I analyzed three ads to discover what Masterworks.io does.

This month I learned the difference between real customers vs targeted customers for a company called Masterworks.io. Masterworks.io is an art investment platform that allows inventors to buy fractional shares in pieces of artwork. If you want to follow my progress and see how I reached my goals, feel free to explore around.

Learning about ads from Masterworks has given me a clear understanding of how the product works. The company buys a piece of artwork and registers it as a Limited Liability Corporation with the Security Exchange Community. They then build a secondary market offering shares or fractional ownership of the artwork. This strategy is meant to include more customers in the investment art community and break barriers for investors.

First ad

Masterworks helps investors enter the art world without spending millions

This ad was done by CNBC and was a partnership explaining the brand Masterworks.io. They start off by explaining how the company uses shares to decrease the initial investment amount for retail investors. This allows investors to buy more than one painting allowing them to be diversified.   

They then talk about how the product allows anyone to invest for only $ 20 a share. Retail and accredited investors can invest for the first time meaning that pension funds and regular investors can invest in artwork. One painting a month is released on Masterworks.io allowing investors to diversify and potentially create higher returns.

The ad explains that art as an asset class has a large market worth – 1.7 Trillion dollars. An ideal investor would be open to using art as a hedge against inflation and would invest 5% of his portfolio in art. The investor would have a long-term focus with a 3 to 5-year horizon. The fund charges 1.5% every year and charges 20% after the capital gains. This is similar to a private equity fund which is only available to the ultra-rich.

The product is an allocation, not a portfolio. Masterworks should be used in tandem with stocks, bonds, and real estate.

From this ad, here are the key stats I gathered: Investors will primarily be men, 50K+ salary, wanting alternative investments, diversification, interest in art, corporate job, and willing to take a slight amount of risk to get higher reward.

Second ad

Why did Masterworks reach a Billion dollars?

The platform of Masterworks has reached a billion-dollar valuation. That value is more than the total value of the art sold from Masterworks. The company focuses and relies heavily on marketing to sell art. 

They sell art as an alternative asset class. Art is then sold to investors as fractional shares. The company makes sales calls to check if the investors are suitable for Masterworks.io. The investors who bought artwork can buy shares in other pieces of artwork.

The investment returns could be 0% to 10 times the initial amount invested. The company is trying to buy $400 Million worth of artwork this year and has a very specialized list of artists they invest in.

The fund structure works like this: 1.5% assets fee, 20% of all profit when a painting is sold, and 10% premium that is payable to Masterworks. The timing of the art sale is up to Masterworks discretion. An average investor has 30K invested with the company. 

Here is what I gathered from this ad: Most investors have a net worth of 300k or more (having 10% percent of their net worth in art), most investors don’t know much about art, most invest in art as an alternative investment, and want to build their net worth with art.

Third ad

Masterworks Review Business Insider

The article talks about how art is now open to an average investor. Art can be bought in shares with Masterworks. The asset class is uncorrelated to other investments. Some of the wealthy use art as collateral for investments. 

The art price index has beat the S and P 500 (an index measuring the US market) since the 2000s. Blue-chip art is an art piece that is worth over a million dollars and made by an Art Price 100 artist. An Art Price 100 artist is a top-selling artist in terms of sales and monetary value. Each painting is filed with the SEC (Security Exchange Community) and is an LLC (Limited Liability Corporation). 

They then sell the painting and you get a return or loss on the painting. Commentary art (art from the 1900s or later) is much more likely to appreciate faster than art from the 1900s or earlier.

What I gathered from this ad: Most investors would gain diversification by investing in art, research in art investing is important and ideal customers would be anyone who wants to learn about alternatives to the stock market.

Final thoughts

Masterworks.io seems to be targeting the middle and upper class, males, primarily white, with high earning potential, see the value in art, and would like to learn how to better invest in artwork.