Readers of technology magazines are now likely to find mutual fund ads interspersed with articles on relational databases and Internet protocol telephony.
In hopes of attracting technologically sophisticated investors, Investec Guinness Flight Global Asset Management of Pasadena, Calif., Kinetics Asset Management of New York and Munder Capital Management of Providence, R.I. have begun placing ads for their technology and Internet funds in high-tech magazines such as IDG's Industry Monitor, Business 2.0 and the recently-introduced Technology Investor.
At Munder, the advertising strategy represents a departure for the firm that generally targets the financial advisors who sell its funds.
"It's our view that these ads will help us to create a bottom-up demand for our funds which will get financial advisors to take action," said Ellyse Essick, director of marketing. "We think we can appeal best to those investors who are technologically savvy. These are the people who are most likely to understand and feel comfortable investing in something like the NetNet fund."
Munder's ads in technology publications are generally similar to those the firm runs in The Wall Street Journal. However, in the future, ads in high-tech publications may have a secondary purpose - to promote Munder's separate account management to investors who have started an Internet company or who work at an Internet company, said Essick.
"These people understand that we know what is going on with their firm and how technology businesses evolve," Essick said. "Our growth on the institutional side is really due to the fact that we have a better handle on what their overall business objectives are."
Kinetics Asset Management began advertising in the fourth quarter of last year and president Steve Samson was quick to make the leap from Money, Worth and Individual Investor to the inaugural issue of Technology Investor, which was sent out at the end of January.
Samson's move was prompted by what he had learned about Kinetics' investors via the firm's website.
"Our site gets 4,800 unique visitors a day and they tend to be pretty technology savvy," Samson said. "Not only do they communicate with us via e-mail, but they download prospectuses. In December, for example, we downloaded nearly 13,000 prospectuses. Most of our visitors know their way around pretty well. They come in with specific questions and even offer us investment advice. This has made us keenly aware that those who are interested in our funds have a good, broad understanding of technology issues."
Kinetics has identified three target markets - retail investors, financial planners, and the technologically sophisticated, Samson said. Thus far, the firm tries to reach all three audiences with the same ad, but that will change in the future.
"Our first advertising wave focused on how we manage the funds, how we work and what we are looking for in a stock," said Samson. "The second wave is focusing on performance - the fact that we recently celebrated our three-year anniversary and got the five-star Morningstar rating and that Lipper just ranked us #1 of all equity funds for the last three years. That's too powerful a message not to get out."
Looking ahead, however, Samson sees particular value in an ad offering education for younger people who are technologically sophisticated.
"I see our shareholders as a barbell. On one side, we have a large number of younger investors with smaller accounts," said Samson. "On the other side, we have more traditional, higher-net worth investors, many who pressured their financial advisor to buy the fund.
"Although our younger investors have smaller accounts, we may be a larger part of their overall portfolio. A message we want to get out to these investors is, Hey, the market is not going to double every year. That's not a good expectation to have.' We need to get this message out because they have not been invested in a down market."
Based in San Francisco, IDG's Industry Monitor estimates its current circulation at 115,000 readers - twice what it was when it was introduced in April 1998. A full page color ad in the magazine costs $16,750. The same ad in Technology Investor costs $19,055 and $21,601 in Business 2.0.
Business 2.0 describes its readers as "young, educated, affluent and influential." Its readership is 83 percent male, 82 percent with a college degree and 44 percent with some post- graduate study or an advanced degree. The median household income is $97,000 and median assets (excluding home) are $131,900.
Nevertheless, Marcia Selz, chief research director at Marketing Matrix of Los Angeles, which has done research on the effectiveness of advertising financial products outside of consumer finance magazines, is skeptical about the effectiveness of such advertising.
"Whether or not these campaigns will work can be debated," said Selz. "We've found that, conceptually, when investors are reading magazines of special interest such as golf or yachting, their focus is on golf or yachting - it is not on investing. Banks and other financial services companies really got the jump on mutual funds in terms of advertising products and services in consumer publications not related to investing, but they have not enjoyed much success."
