Talking Babies Live On: E-Trade's Management Shakeup Isn't Ad Related
There's a lot changing at E-Trade. It's searching for a CEO and refocusing on its core brokerage business. But one thing that 's not going away is its cheeky talking baby.
The company declined to comment beyond a release about its search for a permanent CEO.
But while business may be struggling at E-Trade -- which some experts attribute to macroeconomic problems -- its advertising and marketing strategy driven by the memorable talking baby commercials still works and won't change.
"Love it or hate it, it serves as a tool to make investors aware of E-Trade, and that 's the point. Its problems aren't all that unique in the brokerage world," said Donna McSorley, co-head of financial-services practice group at BlissPR.
The E-Trade commercial was the fourth-best-liked 2012 Super Bowl ad, according to a ranking by Nielsen. According to researcher ABX, E-Trade's baby TV spot outscores all of its financial services peers, including Scottrade, Charles Schwab, Fidelity and TD Ameritrade, and gets high marks on metrics such as message, relevance and likability. It also came in above average compared to all the ads ABX measured beyond the financial-services category.
Its big budget also doesn't hurt. In 2011, the company spent $129.5 million in measured media excluding internet, as compared with $69.4 million for TDAmeritrade, Kantar Media reported.
E-Trade's agency, Grey , New York, declined to comment.
Experts said the challenges affecting E-Trade's business are industrywide and don't pertain solely to the firm. With the Euro debt crisis nowhere near resolved and trading across most asset classes at their lowest levels since 2008, many brokerage firms -- especially those highly dependent on online trading like E-Trade -- are paying the price of lower activity, they said. Investors simply don't want to trade or are staying cautious and trading at lower volumes.
"Problems at E-Trade are mainly due to the market conditions and the lack of resolution of the Euro crisis, which is leading to lower frequency of trading," said Javier Paz, senior analyst at Aite Group, a research firm focused on the financial-services industry. "The more people are waiting on the sidelines, the less impressive are E-Trade's results, despite its phenomenal brand and recognizable name."
But once the Euro crisis improves, firms such as E-Trade are likely to see a boost in business, said Mr. Paz. And E-Trade has other advantages over its competitors. As Mr. Paz noted in a report at the beginning of the year, the challenge for the securities industry in the coming decades is to engage late-teen, early-20s individuals to pick up trading and become comfortable with trading frequently as they acquire wealth. That requires a long-term commitment from brokerage firms.
For its part, E-Trade is showing its commitment with large ad budgets and by offering some of the newest technology.