In an effort to break the stifling full-court press being applied by their critics, two tainted mutual fund shops recently launched expansive advertising campaigns stressing their commitment to achieving solid long-term performance for investors.
Janus Capital and Putnam Investments have each put together print and television ads that aim to address concerns over their lapses in fiduciary responsibility and shoddy performance in recent years. The beleaguered fund shops have endured their own version of Nolan Richardson's "40 minutes of hell," having taken a beating in the press the last seven months for their hand in abusive trading practices that cheated investors and enriched their own pockets. Now, they are trying to reach out to their clients by beefing up advertising efforts in hopes of stemming the flow of cash out of their funds.
"At this point, it's more of an effort to put something positive out to make the people who have stayed with them feel good about it," said Russ Kinnel, director of fund analysis at Chicago-based research firm Morningstar. "I don't think they're necessarily trying to win a lot of new money."
In 2003, Boston-based Putnam weathered a whopping $28.9 billion in outflows, according to Financial Research Corp., as regulators uncovered evidence of abusive market timing and self-dealing shenanigans at the Boston-based firm. And so far this year, the fund complex has bled another $5.6 billion in assets. Janus has had its share of woes as well, hemorrhaging $15.2 billion last year and nearly $4 billion in the first three months of 2004.
"I don't think [the ads] will have a major effect on flows," Kinnel said. "In some regards, it's about something even more important in that they're trying to rebuild their brand."
Stepping Up
Janus unveiled its campaign last week in the Sunday edition of The New York Times with an ad featuring a capri-clad woman ascending a flight of stairs. The ad emphasizes the company's mission of "getting investors where they want to go" and earning their confidence "every step of the way." The television spot features a number of individuals of different ages and occupations moving at their own pace up the staircase. Showing people's feet as they walk up the stairs is meant to signify the wide array of investors that are out there, each with their own unique investment goals.
In what appears to be a mea culpa of sorts, the Denver-based growth maven stresses in its ads that it is "pushing hard for performance" and "offering more investment choices" to regain investor confidence. The company has become synonymous with the tremendous growth spurt in technology that occurred during the dot-com craze and more notoriously its thunderous collapse. Its hefty weighting in tech and growth stocks left its investors twisting in the wind.
"Coming off three years of spotty performance in certain products and the regulatory investigation, we really set out to re-introduce the Janus brand and what it stands for," said Robin Beery, chief marketing officer at Janus, in an interview. "At the end of the day, we know that investors invest with us for one reason and one reason only -- and that's performance."
Beery conceded that Janus "did not have enough product diversification" for its investors in the late 90s and early 2000, and that it has spent the last two years expanding its product lineup to include more risk-managed and value products. New President and CIO Gary Black was recently hired away from Goldman Sachs to repair its image and make sure the firm delivers on that promise of performance. Beery noted that the ads are all about "putting ourselves in the shoes of our investors" and focusing on what's important to them.
Janus indicated that the TV spots will air during a number of sporting events, including Los Angeles Lakers playoff games, New York Yankees and Chicago Cubs games and a few PGA golf tournaments spanning April 8 to June 13. They will also run during primetime broadcasts such as the season finale of "The Apprentice" this Thursday. The firm is expecting to settle trading allegations with the SEC and state regulators in the coming weeks.
Getting a Facial
Putnam, a unit of Marsh & McLennan, rolled out a more aggressive campaign that stresses its longstanding roots in the investment business and the expertise it brings to the table. The ads feature a number of its top executives in the midst of a busy day at the office, representing its attempt to "put a face on Putnam." It's easily the most expansive ad campaign the firm has launched in its history, targeting multiple audiences across all of its businesses including 401(k), institutional, defined benefit and retail, advisor-sold funds.
The television ads show a framed picture of distinguished founding father George Putnam on the left-hand side of the screen, while the right side shows an empty frame combing the office for a modern-day equivalent: At the end of the spot, the frame lands on one of its executives conducting business. For example, CEO Charles "Ed" Haldeman, Jr. is portrayed as "the face of responsible investing" for 2004. Other criteria or "faces" used in the campaign include long-term performance, service excellence, investment leadership, balanced investing and investment expertise.
"We want people to know who's managing their money and who's responsible for their retirement dollars," said Gordon Forrester, director of retail marketing at Putnam. "The goal here is to provide air cover for the advisers who have been out there defending us over the last six to eight months, and in some cases even longer, for some of the performance issues we've had," he said.
The broad-based campaign kicked off with commercial spots during the 2004 NCAA college basketball tournament, advertising that runs at about $55,000 a pop for a 30-second spot in the early rounds, $600,000 for the middle rounds and $900,000 for the championship weekend, according to CBS Sports. That puts the total cost of Putnam's airtime during the tourney in the neighborhood of $10 million.
"It's a significantly large audience, and that's what they're paying for," said Jim Andrews, editorial director of IEG Sponsorship Report. "In this day and age, there are very few of these kinds of vehicles, with the advertising market being so segmented with all the different cable stations. You just don't get many large-scale opportunities where you're getting millions and millions of people tuning in," he said.
Putnam has also signed on for an additional 364 spots on CNBC and CNN to air in April and May. As for the print ads, they will continue to run in major newspapers such as The Wall Street Journal and The Washington Post for the remainder of the year. Sister company Lippincott Mercer was hired to help develop its new branding strategy.
Kinnel noted that these big-time promos are a risky bet not only for their hefty price tags but also the potential for a negative public reaction. "You don't want people ripping your ads," he said. Putnam's approach to the campaign was to show the human side of the firm by putting the names and faces of their executives out there for the world to see. It is an obvious attempt to show a culture change at Putnam under Haldeman, who replaced Larry Lasser in November.
Janus uses a simpler, more conceptual approach. It would probably be a little more challenging for Janus to put a face on things because of the turnover that they've had. Additionally, their CIO is brand new and some of their best-known managers are gone. So they're sort of forced to take a different tack. Not to mention, they've typically been a more insular, quieter firm.
In conjunction with their strategic personnel moves and increased transparency efforts, Janus and Putnam are taking the appropriate measures to rebuild their brand. But betting big on basketball spots alone will not endear them to investors crying foul, especially given the fact that investigations of impropriety continue. And when it comes to the fund scandal, there seems to be a plot twist with each passing week. So for the time being, there will be no easy layups for these guys.
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