Schwab trumpets low rates to ward off discount rivals

By Published on .

Most Popular
In an bid to beat back growing competition from discount-brokerages, Charles Schwab & Co. will launch a campaign this week to keep customers from being lured away by rivals.

The goal is to alert customers that Schwab has low prices per trade, said Becky Saeger, exec VP-brand management and marketing communications. Schwab recently began a "Trades for Less" plan, with rates as low as $9.95 a trade, to compete with Scottrade and Ameritrade Corp.

The campaign, from Omnicom Group's GSD&M, Austin, Texas, includes print, radio and online ads and a TiVo showcase that dovetails with Schwab's Professional Golfers Association sponsorship. Ads promote the prices, along with Schwab's research and investment service, which the company touts as different from the competition. The TiVo effort features pro golfer Phil Mickelson, who is sponsored by Schwab.

Schwab is trying TiVo and other alternatives to network TV, Ms. Saeger said. "It's a pretty straightforward, focused message and we feel we can do it in a more targeted, less expensive media," she said.

new-customer campaign

GSD&M is also working on a more traditional new-customer-acquisition campaign that will use more conventional media, including network TV. That effort will break in August, Ms. Saeger said.

Financial advertisers are re-emerging after three years of reduced spending and low profiles following the market downturn and a spate of scandals involving brokerages and, more recently, mutual-fund companies. Consumers tar all financial companies with the same brush, Schwab CEO David Pottruck said.

As the economy has improved, investors loosened their purse strings, and discount brokerages have begun a price war.

In a recent report to investors, Morningstar analyst Mike Ford-Taggart said Schwab has been "hammered by the online discount brokerages" who have stolen market share.

Mr. Pottruck said rival TD Waterhouse's current campaign has hurt, since the spots always close with the tagline "The alternative to high-priced brokers like Merrill [Lynch] and Schwab" (AA, Nov. 11, 2003).

In a recent speech, Mr. Pottruck said Schwab will boost ad spending in 2004. He added that Schwab will be looking for more-efficient media buys. It has stepped up its direct-mail use and is looking for added value from its traditional media. Schwab upped its total marketing spending 29% in the first quarter, to $62 million.

In this article: