Brand identity is seen as ever more critical by those within the private equity industry, according to research from BackBay Communications, a financial services branding, marketing and public relations firm, and PitchBook, an independent research firm.

The study found that 99 percent of those questioned viewed a private equity firm’s brand as directly linked to a firm’s success. When questioned in 2009 in a previous BackBay study, 93 percent of the same audience held that view.

“The private equity market has changed significantly in the last three years,” says Bill Haynes, president, BackBay Communications. “With more private equity firms in the market raising funds and with increased competition for investments, firms are clearly recognizing that brand identity is ever more critical for fundraising, deal-flow and securing the best talent. As limited partners re-assess their allocations and new investors enter the market for the first time, it’s those firms with positive, stand-out brand identities that will be most attractive.”

Adds Graham Hearns, director of marketing and communications at The Riverside Company, “The industry has evolved, from a model solely based on deal doing to one where a strong brand is absolutely essential.”

A growing recognition of the value of brand is being reflected in the budgets. More than half (52 percent) of those questioned said they had increased their investment in marketing materials, including their website, in the preceding 12 months. Some 26 percent had increased their investment in public relations and 37 percent in investor relations in the same period. In the next 12 months, this is set to increase further, with 54 percent planning to invest more in their marketing materials and website, 53 percent to invest more in investor relations, and 41 percent to invest more in public relations.

According to the survey, the key audiences for a strong brand are limited partners (78 percent); the CEOs of target companies (68 percent); investment bankers (62 percent); lenders (50 percent); current and potential employees (40 percent); and the media (19 percent).

According to survey respondents, the most effective ways to build a strong brand are achieving strong portfolio company returns (71 percent); having investment discipline (47 percent); building a cohesive firm culture (45 percent); and avoiding major portfolio company blow-ups (34 percent).

Engagement with social media still appears to be a sticking point for many firms; only 7 percent of those questioned claim to regularly make use of the likes of Twitter, Facebook, LinkedIn or YouTube to enhance their brand. Notably, while 19 percent of those questioned simply don’t see any value in it, 20 percent feel it goes against their company’s culture.

Despite some reluctance, though, it would seem that greater use of social media by private equity firms remains likely. Nearly one third (30 percent) of those questioned said that while they did not use social media currently they would like to in the future.