Mutual fund companies spent 22 percent more on advertising last year than in 1999 as they touted their products' improved performance in a bull market, according to a recent industry study.

The study is published twice a year by Financial Research Corp. of Boston. The report's figures can be an indicator of the industry's viability, said Kristin Adamonis, a research analyst at FRC.

The study shows that mutual fund companies pumped roughly $515 million into the advertising industry last year, up from $423 million in 1999. Between 1998 and 1999, ad spending rose nearly 17 percent from $361 million in 1998.

Television advertising accounted for nearly two-thirds of last year's spending. And while mutual fund companies had historically favored cable companies, networks became the favorites in 2000. Mutual fund companies increased their network television advertising spending 63 percent last year while they increased cable advertising spending 24 percent. Use of print advertising declined. And companies increasingly turned to sporting-event sponsorships as well as unconventional channels such as elevator advertising, the report said.

The boost in spending was primarily due to outstanding fund performances in recent years, Adamonis said. That success, and a desire to promote strong figures to potential clients, resulted in inflated advertising budgets, she said. And as markets boomed, many mutual fund companies shifted their strategies from promoting a carefully crafted corporate image to boasting of performance gains.

Other firms, meanwhile, continued to focus on their images rather than their funds' performances. Janus, for example, ran a series of television ads boasting sound research as its ingredient for success. Strategies like those could prove beneficial to companies which want to keep their advertising messages constant, even as markets cool, Adamonis said.

"There were some firms that foresaw the time when they wouldn't be able to use performance numbers and went with an image campaign, which could pay off as the markets decline because they were able to sell customers on something besides performance," she said.

Last year also saw a new crowd of smaller, niche firms, such as Kinetics Asset Management of White Plains, N.Y. and Enterprise Capital Management of Atlanta, advertise on television for the first time. Enterprise, with $7.3 billion in assets under management as of April 17, was founded in 1987.

Kinetics, founded in 1996 and currently with $650 million in assets under management as of April 10, advertised on television for the first time in the fourth quarter of 1999, said Steve Samson, president and CEO. All of the spots were on CNBC.

Like other firms, the company did its first television advertising as its assets grew during the markets' steady rise. Now that investor activity is slowing, the company has focused on public relations efforts, such as placing its representatives on television talk shows. Samson, who expects markets to improve during the latter part of this year, said Kinetics may step up its advertising efforts in the third and fourth quarters.

"It's not that we're stepping away from marketing," he said. "It's just that ... we'd rather save our powder for when the market is in more of a positive shift."

If similar strategies are pervasive in the industry, advertising spending could decline further this year.

"There might be somewhat of a decrease, because [firms] won't have the budgets they have had," Adamonis said.

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