of AUM.
This is under review as of last month. Invesco is seeking shareholder approval to convert the UIT to an open-end fund and to become the fund’s investment advisor. A proposed new management fee of 18 basis points (a 2 bps reduction) would be reallocated, with the opportunity for Invesco to earn revenue as a result of a reduction in the marketing spend.
As the decision approaches, a few questions arise:
What will Invesco do with an estimated additional $150 million in revenue they’re projected to book?
How much more attractive will an 18 bps QQQ be to investors?
And, as the QQQ marketing budget shrinks to what a Bloomberg analyst predicts will be a more industry standard of 2 to 3 basis points, what effect will that have on the market?
Theoretically, ad inventory and the overall supply of opportunities available should free up—will that result in some pricing relief? Which advertisers will step up? Which agencies, cut loose by Invesco, will now be available for hire?
Quantity and quality
In anticipation of QQQ’s marketing glory days drawing to a close, here’s the question that makes this worthy of a Finfluential discussion: Where would the $12 trillion U.S. ETF industry be today if not for the marketing support behind the Qs?
We believe it had a consequential, albeit inadvertent, impact on the growth not just of the Qs (the industry’s fifth largest ETF) but on investors’ overall adoption of ETFs.
While there’s no shortage of detractors of how the QQQs budget has been spent—“thrown away,” as one of my advertising confidants puts it—I’d argue that the quality of the promotion over time also was a net positive. No asset manager has had a bigger budget for a single fund, but there are a handful of banking and insurance advertisers who spend about the same but with much less panache. Think Liberty Mutual.
Let’s take a brisk walk down memory lane to get some sense of its influence.
Outreach to the retail investor. While SPY launched in 1993 as a trading tool to institutions, from its earliest days the Qs were promoted directly to retail investors and advisors. The big marketing budget made mass media possible, enabling the fund to show up on television, in print, online, at events, out of home, etc.
The original advertising described the tech stocks accessible via the fund “as the stock market for the next 100 years.” Its first-year return was a showy 79% in what would be the last year of the dot-com boom.
From all accounts, the outreach was successful. With 45% institutional ownership reported by MarketBeat, that means QQQ’s retail ownership is 55%. This compares to SPY’s 36% retail ownership. Over the years, it’s also been reported that the QQQs especially appeal to younger investors.
Success measured by asset growth. Before QQQ, according to this Rethinking65 account, an ETF’s success was measured more by trading volume than asset capture. QQQ’s marketing-driven retail inflows “changed all that and paved the way for an avalanche of new products.”
Room to be creative and innovative. Continuity is so important when building a brand, and the early QQQ marketers must have taken great comfort in the knowledge that the budget would be there year after year with no risk of being slashed as business priorities or market conditions changed.
And, the size of the budget provided room to be creative.
Check out this 55-second PowerShares ad from 2014 (click through to view, it’s not possible to embed). You’ll spot the QQQs here and there on a few sailboats.
Now contrast it with the spots running today. ETF issuers with budget for commercials need to make the most of their shots by featuring towering tickers front and center. In today’s ETF terrordome, there’s no time for setting the scene or conjuring a mood.
PowerShares’ creativity, by the way, extended to using the budget to promote what they wanted to promote—as long as they ended the ad with a mention of the Qs. That’s what’s happening in this 2007 commercial promoting the “Intelligent ETF Revolution” smart beta product line and most decidedly not the 100 largest companies in the Nasdaq.
Beyond advertising, the fund elevated its mainstream awareness with sponsorships of:
March Madness, becoming the “official ETF” of the NCAA in 2019. The campaigns evolved to include social media, immersive and influencers.
Miscellaneous other motorsports, golf, tennis, football and baseball sponsorships at the professional and college level
Gen Z education campaigns, including the heralded “How Not to Suck at Money”
It was never about the cost. In the recent race to zero fees, the 20 bps QQQs can’t now play that card. But throughout its history the marketing has never has stressed low-cost as part of the fund’s value proposition.
Instead, the messaging sought to pay for itself by proving that an emphasis on innovation, growth potential and access was sufficient. Props to the firm for pursuing a premium brand strategy, especially early in the development of the product wrapper.
Taken together, the size and consistency of the marketing spend combined with the creativity and execution of QQQ campaigns over time played a significant role in elevating the product category at a pivotal time. The nonstop promotion provided the air cover needed for fund wholesalers to approach financial advisors and for advisors to, in turn, introduce the wrapper to their clients.
QQQ shareholders vote on October 24 on the proposal for the Qs to leave the UIT structure, make Invesco investment advisor, and reduce the expense ratio—likely drawing an end to 26 years of extraordinary marketing support.