In a conference call today to report first-quarter earnings, Chairman Joe Ricketts said spending -- which had been previously pegged at $200 million annually -- will drop to $20 million to $25 million per quarter for the rest of the year.
Ameritrade reported revenues dropped to $133.8 million for the quarter, compared to $194.1 million the same time last year. As a result, the company began a cost-cutting program that reduced operational costs by $22 million, including a 20% head-count reduction and cuts in marketing spending.
Ameritrade has managed to build a strong brand thanks to its advertising, which allows it to cut marketing without fearing a drop in customers, Mr. Ricketts said. He noted that the company still managed to bring in 138,000 new accounts, its third-best quarterly result, in spite of the marketing cuts.
Ameritrade had reported advertising spending already dropped to $45.6 million in the first quarter, from $54.8 million in 2000.
WPP Group's OgilvyOne, Chicago, broke a new campaign last month to promote Ameritrade's new Personal Finance Center, a financial planning area backed by Ameritrade's OnMoney financial portal. The OnMoney subsidiary, which was originally expected to spin off in an initial public offering this year, has become a part of Ameritrade, said Mr. Ricketts, but he did not rule out an IPO if the market revives. -- Mercedes Cardona
Copyright April 2001, Crain Communications Inc.