Barclays Global Investors

45 Fremont Street
San Francisco, California 94105
USA
Telephone: (415) 777-8389
Fax: (415) 597-2171
Web site: www.barclaysglobal.com

NEW SCHOOL CAMPAIGN

OVERVIEW

Barclays Global Investors (BGI), a subsidiary of the United Kingdom's Barclays PLC, was a little-known mutual-fund provider in the United States when in 1999 it developed a new investment product called iShares. It was essentially an index mutual fund that could be bought and sold like shares of stock. Such funds held shares of stock in every company listed on a particular index in order to enjoy the growth of the entire group, the winners more than offsetting the losers. It was not imaginative investing, but over time it proved to be a worthwhile strategy. Making the index funds tradable was an innovation, but given the abundance of mutual funds competing for investment dollars and BGI's limited marketing budget, it was difficult to bring iShares to the attention of investors. In 2004 BGI released the "New School" campaign, which targeted the top ranks of investment advisers rather than the general investing public.

The "New School" campaign consisted mostly of television spots and print ads. Airtime was limited to the high-profile financial cable channels CNBC and Bloomberg. Print ads were run in prestigious publications such as the Wall Street Journal and Barron's. The less-than-$5 million campaign ran from January 2004 through August 2004. The target of the advertising was younger financial advisers who were willing to entertain new ideas in investment. Many of the television spots depicted a financial adviser who, having decided he was ready to embrace a "new school" of thought and action, debated his mirror image, who was stuck in the past.

The "New School" campaign significantly improved awareness of iShares among financial advisers and greatly increased investments in iShares. During the course of the campaign, Barclays became the third-best-selling fund family. The campaign also won a pair of prestigious awards: a Midas and an EFFIE.

HISTORICAL CONTEXT

BGI's U.S. predecessor, a Wells Fargo Bank unit, was a pioneer of the index fund—a mutual fund that mirrored a market index such as the S&P 500 (a list of the top 500 U.S. corporations ranked by their stock value). By holding shares in all companies of an index in proportion to their worth, an index fund achieved the same growth as the entire index. It was a passive form of investing but produced steady results and became a popular investment vehicle. In 1999 BGI unveiled a new index-investment product, iShares, but instead of taking the form of a mutual fund iShares were exchange-traded funds, which could be bought or sold just like shares of stock, even though they represented a large bundle of stocks. In addition to containing stocks, iShares funds would also be developed to collect baskets of bonds, currencies, and commodities.

BGI began marketing iShares in 2000 with a $10 million campaign developed by the ad agency Saatachi & Saatchi, San Francisco; it focused on wealthier, more sophisticated investors, taking what Adweek magazine's Justin M. Norton called a "buttoned-down approach." As BGI struggled to establish iShares in the marketplace, Saatchi closed its San Francisco office, and BGI's advertising account was put up for review. In a surprise outcome, a new advertising agency, Venables, Bell & Partners, founded by veterans of San Francisco's well-regarded Goodby, Silverstein & Partners, won the business. The new agency took a more lighthearted approach than its predecessor, focusing on the close relationship between investors and the financial advisers who handled their iShares account. In one of the television spots, for example, a man urged his adviser to don a helmet because of nearby construction projects, while in another spot a man mistook a car backfire for gunshots and reacted by knocking down and then shielding his adviser. The tag-line was "Industrial Strength Investment Tools."

BGI was experiencing only modest success with iShares in the early 2000s, a result in large measure of the depressed state of the stock market. In 2003 Venables began looking for a new approach to promoting iShares. Because it lacked the hefty ad budgets of its competitors, BGI could not hope to target the general investing public. Instead Venables and BGI decided to target financial advisers. Agency personnel spent a month meeting with financial advisers to hone the new strategy. Out of this fieldwork emerged the "New School" campaign, which was released in 2004.

TARGET MARKET

The "New School" campaign was aimed at financial advisers, the people who could urge their clients to purchase iShares. Because of a limited advertising budget BGI narrowed its target to the top 200,000 financial advisers in the United States, who were responsible for placing the lion's share of the investments made by wealthy Americans. But after devoting a month to meet with many of these advisers for lunch, dinner, or drinks, the marketers came to recognize a major difference between older and younger advisers. The former clung to tried-and-true recommendations, such as traditional mutual funds, while the younger group was more open to new ideas like iShares. It was this insight that laid a foundation for the "New School" campaign and led to the narrowing of the target audience to younger advisers—and to the older ones who would respond positively to the challenge of fresh thinking.

COMPETITION

BGI's main competition for iShares came from mutual funds, especially the larger ones, such as those sold by the Vanguard Group, Fidelity Investments, and T. Rowe Price Group. Together they spent about $200 million on advertising each year, cast a wide net, and as a result had developed tremendous brand recognition. Fidelity itself spent nearly $100 million a year on ads, according to Adweek. While BGI was preparing its new marketing effort, Fidelity was pursuing its "Personally Invested" campaign, which targeted individual investors. Vanguard was spending another $40 to $50 million promoting its multitude of funds, and the marketing efforts of T. Rowe Price were estimated by Adweek to cost $35 million a year. With far less money at its disposal, BGI could not hope to compete directly with the major fund providers, hence the decision to focus on investment advisers rather than the general investing public. To further complicate the task, iShares also had to compete against scores of other fund providers, many of which—such as Dreyfuss, Oppenheimer, Janus, American Century, Franklin Templeton, and Nuveen—had been around for years and had built up their own level of brand recognition. In short, iShares faced a crowded marketplace, a situation that forced the narrow focus of the "New School" campaign.

DEEP ROOTS

Barclays Global Investors was originally a unit of the legendary Wells Fargo, founded in the early 1850s by Henry Wells and William Fargo, who had earlier established American Express. Wells Fargo was started in San Francisco to serve the stagecoach and banking needs created by the California gold rush, and as a sister company to American Express it handled the express shipping business west of the Mississippi River. What would become Barclays Global Investors was introduced in 1973 as Wells Fargo Investment Advisors. Barclays PLC acquired the operation in 1995 and merged it with other divisions to create Barclays Global Investors, which like its famous ancestor remained based in San Francisco.

MARKETING STRATEGY

Venables set three campaign objectives. The first was to gain notice for iShares in the marketplace. Second was to drive traffic to a website where interested parties could learn more about the new product by downloading articles and accessing other information. Finally, and most importantly, the campaign wanted to drive the sale of iShares.

To reach the target audience of upper-tier financial advisers, BGI and its agency Venables concentrated their resources on select television programming and print media, including cable TV channels CNBC and Bloomberg, the Wall Street Journal, Investor's Business Daily, and Barron's, and smaller trade publications. In addition, the campaign promoted iShares in direct mailings, through online and interactive advertising, via public relations, and at tradeshows. To gain the most impact from the campaign's limited budget, television commercials were aired before and after stock-market trading hours. The campaign also involved tracking the Federal Open Market Committee Meetings, of which there were eight in 2004. At these meetings Alan Greenspan, chairman of as the Federal Reserve, announced the agency's short-term monetary policy. Believing that financial advisers were certain to pay closer attention to the media whenever Greenspan was scheduled to make a pronouncement, Venables pursued a strategy of running daytime television spots at these times. The day after each meeting, when financial advisers were likely to be reading news coverage, BGI spent money on newspaper ads promoting iShares.

The "New School" television spots first began airing in early 2004. One, titled "Clean Slate," showed a group of financial professionals trapped in a conference room by a flood. When the sun rose the next day, the spot offered the message: "Investment advisers: It's a new day. The new school of investing is here. iShares.com/newschool." Another set of commercials in the campaign featured text that read, "Say goodbye to the old you. Here's to the new smarter you." They included "Break Up," in which trick photography was used to show a financial adviser on a lunch date with himself; he explained to his chagrined former self, "This just isn't working for me … You're holding me back. I'm moving our clients in new directions with new investment strategies." In "Fired" a financial adviser called her double into her office to terminate her employment. Another spot, titled "Grave," portrayed a man digging a burial plot for his old self, while his identical image stood by and attempted to talk the man out of leaving the old ways behind: "Are you sure you want to do this? We had a pretty good run. Making trades, picking stocks …" The man cheerfully replied, "I'm sure … Get in the hole." Each spot ended with the tagline "iShares. This is the new school of investing."

The print ads of the "New School" campaign followed a similar approach to the television spots. In one ad a man stood on a sidewalk with a briefcase, a deflated version of himself at his feet, as if he had just shed his skin. In the corner appeared the text: "Eric White, Financial Adviser; 1965 born; 2005 evolved." Ironically, or not, this was also the campaign's target audience: white financial advisers around 40 years of age. Other print ads played up the simplicity of dealing in iShares. In one execution an adviser was shown drinking a cup of coffee, his feet propped up on his mahogany desk. In another a man in a cubicle environment was shown looking a little under the weather. The headline read: "Gentle Relief from Bond Ladder Discomfort Is Here." (A bond ladder was an investment strategy in which bonds or certificate of deposits were arranged to mature simultaneously).

OUTCOME

The "New School" campaign was successful on a number of levels. It increased recognition of iShares in the marketplace. According to a 2003 tracking study, 57 percent of financial advisers were aware of iShares without given any aid, and awareness of iShares among financial advisers totaled 98 percent. The campaign also drove increased traffic to the iShares website. From January until September 2004, visits increased 74 percent over the comparable period in 2003. Finally, during the campaign period, January through August 2004, iShares enjoyed a surge in cash investments (inflows), a 280 percent increase over the same period of time in 2003. Inflows increased from $6.37 billion to more than $24.25 billion. As a result, iShares became the number three fund family according to cash inflows during this period. The "New School" campaign also garnered advertising-industry awards for Venables. It won a Silver EFFIE in the Small Budgets category of the 2005 EFFIE Awards, a prestigious competition produced by the New York American Marketing Association, a trade organization for marketing professionals. In addition, the spot "Clean Slate" won a 2005 Midas Award for best special effects. The Midas Awards, produced by New York Festivals, honored marketing work in financial services.