Mutual funds go on ad-spending binge, shell out 30% more in '10

Mutual funds have been on an advertising blitzkrieg last year, increasing spends on print. As per AdEx India, a division of TAM media research, the advertising volumes have shot up 89% for print advertising in calendar year 2010 as compared to the previous year.

TV ad volumes during the same period grew at a slower pace of 4%. According to industry estimates, overall advertising budget for the mutual fund industry shot up 30% in 2010 to total R200 crore. "Earlier, fund houses paid higher commission to distributors (taken from entry loads) to push equity funds," Dhirendra Kumar, CEO of Valueresearch online, says. But with ban on entry loads post August 2009, fund houses have resorted to higher advertising to market its schemes resulting in print advertising figures going up, he added.

Advertising though didn't seem to have an immediate impact on its overall assets, which fell 6% to R6,26,314 crore while equity assets grew 4% to R1,81,224 crore. Some of the industry though believe the advertising has helped push SIP schemes and limit losses post entry load ban.

Interestingly, on the back of record profits made by mutual fund houses for the financial year 2009-10, MFs had increased advertising spends which had remained subdued in the past following poor equity market conditions. And print have traditionally remained the largest component of advertising budget with around 50% of advertising goes towards print media, with another 40% towards television and rest into out-door media, according to industry estimates." MFs usually prefer advertising in print which is much easier for marketing financial products.

Sundaram Asset Management Company (AMC), Birla Sun Life , DSP BlackRock and UTI were among the top advertisers constituting 56% of total advertising volumes of the MF industry in the year 2010, according to AdEx data.

T P Raman, MD of Sundaram MF says, "In 2010 we had declared dividends in almost all the equity schemes which we advertised". Besdies we also wanted to reinforce our brand name, he added. However some of the market participants believe advertising spends got a boost following Sundaram Finance acquiring 49.9% stake of BNP Paribas. "After the acquisition Sundaram MF, spent a lot on creating their own identity " said a senior official from the leading fund house.

Within print media, most of the advertising (97%) was done in newspapers with rest in magazines. In terms of geography, south zone dominated with 33% market share followed by 28% for the west zone. Among TV ads, national channel dominated with 73% market share.

Source: http://www.financialexpress.com/news/mutual-funds-go-on-adspending-binge-shell-out-30-more-in-10/769462/0

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