Unconventional Ads Bemuse Industry
February 7, 2000
A recent advertising campaign by Reserve Funds of New York that congratulates four other fund companies for their ability to raise brand awareness has caused some consternation in the industry.
In a series of advertisements published in Investment News, Reserve Funds congratulates Warburg Pincus and Baron Funds, both of New York, and Janus and INVESCO Funds Group, both of Denver, Colo.
"These funds are the stars," said Eric Lansky, the marketing manager who came up with the idea to congratulate the other funds. "These are the ones with the great brand names. And I started thinking that if we become acknowledged for recognizing these funds, then maybe we benefit."
The congratulations came as a surprise to many of the fund companies mentioned.
"It's unusual and I'm skeptical about the benefits to them, quite frankly," said Gail Eisenkraft, director of marketing for Warburg Pincus. "It's an interesting tactic and it's probably one that I wouldn't use, basically because it's unclear who is getting the benefit. But, it's certainly getting your attention. Presumably they are saying they want to travel in this kind of company and it certainly gives us some ad space, so I don't have a problem with it at all."
Reserve Funds' advertising campaign has generated phone calls, according to Lansky.
"I have received a handful of calls directly and I know that our customer service has fielded a lot of calls regarding the ads," he said. "People are interested in finding out more about our funds."
The advertisements achieved their objective of generating some attention, Lansky said.
Reserve Funds spent its entire annual advertising budget, $20,000, on the campaign and may spend more depending on its success, he said.
"The bottom line is assets raised," he said. "These ads cost money and we're a small fund company. But again, if it proves successful and we cover our costs, we'll continue this."
While the ads may generate attention because they are unconventional, they are probably not very effective, according to Dr. Marcia Selz, president and chief research director for Marketing Matrix of Los Angeles, an advertising agency specializing in the financial services industry.
"This is a chance for them to generate some buzz," she said. "Small fund groups have small budgets so they are trying to get more bang for their buck. But naming your opponent is rarely as effective as people think."
Spokespeople for all of the fund companies being congratulated in the advertisements said they had no objection to the advertisements.
All were unaware they were being congratulated until after the advertisements ran.
"We saw it and thought, Wow, that's unusual.' But, it's certainly not something we are going to lose any sleep over," said Matt Kelly, director of marketing for Baron Funds. "We don't have any reaction to it. I guess we would just say, Thanks.'"