During a time of plummeting assets and steep budget declines, mutual fund companies spent a total of $6.3 million on advertising related to the terrorist attacks of Sept. 11, a New York research firm said last week.

"The industry took the ramifications of the events very seriously," said Joanne Shiebler, president of the Minneapolis financial marketing company Asset Publishing, which services mostly mutual fund companies. "It's a sizable amount of money and clearly it portrays the commitment the industry put forth in communicating with [its] clients."

The advertising was part of a media blitz that occurred in the wake of the attacks, she said, where companies scrambled to calm the nerves of investors and open communication channels even wider throughout the industry.

Austere Expressions of Sympathy

The advertisements, which mostly consisted of austere, text-only expressions of sympathy for victims and reassurances for investors, ran in financial publications and the likes of the Wall Street Journal, New York Times and newspapers throughout the country, such as the Dallas Morning News and the Chicago Tribune. In addition, companies bought T.V. time, which they used to broadcast images of flapping American flags accompanied by messages of financial stability and patriotism.

Firms also sent letters to investors and wiggled their executives onto national news programs - all to tell investors that back-office systems were stable, data was backed up in offsite locations and, yes, markets would recover.

Companies also began looking to each other's strategies to find the appropriate tone for the messages and to time them properly. Melanie Szlucha, a senior analyst at Competitrack, which collected the data, said mutual fund firms were calling the researcher, trying to gauge how many ads competitors were running and when the tone might shift back to business as usual. "People didn't know when to stop," she said.

The answer came at September's close when most firms stopped running the text-only advertisements. A few stragglers continued into early October. By the time the blitz had ended, Morgan Stanley and Merrill Lynch had emerged as the month's top spenders. Lehman Bros., the Vanguard Group and Fidelity Investments followed in rank. Noticeably absent from the top spenders were the likes of Janus, OppenheimerFunds and other industry giants. Those firms published disaster-related advertising, but spent markedly less.

Observers note that Morgan Stanley, which kept a key location in the now-destroyed World Trade Center, may have been more compelled to communicate with the public and its employees in the wake of the attacks. For example, a spot the company ran in the New York Times on Sept. 13 said, "This past Tuesday, many of us who work at the World Trade Center returned home to our loved ones. Sadly, all of us did not. At Morgan Stanley our priority has been, and always will be, our people. What happened on Sept. 11 was not a financial tragedy, but a human one."

A Counter Trend Fades Out

The rush to communicate in the weeks following the attacks came as advertising spending across the business was plummeting. Competitrack Data show that mutual fund companies slashed their spending on product-related advertising from more than $40.4 million in March to $13.8 million in September, a decline of 66%.

Observes expect more declines in an industry that was already expecting to limp through year-end even before Sept. 11. Some firms were locked into advertising contracts with major publishers and that could have forced companies to keep spending, said Irving Strauss, a longtime provider of financial marketing services. As those contracts expire, marketing efforts may wither even more, he said.

Shiebler, meanwhile, expects that the massive and unexpected spending on Sept. 11-related ads mean companies will likely cut corners in their budgets as the industry rolls into the first quarter of 2002. "I would expect that there is going to be some kind of sacrifice," she said. "There are only so many dollars to spend."

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