Advertising Spending in 2001 Drops Markedly
February 25, 2002
Advertising for individual equity funds was down 35% for 2001, according to data released this month by Competitrack, an advertising research firm.
Spending on ads for specific equity funds totaled more than $128.7 million last year, a decline of about $70 million from spending in 2000.
General brand-driven ads for fund families, meanwhile, declined by 22% last year, the company said. That type of advertising totaled $112.8 million, compared to $145.2 million in 2000. The figure does not include the tally for individual equity funds.
The top advertising spenders were Fidelity, Janus, T. Rowe Price, American Century and Oppenheimer.
Geraldine Leder, the president of a financial marketing and advertising firm called LederMark Communications, said the figures illustrate what those in the industry have known all along: That 2001 was a difficult year for fund complexes, which prompted them to retrench, including cutting their marketing budgets.
But she said that's only part of the story. "The bigger issue is that advertisers have figured out when the public is more receptive to putting money in mutual funds," she said. "When the market is down, there's no point in selling somebody something they don't want."
So, she said fund companies are being smart with their dollars and waiting for a time when mutual fund investors will more-openly receive their message.
"When the market's going down, mutual fund investors, who by definition are often less sophisticated, tend to get into the markets later, when they feel like the markets have turned around," she said. "Certainly the 2001 market wouldn't give you that level of confidence."