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MARKETING


With the launch of its $12 million advertising campaign to promote its exchange-traded funds, Barclay's Global Investors of Boston is going after retail investors for the first time, said Lee Kranefuss, the CEO of Barclays individual investor group.

"We've been in the exchange-traded fund market since 1996 so it's expanding our product set to retail investors," he said. "It's a very natural evolution."

The company can easily move into the retail market because all sales and account services are outsourced to brokers and back office firms, he said. With the exception of adding some personnel to provide retail marketing expertise, there have not been many changes needed to offer the new funds on the retail market, he said.

"I'm sure Barclay's looks at this like a major opportunity to get market share in the fund industry," said Steve Cummings, an analyst with Financial Research Corporation of Boston, a financial services tracking and consulting firm.

Although all of the iShares have been approved to carry 12b-1 fees, the cost of the ad campaign is being paid for separately, Kranefuss said.

Barclay's advertising campaign is the largest promotional effort ever supporting an exchange-traded product, said Paul Nobile, a spokesperson for the company's marketing department.

"This effort being applied to the indexing category is unprecedented," he said. Barclay's plans to spend another $12 million campaign to continue the campaign next year and may spend more, he said.

The ad campaign will run in several publications and on television throughout the year, he said. The ads are designed to raise awareness of the firm's iShares as well as to educate investors on the advantages of exchange-traded funds over traditional mutual funds, including lower fees and greater flexibility, Kranefuss said.

Barclay's also recently launched a website for its iShares to provide information to retail investors and financial intermediaries, he said.

Both print and television advertisements are designed to target retail investors who own both stocks and funds and who want the flexibility of stock trading as well as funds' diversified portfolios, Kranefuss said. The advertisements are also designed to highlight the breadth and diversity of Barclay's exchange-traded funds, said Nobile.

One of the ads -a two-page spread that appeared last week in The Wall Street Journal - showed an AMEX stock listing page with the words, "New and Improved!" in the middle of the page. In the middle of the opposite page was a list of all of Barclay's iShares laid out to look like a stock listing. The tag line read, "Introducing over 50 index funds that you can buy and sell just like stocks. iShares. The way you invest now. Only better."

Television advertisements are designed to convey that Barclay's iShares are appropriate for all investors, Nobile said. One of the ads shows a woman sitting on a plane between two investment managers who are talking about the latest technology stocks. The executives use industry jargon to discuss their investments while the woman is clearly perplexed by the conversation. The tag line for the ad says that investors in iShares do not have to be professional investment executives to invest in technology.

Another television spot shows a day trader at home fixedly watching his investments in the market swing up and down. A friend who stops by is stunned by the day trader's highly agitated behavior. The tag line says that investors do not have to be glued to their computers to track the market on a daily basis, Nobile said.

The print advertisements will use similar themes to emphasize iShares' compatibility with a variety of life situations, he said. One of the ads has a baby's picture and a list of the iShare funds. The Dow Jones U.S. Internet Index Fund is in bold print with a message next to it that says, "January: Investing like a player." Further down the list of iShares the Standard & Poor's 500 iShare fund is in bold and is accompanied by the message, "September: Investing like a parent."