Ad firms prepare for pension blitz
Under pension reform, Poles will begin to allocate a portion of their social security tax to private funds as of January 1999. As part of that, around 20 new funds are expected to set up shop here and in the coming months will begin to wage an advertising war for clients.
"It's a totally new product," said Katarzyna Kuznicka, new business development manager at Ammirati Puris Lintas. "People don't know anything about it."
The money those news funds pour into advertising is expected to significantly push up overall spending, which at $550 million is already 57% higher in the first five months of 1998 compared with the same period last year, according to media surveyor Amer Nielsen Research.
While the funds are not able to apply for a license until August, companies have already begun talking with advertising agencies and several have issued tenders for the future work.
While neither the advertising agencies nor the insurers are willing to talk about the details of the upcoming campaigns, they have agreed that the first step is to educate the populous on what the "second-pillar" is.
Pension reform calls for switching from the current pay-as-you-go system to a three-pillar structure that will feed on obligatory taxes. The second-pillar is the area that insurers and financial groups are lining up to serve. While the Social Insurance Office (ZUS) will keep 80% of the employee's 45% gross salary contribution, the remaining money will go to privately owned pension funds, which will invest their money in various types of securities.
But the average Pole doesn't understand the structure yet, said Marek Janicki, general director of McCann-Erickson. Advertising firms are also finding it difficult to craft an approach, largely because they are dealing with an unknown product. That makes it a little hard to figure out what approaches will work.
"Everyone is full of reserve," Janicki said. "People's opinions on the subject are very superficial, because no one really knows what this is all about."
Executives also said that they felt the government needed to step in and conduct its own educational campaign.
"If the government starts a new reform it should inform the people about the basics," said Anna Banach, marketing manager at Saatchi & Saatchi Advertising.
The office of the Government Plenipotentiary for Social Security Reform is supposed to launch an information campaign on pension reform, but so far nothing has been released.
But the amount of business at stake - hundreds of millions of dollars - has the agencies willing to take on the challenge. "It's a very fascinating project," Banach said.
The funds alone are expected to create a billion dollar industry. According to the Government Plenipotentiary for Social Security Reform, the funds will manage $1.3 billion worth of assets by the end of 1999 and up to $24 billion by 2005, when the program is expected to have more than 9 million members.
"Let's be honest," Lintas' Kuznicka said. "We are talking here about clients with quite a handsome amount of money."
For example, Commercial Union, which is setting up a pension fund together with Wielkopolski Bank Kredytowy (WBK) and Bank Przemyslowo-Handlowy (BPH), plans to sink zl. 115 million ($33.3 million) into advertising its fund, the company said.
Executives at Bank Handlowy, which plans to start a pension fund in conjunction with Powszechna Kasa Oszczednosci Bank Panstwowy (PKO BP), said each new fund will need to spend $6 million-$20 million to reach 1% of the potential market.
The funds quickest off the mark are expected to attract the most clients, at least initially. That puts additional pressure on advertising agencies to come up with strong campaigns. "At the beginning people will be driven by emotions," said Bartlomiej Ludwicki, marketing manager at advertising firm Henyo Behrendt, a company that is in the middle of talking with two potential fund managers. "That's why the campaigns need to be strong."
Brand identity will also be crucial, ad execs said. Consumers will remember a company's name long before they comprehend how a fund works, Ludwicki added.
"It (the campaign) won't concentrate on the product, which is a commodity, the same for all companies," Banach said. "It will be concentrated on the fishing rod, which will be a company offering the product."
"It's a totally new product," said Katarzyna Kuznicka, new business development manager at Ammirati Puris Lintas. "People don't know anything about it."
The money those news funds pour into advertising is expected to significantly push up overall spending, which at $550 million is already 57% higher in the first five months of 1998 compared with the same period last year, according to media surveyor Amer Nielsen Research.
While the funds are not able to apply for a license until August, companies have already begun talking with advertising agencies and several have issued tenders for the future work.
While neither the advertising agencies nor the insurers are willing to talk about the details of the upcoming campaigns, they have agreed that the first step is to educate the populous on what the "second-pillar" is.
Pension reform calls for switching from the current pay-as-you-go system to a three-pillar structure that will feed on obligatory taxes. The second-pillar is the area that insurers and financial groups are lining up to serve. While the Social Insurance Office (ZUS) will keep 80% of the employee's 45% gross salary contribution, the remaining money will go to privately owned pension funds, which will invest their money in various types of securities.
But the average Pole doesn't understand the structure yet, said Marek Janicki, general director of McCann-Erickson. Advertising firms are also finding it difficult to craft an approach, largely because they are dealing with an unknown product. That makes it a little hard to figure out what approaches will work.
"Everyone is full of reserve," Janicki said. "People's opinions on the subject are very superficial, because no one really knows what this is all about."
Executives also said that they felt the government needed to step in and conduct its own educational campaign.
"If the government starts a new reform it should inform the people about the basics," said Anna Banach, marketing manager at Saatchi & Saatchi Advertising.
The office of the Government Plenipotentiary for Social Security Reform is supposed to launch an information campaign on pension reform, but so far nothing has been released.
But the amount of business at stake - hundreds of millions of dollars - has the agencies willing to take on the challenge. "It's a very fascinating project," Banach said.
The funds alone are expected to create a billion dollar industry. According to the Government Plenipotentiary for Social Security Reform, the funds will manage $1.3 billion worth of assets by the end of 1999 and up to $24 billion by 2005, when the program is expected to have more than 9 million members.
"Let's be honest," Lintas' Kuznicka said. "We are talking here about clients with quite a handsome amount of money."
For example, Commercial Union, which is setting up a pension fund together with Wielkopolski Bank Kredytowy (WBK) and Bank Przemyslowo-Handlowy (BPH), plans to sink zl. 115 million ($33.3 million) into advertising its fund, the company said.
Executives at Bank Handlowy, which plans to start a pension fund in conjunction with Powszechna Kasa Oszczednosci Bank Panstwowy (PKO BP), said each new fund will need to spend $6 million-$20 million to reach 1% of the potential market.
The funds quickest off the mark are expected to attract the most clients, at least initially. That puts additional pressure on advertising agencies to come up with strong campaigns. "At the beginning people will be driven by emotions," said Bartlomiej Ludwicki, marketing manager at advertising firm Henyo Behrendt, a company that is in the middle of talking with two potential fund managers. "That's why the campaigns need to be strong."
Brand identity will also be crucial, ad execs said. Consumers will remember a company's name long before they comprehend how a fund works, Ludwicki added.
"It (the campaign) won't concentrate on the product, which is a commodity, the same for all companies," Banach said. "It will be concentrated on the fishing rod, which will be a company offering the product."
