The Big Switch
By the end of the year, the 15 new, licensed pension funds are expected to spend $100 million to entice new customers to their investment vehicles. Ad agencies and media outlets, especially television, will reap the benefits, with overall advertising spending in Poland expected to increase 30% in 1999 because of pension reform and financial advertising.
"For the first two to three months you will have more advertising than you can bear," said Frederick Winkler, general manager for advertising agency J. Walter Thompson/ Parintex, which has the account for the Pioneer Pension Fund, being run by Pioneer Group.
Ad agencies expect the funds to run ads for their services throughout the year and to use both above-the-line advertising - television, radio and print media - as well as below-the-line methods such as mass mailings, flyers and billboards.
The pension fund reform is expected to add rocket fuel to an already burning advertising market fire. Total ad spending in Poland rose 40% in 1998 and 15% in 1997. But now, a whole new type of advertiser is coming onto the scene, ad execs said.
"That will change the landscape of who will advertise on the market," said Rupert Slade, media planning director at media planning and buying company Initiative Media, which has Commercial Union PTE as its client.
These new customers will add a new plank to the advertising market's platform, which until now has consisted mostly of campaigns by fast moving consumer goods companies, Slade said.
"It is quite a miraculous situation," said Adam lapinski, media client services director for Media Direction, which is part of the BBDO group.
"People in Poland are realizing that financial services are important," said Andrzej Muszynski, advertising director at private television station Polsat. As retail banking, as well as credit and debit cards, becomes popular, the need for marketing becomes more obvious. "It makes sense for them to advertise this sort of activity," he added.
If ad agencies are happy, though, mass market media outlets are jumping for joy.
Muszynski said that once the funds get their marketing campaigns into gear, ad expenditures could increase by at least 20%. But that number isn't definite just yet. Television isn't the only medium cashing in on reform. Print publications are also seeing a boost.
Weekly magazine Polityka expects first-half ad revenue to rise by at least 10% above projections because of the reforms, said Krystyna Jarosz, the magazine's advertising director. "Actually I think it may well go beyond that, it's a little bit similar to when two years ago GSM operators were hitting the consumers (and) letting all of us gross some money," she added. "Although we did not distinguish pension funds in our business plan for this year, judging from what everybody is saying about their ad budgets and the bookings that we already have we can probably expect much better results than what we put in it."
Jarosz would not detail the magazine's expected 1999 ad budget. Last year, Polityka had zl. 47.97 million ($13.7 million) in revenue making it the second highest grossing magazine behind Wprost, according to Expert Media market research firm.
Last week's Polityka, the first in which funds could advertise, featured eight pages of ads from pension funds, side by side.
"It was not a typical ad contract," Jarosz said. "We actually thought we could ask the funds to run their ads in a sort of supplement and in their ads to answer a set of questions that would list their shareholders, share capital, international experience and so on."
Usual full-page rates are zl. 29,000 and zl. 34,000 for left-hand page and right-hand pages respectively. "We went down on the price a few percent more than usual contracts we sign with ad agencies representing advertisers," Jarosz said.
Initially, the pension fund campaigns are likely to target a mass market audience, rather than specific groups, ad executives said. The most important difference among those taking part in pension reform is that workers below the age of 30 must participate in the new system, while those 31-50 can stick with the old, pay-as-you-go system or switch.
The name of the game in the first year of the funds will be to build market share. Because of this, funds will want to target a wide audience.
"Probably they will aim at everybody because they want to get the biggest chunk of the market," said Michal Sorowka, managing director at Nos/BBDO, which has as its client the as-yet unlicensed PTE Epoka. PTE is owned by Bank Ochrony Srodowiska, Bank Gospodarstwa Krajowego, the three power plants Belchatow, Kozienice and Turow, and the Szczecin Shipyard.
Any distinction between the two groups, after the initial blast of ads aimed at creating name recognition for the funds and general education about the reform, is likely to materialize around September.
This is the time when those in the under-30 group must choose a fund and ads will be targeted to help them make that choice, said Stephen Mangham, chief executive officer of Saatchi & Saatchi Polska and regional manager for the company's Central and Eastern Europe operations.
The second age group, 31-50, will have an additional three months to decide which fund to join.
For ad agencies themselves, the pension fund campaigns are a challenge because no references between the fund and parent company are allowed. This ban extends right down to actors chosen for parts. Ads are also not permitted to speak about the future performance of any fund. "There is very little scope," Mangham said.
Still, agencies and funds have eagerly awaited the chance to begin wooing the general public.
Last year, the government delayed the introduction of pension reform by three months, forcing advertisers and agencies to postpone ad campaigns. But the postponement was met more with relief than grief, because it gave both advertisers and agencies a breather and a chance to pull their acts together.
"I think it was not a bad solution," said Marzena Kowalska, marketing department director for pension fund company Skarbiec-Emerytura, owned 75% by Bank Rozwoju Eksportu (BRE) and 25% by Hestia Insurance. The company was established last August and is planning to run television, radio, press and billboard campaigns with help from Sopot-based advertising agency Hestia Art.
Kowalska did not want to say how much Skarbiec-Emerytura was planning to spend on the ad campaign, but did say that it would run through the year with pauses to determine how further to advertise, an approach many advertisers seem to be taking.
"We have to look at the dynamics," she said.
And some funds, despite the ban on advertising, have been building up to the reform launch for some time. Often, this took the shape of companies that would establish a fund beginning education campaigns for employees or generally about the need to plan for the future.
Dutch insurer Nationale Nederlanden, which set up pension fund company PTE Nationale-Nederlanden Polska, was one of the early starters. At the beginning of 1998, it had a 10% share of insurance market ad spending. This year, its share had grown to 30% in anticipation of pension reform.
While the funds' main goal will be to build market share through their ad campaigns, much of this brand building is also likely to take the guise of education about pension reform. This has advantages for the funds, which can be seen as helping the general populace, but is also a necessity.
A government-sponsored information campaign about pension reform, which was to begin last January, never materialized.
"The government promised to organize this campaign," said Kowalska. The lack of such a campaign has left many people in the dark and created more work for the funds, she added.
"Our clients will not be prepared," said Kowalska.
But Sam Baker, a manager of AIG Global, which operates here as AIG PTE, which is a client of TBWA Warszawa, said that it is also a company's obligation to educate the public about the pension reform and it is better if customers hear about the new system from different sources.
"A government campaign is beneficial, but it is only one piece of the pie," Baker said.
Marta Karpinska, , contributed to this story.
"For the first two to three months you will have more advertising than you can bear," said Frederick Winkler, general manager for advertising agency J. Walter Thompson/ Parintex, which has the account for the Pioneer Pension Fund, being run by Pioneer Group.
Ad agencies expect the funds to run ads for their services throughout the year and to use both above-the-line advertising - television, radio and print media - as well as below-the-line methods such as mass mailings, flyers and billboards.
The pension fund reform is expected to add rocket fuel to an already burning advertising market fire. Total ad spending in Poland rose 40% in 1998 and 15% in 1997. But now, a whole new type of advertiser is coming onto the scene, ad execs said.
"That will change the landscape of who will advertise on the market," said Rupert Slade, media planning director at media planning and buying company Initiative Media, which has Commercial Union PTE as its client.
These new customers will add a new plank to the advertising market's platform, which until now has consisted mostly of campaigns by fast moving consumer goods companies, Slade said.
"It is quite a miraculous situation," said Adam lapinski, media client services director for Media Direction, which is part of the BBDO group.
"People in Poland are realizing that financial services are important," said Andrzej Muszynski, advertising director at private television station Polsat. As retail banking, as well as credit and debit cards, becomes popular, the need for marketing becomes more obvious. "It makes sense for them to advertise this sort of activity," he added.
If ad agencies are happy, though, mass market media outlets are jumping for joy.
Muszynski said that once the funds get their marketing campaigns into gear, ad expenditures could increase by at least 20%. But that number isn't definite just yet. Television isn't the only medium cashing in on reform. Print publications are also seeing a boost.
Weekly magazine Polityka expects first-half ad revenue to rise by at least 10% above projections because of the reforms, said Krystyna Jarosz, the magazine's advertising director. "Actually I think it may well go beyond that, it's a little bit similar to when two years ago GSM operators were hitting the consumers (and) letting all of us gross some money," she added. "Although we did not distinguish pension funds in our business plan for this year, judging from what everybody is saying about their ad budgets and the bookings that we already have we can probably expect much better results than what we put in it."
Jarosz would not detail the magazine's expected 1999 ad budget. Last year, Polityka had zl. 47.97 million ($13.7 million) in revenue making it the second highest grossing magazine behind Wprost, according to Expert Media market research firm.
Last week's Polityka, the first in which funds could advertise, featured eight pages of ads from pension funds, side by side.
"It was not a typical ad contract," Jarosz said. "We actually thought we could ask the funds to run their ads in a sort of supplement and in their ads to answer a set of questions that would list their shareholders, share capital, international experience and so on."
Usual full-page rates are zl. 29,000 and zl. 34,000 for left-hand page and right-hand pages respectively. "We went down on the price a few percent more than usual contracts we sign with ad agencies representing advertisers," Jarosz said.
Initially, the pension fund campaigns are likely to target a mass market audience, rather than specific groups, ad executives said. The most important difference among those taking part in pension reform is that workers below the age of 30 must participate in the new system, while those 31-50 can stick with the old, pay-as-you-go system or switch.
The name of the game in the first year of the funds will be to build market share. Because of this, funds will want to target a wide audience.
"Probably they will aim at everybody because they want to get the biggest chunk of the market," said Michal Sorowka, managing director at Nos/BBDO, which has as its client the as-yet unlicensed PTE Epoka. PTE is owned by Bank Ochrony Srodowiska, Bank Gospodarstwa Krajowego, the three power plants Belchatow, Kozienice and Turow, and the Szczecin Shipyard.
Any distinction between the two groups, after the initial blast of ads aimed at creating name recognition for the funds and general education about the reform, is likely to materialize around September.
This is the time when those in the under-30 group must choose a fund and ads will be targeted to help them make that choice, said Stephen Mangham, chief executive officer of Saatchi & Saatchi Polska and regional manager for the company's Central and Eastern Europe operations.
The second age group, 31-50, will have an additional three months to decide which fund to join.
For ad agencies themselves, the pension fund campaigns are a challenge because no references between the fund and parent company are allowed. This ban extends right down to actors chosen for parts. Ads are also not permitted to speak about the future performance of any fund. "There is very little scope," Mangham said.
Still, agencies and funds have eagerly awaited the chance to begin wooing the general public.
Last year, the government delayed the introduction of pension reform by three months, forcing advertisers and agencies to postpone ad campaigns. But the postponement was met more with relief than grief, because it gave both advertisers and agencies a breather and a chance to pull their acts together.
"I think it was not a bad solution," said Marzena Kowalska, marketing department director for pension fund company Skarbiec-Emerytura, owned 75% by Bank Rozwoju Eksportu (BRE) and 25% by Hestia Insurance. The company was established last August and is planning to run television, radio, press and billboard campaigns with help from Sopot-based advertising agency Hestia Art.
Kowalska did not want to say how much Skarbiec-Emerytura was planning to spend on the ad campaign, but did say that it would run through the year with pauses to determine how further to advertise, an approach many advertisers seem to be taking.
"We have to look at the dynamics," she said.
And some funds, despite the ban on advertising, have been building up to the reform launch for some time. Often, this took the shape of companies that would establish a fund beginning education campaigns for employees or generally about the need to plan for the future.
Dutch insurer Nationale Nederlanden, which set up pension fund company PTE Nationale-Nederlanden Polska, was one of the early starters. At the beginning of 1998, it had a 10% share of insurance market ad spending. This year, its share had grown to 30% in anticipation of pension reform.
While the funds' main goal will be to build market share through their ad campaigns, much of this brand building is also likely to take the guise of education about pension reform. This has advantages for the funds, which can be seen as helping the general populace, but is also a necessity.
A government-sponsored information campaign about pension reform, which was to begin last January, never materialized.
"The government promised to organize this campaign," said Kowalska. The lack of such a campaign has left many people in the dark and created more work for the funds, she added.
"Our clients will not be prepared," said Kowalska.
But Sam Baker, a manager of AIG Global, which operates here as AIG PTE, which is a client of TBWA Warszawa, said that it is also a company's obligation to educate the public about the pension reform and it is better if customers hear about the new system from different sources.
"A government campaign is beneficial, but it is only one piece of the pie," Baker said.
Marta Karpinska, , contributed to this story.
