Fund Spending on Advertisments Continues Fall
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Wednesday, May 14, 2003

Fund Spending on Advertisments Continues Fall

Fund firms continued to cut back on their ad spending during the first quarter. Spending during the first three months of 2003 fell some 7 percent from the fourth quarter of 2002, according to Long Island City-based Competitrack. Year-over-year ad spending was down by 23 percent.

"We are seeing many advertisers who have been historically strong spenders in the category, such as Fidelity Investments, Janus Capital and TD Waterhouse, pull back their spending by as much as 90 percent, in some cases, compared to the first quarter of 2002," said Melanie Szlucha, senior financial services analyst for Competitrack. "Those that have remained active are communicating that they can provide consistent long-term performance, as well as emphasizing their stability as an investment firm."

Competitrack found that fund firms are not only continuing to cut ad spending, but that they are also shifting where they put the dollars they do spend. Firms are spending more with broader-based, full-color publications such as Business Week, Forbes and the New Yorker and less on television. Spending on the latter category has doubled to 8 percent of all dollars since 2000 while television spending has fallen to 53 percent of spending from 67 percent in 2000.

Spending in the big three publications -- The Wall Street Journal, New York Times and USA Today -- fell to 26 percent of all spending from 35 percent in 2000.

"Despite the reality of shrinking ad budgets, investment firms still recognize the need to reach out and communicate with existing and prospective investors and clients," said Dan Sondhelm, partner with SunStar. "Firms are actively pursuing lower cost ways to garner attention, such as through public relations campaigns, direct mailings, web casts, and even opportunities for their firm and its employees to be recognized in the mainstream media," he said. "Keeping these additional lines of communications open isn't a new idea. But more traditional methods had been overshadowed by frothier advertising budgets and firms' desires to toss big bucks at flashy ads. Now it's back to the basics."

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