Industry that shunned TV now buying lots of spots

Mutual Funds

February 16, 1997|By Jerry Morgan | Jerry Morgan,NEWSDAY

Blue eyes. A newly invigorated lion. A herd of black-suited businessmen. A moon landing. Daily headlines.

Seemingly disparate images, but with one thing in common: They are all part of new television ads for mutual fund companies, a group that once avoided television as too expensive and unnecessary.

But now, with about 7,000 mutual funds and hundreds of firms managing them, companies need to set themselves apart.

Investors are coming into the market through mutual fund supermarkets, such as Schwab's OneSource and Fidelity's FundsNetwork, through financial planners or through 401(k) plans with multiple fund offerings.

The ads aren't for specific funds, though some funds do advertise on cable TV financial shows. Mostly the ads are institutional, an attempt to create brand-name images.

So the fund management companies, not the mutual fund shareholders, are paying for the ads, fund officials said.

Most of the ads run on networks and cable TV -- especially, and naturally, on the financial news networks.

The tens of millions of dollars being spent on the ads "is unusual for the industry," said Louis Harvey, president of Dalbar Inc., a Boston financial services research company.

"The fact that mutual funds have become so commoditized means that branding them has become more important.

"As we move forward in the defined contribution area and the multimanager fund supermarkets, everybody is going to be in the retail business and you need a brand name."

John Reilly, spokesman for Massachusetts Financial Services, said, "We want to get better known." As its ads point out, it is the nation's oldest mutual fund company.

"We are sold through financial advisers and we have done a lot less advertising in the past. But we are competing in the 401(k) market, and if you are in a multimanager plan, people are more comfortable choosing names they know," he said.

Janus, a company that in 1990 was managing $1.3 billion in four funds and now has 20 funds with more than $50 billion, spent $1.2 million for a 30-second ad aired during the Super Bowl. The ad featured a pair of bright-blue eyes and some institutional copy about investing in great companies, not sectors or trends or fads.

"We are bigger than most companies and our name recognition is higher," said Stuart Novek, Janus' vice president for retail marketing.

"But obviously, in an increasingly competitive and maturing industry, it is tougher to build a brand name, and that is one of the reasons for television.

"In the past, performance alone was enough to drive asset growth. Now, performance is just the price of admission. Consumers drive our business and we want them to demand Janus no matter how they buy it."

Was the $1.2 million Super Bowl ad worth the money? "You can't gauge the success of trying to build a brand name with one ad, even though the volume of calls was very positive," Novek said.

Fidelity has been getting negative publicity after a relatively poor performance last year and the departure of many fund managers, which made investors nervous.

The company is running six weeks of ads built around daily headlines, with a tag line that effectively says, "It may be news to you, but it is already history to us."

The intent, a company spokeswoman said, is to show that the the company's extensive resources put it on top of the news and ahead of the times.

American Century is spending a good part of its $15 million advertising budget on TV, both network and cable, said spokesman Gunnar Hughes.

American Century is the result of a merger of Twentieth Century Funds and the Benham Group. "It is a combined company with a new name and we have to reintroduce ourselves to our investors," Hughes says.

The herd ad is intended to show that the company goes its own way in investing.

Dreyfus recently brought back its lion, in ads that included some that ran during the Super Bowl, which company officials say is one of the most recognized corporate logos in the country.

T. Rowe Price, meanwhile, is expanding its TV advertising 70 percent this year over last year.

Notable exceptions to the trend include the always-thrifty Vanguard Group.

"We have no intention of getting involved in television advertising," said Vanguard principal Brian Mattes.

"It is too expensive, and we prefer a more direct and less expensive approach."

Putnam Investments, which had a very good year last year, is also eschewing TV for now, a spokesman said.

Liberty Financial is taking a more high-tech approach, said Bill Rice, director of communications. "We are spending more money on online advertising on Internet sites, and the response has been very good for us," he said.

Pub Date: 2/16/97

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