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Fear Factors

Push people's panic buttons with these techniques for an alarmingly effective ad.
July 1, 2002
URL: http://www.entrepreneur.com/article/52714

I can't remember the last time I admired an ad by an investment firm as much as I do the one featured here. Developed by mutual fund behemoth The Vanguard Group of Valley Forge, Pennsylvania, it's as powerful and motivating a sales message as you'll find in the world of wealth-building today. Let's talk about what makes the ad so good and what you can learn from it to improve your own efforts.

You should know that the company's reputation is based on charging a very low expense ratio-the fee charged to manage an investor's money in a given fund. The point of the ad is to stress how that ratio size can affect an investment's performance beyond the ups and downs the stock market brings, especially if you are paying higher-than-Vanguard fees. The company could have pulled that off in any number of ways, but they chose a motivational "button" that jerks us to attention: the fear of loss.

The headline reads, "This is the story of the investor who lost $31,701 and didn't even know it." The body copy is golden: "There are investors who choose to believe that the fees charged for managing a mutual fund involve money they weren't entitled to in the first place. Truth is, it's all yours. And the impact of fees on performance over time can be significant." It then gives an example of a hypothetical fund with an expense ratio of 1.3 percent vs. one of Vanguard's funds with a 0.2 percent ratio. The advantage is obvious. Over time, with compounding, you would have gained thousands more with a Vanguard account. Or, stated more provocatively, you would have lost that amount in another fund and not even known it because fee-taking is an almost invisible part of mutual fund management.

This story-styled ad is artfully placed within a storybook format and adds to its freshness with an au courant illustration of a hapless investor journeying through life, unaware of the fact he was losing a lot of money out of his backpack "portfolio."

What underlying principle can you take away from this ad? That the fear of loss is imbedded in all of us, and that any stimulus that succeeds in activating it will get us to react and respond immediately. Whether you sell insurance, move furniture or develop software, there's always a fear-of-loss button you can push to bring in more business.


Jerry Fisher is a freelance advertising copywriter and author of Creating Successful Small Business Advertising.