Of the eligible 6.5 million workers who must choose a new fund or opt to stay with Argentina's state social security system, fewer than 1.75 million have gone the private route. That's a far cry from the 3 million that were expected to switch by June 30, the final date for choosing a fund.
Three million others stuck with the state system, and the rest have been transferred temporarily to the state Banco de la Nacion Argentina's pension fund. The deadline has been deferred to Sept. 25 because so many people were undecided by June 30.
The privatization and prospect of handling $2.5 billion in funds unleashed an explosion in ad spending by the 24 private pension funds. Allowed to advertise only after April 18, the funds had less than three months to sell themselves. And most fund managers, having already spent the bulk of their ad budgets, are furious that they now have to come up with more ad money.
What went wrong? Simply put, said one expert, Argentines don't trust a private system to handle their money even though they consider the government inept. And the explosion of ad messages added to confusion.
The public was carpet bombed with ambiguous and subjective marketing messages by two dozen private funds.
For example, one fund, Origines, ran a vaguely worded magazine ad, created by Verdino, that read, "When making a very important decision, one always trusts his origins." The text bills Origines as "the private pension fund with ... international experience." Another ad, for Previnter by Ratto/ BBDO, presented a list of the fund's supposed attributes: "experience, solidity, confidence, security, solvency, profitability, support, commitment, attention."
As the deadline approached, people were unable to make a decision, said Jose Aragone, marketing director, Consolidar Fund, one of the five heaviest advertisers.
By June 30 Consolidar, handled by Lautrec Nazca/S&S, enrolled the most members of any fund-278,018, more than 70,000 short of its goal. Still, at nearly 80%, Consolidar fared better than its rivals: No. 2 Maxima signed up only 57% of the projected number. On the low end, Mas Vida pulled in only 1.9% of a desired 140,000.
The marketers blame the state's Superintendent of the Administrators of Retirement and Pension Funds, which failed to deliver a promised ad campaign to explain the private system. "Our challenge was to position the brand," not to explain it, Mr. Aragone said. The superintendent did not comment.
Then, in mid-June, the superintendent declared several funds' ads misleading and ordered modifications.
"It's all been handled very poorly," said Diego Leon, general manager, Ayer Vasquez, which revised the Maxima fund campaign it handles.
Maxima's spot originally depicted a meeting of presidents of international banks, with Maxima mentioned only after profiles of each president, but suggesting that they were endorsing Maxima.
The revised campaign consisted of spots presenting an executive discussing his or her company's relationship with Maxima.
Consolidar, having spent an estimated $10 million during the initial election period, held advertising to a minimum during July and August in order to spend in heavilymid- to late-September.
Advertising mistakes are also being corrected. In the ads, funds are now using facts and figures tohighlight membership figures, profitability and track records in place of the earlier claims lacking hard facts.
But none are mentioning their fee structure, which ranges from no monthly fee to $5 plus a variable rate of 2.6% to 3.8% of monthly income, in advertising.
Funds are not playing this up, said Gerardo Pelaez, Ethika fund commercial director, because a survey Ethika commissioned found that fees ranked eighth in importance to consumers choosing a private pension fund.
The funds have also changed their media mix and are using national business magazines rather than making saturation buys in mass media.
The changes in marketing tactics and the extended deadline have boosted the confidence of fund marketing directors.
"It's a very big system that is just beginning. ... The changes are good for the system," said Mr. Aragone, who expects a million newcomers by the end of September.