Brokerage migration

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After charles Schwab & Co. came out last September with its "Trash talk" corporate campaign bearing such lines as "You can't even spell Dow Jones," numerous Americans responded with an indignant,"Ugh."

But "Ugh" no more.

The American landscape is now blanketed with online brokerage advertising, exposing those puzzled viewers of last year to the stock market and converting many to take the online plunge.

These brokerages spent $496.3 million in 1999, up from a mere $94 million in 1998, according to Competitive Media Reporting. Their numbers have risen from 16 online brokerages advertised in national media in 1998 to 38 by the end of 1999.

Most of these ad dollars are contained within the $1.94 billion media expenditure (up 44.5%) recorded by 11 megabrands comprising the financial services, insurance & securities category of the Top 100 Megabrands.


The brokerage business in fact is quickly shifting to these online upstarts. Trading volumes online accounted for 48% of all retail trades for the second half of 1999, up from 37% in the first half, according to U.S. Bancorp Piper Jaffray. Assets held in online brokerage accounts reached $900 billion in the fourth quarter.

The online industry added from 1.2 to 1.8 million accounts each quarter of 1999, growth fostered by heavy advertising expenditures.

E*Trade Group was the biggest online spender in 1999 at $130.6 million, tripling 1998 ad support levels. The volume helped it win a phenomenal 330,000 new accounts alone in last year's fourth quarter and narrow the market share lead held by Schwab.

But Schwab's 22% share of market at the end of 1999 no longer looked invincible. E*Trade was closing fast with a 15.3% share, according to Piper Jaffray. TD Waterhouse held 13.3% of market, Fidelity Investments 11.4%, Ameritrade Holding Co. 8.8%.

The Schwab megabrand, which grew 96.8% in media spending to $191 million, contained within those numbers $59.1 million for its online brokerage business, a 198% increase in online dollar volume.

Ameritrade Brokerage Online spent $104.5 million in media, up from $14.2 million in 1998. It broke into the limelight with network TV spots during last year's Super Bowl.

FMR Corp.'s Fidelity financial services megabrand pulled $168.5 million in media, up 93.4%, including $44.5 million for investments online, up from only $293,500 in 1998.


The media mix for online brokerages is dominated by network and cable TV networks at 32.5% and 27.2% of the total, respectively. Cable's financial networks in particular have benefited from the largess.

The Top 100 financial category also includes the credit-card troika and three insurance megabrands. One, Geico Direct, exploded into the Top 100 for the first time, spending $170.9 million, up 121.6%, a big part of that on its award-winning "Sensible Alternative" TV campaign. In one spot, the earth rumbles as if triggered by a customer's state of mind when he learns he could have saved money with Geico.

The "rumbling" metaphor in that spot could just as well reflect the impact of online brokerage spending on national media.

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