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New Ad Campaign Pushes Performance

Key Asset Management, the investment advisory unit of KeyCorp of Cleveland, Ohio and adviser to the almost $20 billion Victory Funds group, has launched a new two-pronged ad campaign aimed at getting the until now low-profile investment adviser and its proprietary mutual fund group noticed.

The new initiative includes two series of print advertisements which will run in national trade magazines and mainstream print publications, such as The Wall Street Journal, through 2000. The ad campaign is part of Key's year-long re-branding efforts, said Pam Glazer, marketing manager at Key Asset Management.

The campaign will include two messages that are designed to work in tandem, said Toby Carlin, marketing director of the Victory Funds. One set of ads will tout the investment prowess of Key Asset Management. The other will boast several individual Victory Funds' performances. Key is increasing its ad budget for the campaign by about 20 percent over last year's budget, he said. Carlin declined to disclose a dollar figure.

The Key Asset Management ads are designed to appeal to the institutional audience of independent agencies, such as pension consultants, labor unions and non-profit institutions which research and evaluate investment managers, said Glazer.

"We're very aware of the strength of our investment process," she said. Yet, Key is not well known in institutional circles she said. "We feel it's time to blow our own horn, very loudly. It's primarily an image-building campaign."

The other group of print ads will stress the strong investment performance of a handful of Victory funds. These funds are not high risk and have earned four or five-star ratings from Morningstar, the fund data provider in Chicago, Carlin said.

The Victory Funds' ads were developed under a "push and pull marketing strategy," said Carlin. While the 33 Victory Funds are marketed through financial intermediaries and not directly to investors, Key hopes the new ads will command attention from both audiences, especially retail investors. The ideal is to have an individual walk into an intermediary's office and say "tell me about this fund," said Carlin.

"To enhance the overall credibility, you need to be seen," he said.

The Victory Funds are sold through regional broker/dealers such as Janney, Montgomery, Scott in Philadelphia. They are also sold through bank trust departments and registered investment advisers. Key also uses 720 financial consultants it added as part of its merger with McDonald & Company Investments, a regional broker/dealer, also in Cleveland, in the fall of 1998.

The merger with McDonald & Company not only provided a new channel of distribution for the Victory Funds, but also expanded the fund group's assets under management. McDonald was the investment adviser to The Gradison Mutual Fund group which, at the time of the merger with Key, had more than $3 billion under management. The merger boosted the Victory Funds' then $14 billion in assets to over $17 billion.

In April, the seven Gradison Funds were merged into similar funds in the Victory Funds group via the creation of a special class of "G" shares. McDonald has since changed its name to McDonald Investments and now operates as a Key subsidiary.

To further keep reps interested in recommending Victory Funds to clients, last week Key added a similar, third G class of shares to each of its original funds which had not been merged with Gradison Funds. These funds had only offered A and B shares. G shares, a standard on each of the former Gradison mutual funds, do not have upfront sales charges but include 12b-1 fees. As an added incentive to intermediaries, the G class of shares will pay a 0.25 percent "finders fee" to reps for bringing in a new customer, said Carlin.

For the past three years, Key has run print ads that have been more low-key than those just introduced. The previous ads conveyed an image of the fund group but did not boast individual fund's performances. According to Carlin, the Year 2000 campaign, which was started last month to get a jump start on the competition, will include only print ads for the money manager and its funds. Key is considering running radio ads in its regional home market and TV spots but not until 2001.

The Key advertising initiative is similar to those of other bank proprietary funds that strive to distance themselves from their "bank fund" associations. Some bank fund advisers hope to establish their investment advisory units as separate, stand-alone, competent investment managers, said one industry portfolio manager.

"Key is probably looking to build a track record of performance which isn't tied back to the bank," said the manager. In this way, it can better compete against larger, more established companies, said the manager.

PNC Bank of Philadelphia, in an effort to boost recognition for its advisory services, spun off its BlackRock division earlier this year in an initial public offering. PNC acquired BlackRock, of New York, in 1995. BlackRock manages a family of mutual funds.

The Evergreen Funds group, seeking independent recognition, does not even mention in some of its ads that it is the proprietary fund family of First Union Bank of Charlotte, N.C. And Dreyfus Mutual Funds of New York, which already had a well-established identity of its own many years before its acquisition by Mellon Bank of Pittsburgh in August 1994, has maintained and relied on its own name to use in its marketing.

"An important part of our growth strategy is to benchmark ourselves against the best adviser-distributed funds," said Chad Peterson, a spokesperson at Evergreen Funds.