Marketing & Media Advertising
February 22, 2001
By Pui-Wing Tam
Kinetics Asset to Launch Its First TV Ads
A mutual fund company that has flourished by investing in the Internet boom is starting to do what so many dot-com companies in its portfolio are doing: advertise. Kinetics Asset Management, a New York fund firm that burst out of nowhere in late 1998 on the back of its red-hot Internet Fund, is set to unveil its first ever television commercials as part of its $4 million advertising campaign next week. The new campaign will feature three 15-second television spots that will air in 30-second combinations on cable channels CNBC, CNN and Bloomberg Television. The firm’s print and internet advertising have already begun appearing in publications such as The Wall Street Journal and SmartMoney Magazine, and on Web sites such as Fool.com and E*Trade.
The new ads heavily tout the performance of Kinetics’ Internet Fund, which delivered a whopping 196.1% return in 1998 and another 216.4% in 1999. Prior to the winning results, Kinetics, which was set up three years ago by a former school superintendent and initially operated out of a house in a residential neighborhood on Long Island, was close to shutting down.
Now, Kinetics is looking to capitalize on the craze for the Internet stocks to grab market share and to extend its brand name. “We’re heavily into brand-building mode,” says Steve Samson, Kinetics chief executive officer. “We view ourselves as an Internet organization.”
Kinetics’ television ads mainly highlight Internet Fund’s logo, while in the background a voiceover intones the merits of the fund’s performance. In one of the 15-second commercials, an image of a road flashes up, which then turns into the logo of Internet Fund. In another 15-second spot, a welder drills into what turns out to be the fund’s logo, as sparks fly. The third commercial showcases Kinetics’ company logo and its lineup of other funds, which includes a medical fund and an Internet infrastructure fund.
The mutual fund industry in general isn’t known for heavy spending on advertising. Fund firms put just $244.1 million in advertising in the first nine months of 1999, marginally below the $252.9 million that was spent in the same period in 1998 according to Competitive Media Reporting.
Even the biggest of the fun companies have kept a lid on advertising costs. The nation’s largest fund firm, Fidelity Investments, which manages a gargantuan $995 billion in assets, only shelled out $28.6 million
in television, print and radio advertising in the first nine months of 1999, according to Competitive Media. Another giant fund company, Franklin Resources, which manages $226 billion in assets, only spent $20.9 million on advertising in the same period.
In contrast, Kinetics’ $4 million ad campaign certainly isn’t a drop in the bucket for a company its size. While the firm has grown spectacularly in the past two years, it still only manages $1.5 billion in assets. Kinetics is paying out “an exceptional sum given their asset base,” says Burt Greenwald, a fund consultant in Philadelphia. “They’re trying to build assets under management as soon as possible. I’d expect that as soon as they reach a certain level of assets, they’d want to go public.”
Kinetics’ Mr. Samson acknowledges the ad campaign “is a significant part of our budget,” but says, “it’s money well spent.” He adds that an initial public offering for the firm isn’t in the cards right now, and the firm simply concentrating on growing.
Kinetics has also been quicker than many of its larger counterparts in moving its advertising onto the television and new media. More established fund companies, such as Fidelity and Alliance Capital Management, have only beefed up their television presence in the past few years. Last year, for instance, Fidelity introduced a big campaign pushing its Powerstreet online brokerage services. And earlier this month, Alliance launched a $12 million television campaign that poked fun at stock trading and highlighted the merits of mutual funds.
“We wanted to get a broad reach through TV,” says Mr. Samson of Kinetics. “It’s the best way to generate awareness.”
Kinetics’ ad campaign was created by public relations and advertising firm BergerBrown Communications, in conjunction with design firm Langton Cherubino Group and media strategy firm KDM International.
Reprinted from The Wall Street Journal - Tuesday, February 22, 2000, © 2000 Dow Jones & Company, Inc. All Rights Reserved
