The announced $1.29 billion merger of Ameritrade and Datek Online comes as only the latest development in an industry that has undergone dramatic changes in the past two years.
With their prospects changed dramatically after the end of the record-breaking dot-com era, online brokerages are again revamping their advertising messaging, this time in response to a new slate of changes in the competitive landscape.
Early Movers, Expanded and Rebranded
E*Trade Financial , one of the highest-flying players in the dot-com space, this year is attempting to parlay its own recent acquisition tear into a suite of serious, high-profile banking and finance products. That’s a change from the company’s wacky, irreverent television spots — featuring a “spokeschimp” — that dominated the firm’s advertising for years.
Now, however, the company is looking to concentrate attention on its breadth of traditional banking services, which it has expanded as the company’s core brokerage business felt the tremors of the dot-com shut-down.
The company began its positioning turnaround during January’s Super Bowl, when it showed the company unceremoniously “firing” the chimp (and sending him into deep space).
“E*Trade has pretty significant brand awareness, and we support that with the Super Bowl every year, but after 18 acquisitions, if you talk to people on the street, they still say ‘online trading company,’ and it’s very different than that,” said a spokesperson for the company. “The Super Bowl ad showed a new name [from E*Trade Group previously], a new site, and a whole new approach to financial services. That’s how this all started , with the monkey shot into space. Times have changed, and so have we.”
Beginning in April, E*Trade began steadily running product ads designed by Goodby, Silverstein & Partners, and plans to continue doing so throughout the year. Spending is expected to be roughly in line with the 20 percent of annual revenues reallocated to marketing budgets. E*Trade spent about $37 million on advertising last year, according to figures from CMR.
Special focus will be given to sectors like fixed-income banking, mortgages, and especially, the so-called “active trader” — which is consider to be the “sweet spot” for online brokerages, which typically make their money on per-trade commission. Last month, the firm announced promotional discounts for traders who complete more than 75 trades a quarter.
Another pioneer, Ameritrade, emerged in February with a new advertising campaign that similarly seeks to speak to its range. The Omaha-based firm’s campaign, designed by Ogilvy Chicago, positions the company as being powerful enough and customizable enough to serve all sorts of traders — bulls or bears.
Literally, the television spots — which used the talents of Chicken Run animation house Aardman of London — show a bull and a bear chatting peacefully about the market. While one is optimistic and confidence and the other is cautious and anxious, Ameritrade says that it can serve both viewpoints equally well.
As with the final appearance of E*Trade’s spokeschimp, the Ameritrade effort is conceived as a stepping-stone to new, more product-oriented work. In recent months, the ads have focused on tools for individual investors, and execution quality.
“The new campaign is a natural evolution of Ameritrade’s masterbrand strategy,” said Anne Nelson, chief marketing officer of Ameritrade. “It positions us to deliver outstanding value and experience in a customized manner to specific client segments, who may have different needs and investing styles.”
The ads also continued offline, with similar messages but lacking the TV spot’s animated characters.
“Our new ad campaign reinforces our commitment to giving clients the ability to pursue their financial objectives — through any market conditions,” said Joe Moglia, chief executive officer of Ameritrade. “Over the last three years, we have invested $500 million in the Ameritrade brand, which has become synonymous with great value and execution. The new campaign builds on these strengths.”
Datek, which declined to discuss its advertising strategy, said it is continuing to roll out new ads in compliance with federal law, which specifies that until the merger is complete, Datek and Ameritrade must still compete.
However, sources close to Ameritrade indicate that the firm is talking to its rival about advertising efforts following the merger. Both companies declined to discuss the matter. Datek and Ameritrade each spent about $55 million in advertising last year, according to CMR.
CyberTrader
While E*Trade and Ameritrade are diversifying their advertising efforts, others are looking at ways to carve out new client bases among the dwindling numbers of online traders.
Last month, Charles Schwab’s CyberTrader took the wraps of its latest effort, designed to capture the attention of serious traders by appealing to them as sophisticated and freethinking. Thus, by positioning CyberTrader as a tool not for the uninitiated, Schwab is aiming to boost its numbers of less-active but still-serious investors.
“The campaign was born out of respect for the ‘CyberTrader,'” said Bo Bradbury, an account director at GSD&M, which also handles work for San Francisco-based Schwab. “They are [each] unique in terms of trading styles and the tools they use, but they share the same mind-set — they are disciplined, strategic and very competitive.”
Designed by Austin-based GSD&M, the effort involves television, print, online and direct ads. Spots show skittish herd animals like sheep, fainting goats and wildebeests, which, a voiceover says, “do not make good CyberTraders.”
Instead, “CyberTraders get streaming data and news advanced charting and rapid-fire executions, all within a customizable trading platform, for just $9.95 a trade,” the spot’s voiceover reads. “Sheep get nothing.”
The piece then concludes with the tagline, “There are traders and there are CyberTraders.”
“This campaign … shows that strategic traders are different from active traders because they are highly disciplined, strategic, and analytical,” said Jack Calhoun, executive vice president of advertising and brand management for Schwab.
Harrisdirect
Harrisdirect, the newest player in the field, is also taking one of the most aggressive stances, launching a multi-million dollar campaign just three months after its parent, the Bank of Montreal , acquired and renamed CFSBdirect — which just a year and a half earlier, had been DLJdirect, until Donaldson, Lufkin, & Jenrette sold the unit to Credit Suisse First Boston.
With the continued name-changing, Jersey City, N.J.-based Harrisdirect aimed to make a splash with its debut advertising. A trio of television spots, designed by Euro RSCG MVBMS Partners, highlights the company’s new trading platform.
“In an environment where key industry players are trying to restate their relevance, Harrisdirect launches with a truly unique set of strengths: leading technology, a diversity of product and research, and philosophical investing goals that are consistent with the mindset of today’s direct investor,” said Ron Berger, chief executive of the agency.
The campaign seeks to communicate the benefits of direct investing through “Guided Independence” — the concept that Harrisdirect is the only brokerage service that provides guided independence for direct investors.
Like CyberTrader, the Harrisdirect campaign is intended to appeal to an investor who is both self-directed and discriminating — who demands a proven platform of industry leading tools and resources specifically tailored to meet their unique investment needs, supported by personalized service from licensed professionals.
“Our industry-leading technology focuses on both information and access to professional support, providing our clients with an approach we’re calling ‘guided independence’,” said Harrisdirect President and CEO Bruce Schwenger. “This campaign captures the essence of our direct investing philosophy, and makes it clear to investors that they can be in control without being alone.”
The campaign also features a slate of newspaper and magazine executions, drawing on the television ads.
Regardless of the differing objectives and tactics, the final estimation of any firm’s success in the hotly competitive arena naturally comes down to longevity. And that, unfortunately, may rest more in online brokerages’ efforts to cushion themselves by finding niches — such as CyberTrader — or by branching out into less-troubled areas, as the early-movers in the space have been doing.
Indeed, even as the online brokerages are executing on their new ad strategies, signs are suggesting that the individual trader might even become an afterthought to the larger, differentiated players. Last month, Ameritrade rolled out Connection, its platform for institutional traders. With the big budgets and high margins of institutional trading, the move could appeal to other rivals as well — paving the way for a third round of sweeping industry changes, and a new stab at positioning.
