Alliance Capital Management LP is the latest mutual fund company to turn to television to boost its brand awareness with the public.
For the first time, the New York-based company has pegged time slots during major network prime-time news shows, as well as space in mainstream magazines, to sell its wares. The company plans to launch its campaign tonight during the USA Network's coverage of the U.S. Open tennis tournament.
Many fund companies such as Alliance, which only sell their funds through financial advisers, are now using television to reach out to the general public. They are looking for ways to combat rivals such as Fidelity Investments that are gaining market share by skipping financial intermediaries to sell their funds directly to customers.
Advertising is "almost a competitive necessity," said Barbara Levin, executive director of Mutual Fund Forum, a trade group for fund companies that use financial intermediaries. "Whose survival is not threatened?" she asked.
Among the others with plans to run commercials on broadcast networks for the first time is the nation's oldest fund company, Massachusetts Financial Services. The Boston-based company is planning a campaign for the fall that focuses on its history and portfolio performance.
OppenheimerFunds Inc., meanwhile, has hired a New York advertising agency and has targeted next year's first quarter for a television and print campaign.
"We need to establish our name with investors as well as financial advisers," said Bruce Dunbar, the executive overseeing the company's advertising plans.
And Zurich-Kemper Investments Inc. began marketing its mutual funds for the first time in March, during the NCAA basketball tournament.
Last year, Alliance ran humorous commercials touting the virtues of using financial advisers. The cable-TV spots suggested that investing on your own is like cutting your own hair, or performing surgery on yourself.
This year's campaign, which will run on broadcast networks as well, is dubbed "Rude Awakenings," and continues the humorous approach in three 30- second spots. They depict family situations: planning for a wedding; a couple thinking about retirement; a son discussing caring for elderly parents. But in each case, the plans are sidetracked by insufficient financial planning.
In one advertisement a young woman approaches her mother and says "Mom, I have good news, I'm getting married."
And the mother replies: "I wouldn't get your hopes up. Well, your father and I never invested. We don't have enough for a wedding. If you want companionship, get a cat."
The creator of Alliance's ads, John Ferrell, president of FerrellCalvillo Advertising, explained humor attracts attention. "We wanted to hit a nerve, but it may be more effective dealing with it by not being so serious," he said.
Advertising isn't for everyone. Capital Research and Management Co., Houston, eschews commercials on television as well as print campaigns. Yet it remains the nation's fourth-largest fund company.
"We believe financial planning is more than just picking a fund you saw advertised," a spokesman said.