SMARTER INVESTOR CAMPAIGN

OVERVIEW
Known as a discount broker in a world of traditional full-service investment firms, the Charles Schwab Corporation diversified during the 1980s and 1990s. In keeping with an industry-wide trend toward offering customers one-stop financial services, it expanded into banking, annuities, bond trading, and mutual funds. With the rise of the Internet, Schwab’s core brokerage business evolved to allow trading on its website, making it America’s leading online broker by the late 1990s. While a host of upstart, low-fee online trading services challenged Schwab from below, the company also needed to position itself against a wide range of consolidated financial-services companies. In response to these pressures, and amid an unprecedented bull market on Wall Street, Schwab rapidly increased its marketing profile at the end of the millennium, an effort that culminated with the well-received ‘‘Smarter Investor’’ campaign, which began in 1999 and ran through 2000. Created by the New York office of Omnicom Group’s BBDO agency for an estimated first-year price tag of $50 million, ‘‘Smarter Investor’’ began as a series of four television commercials featuring sports celebrities. According to the agency, the use of celebrities was meant to make Schwab seem accessible and good-natured, in touch with ordinary Americans’ interests, and the athletes’ humorously surprising grasp of the intricacies of investing terminology suggested that anyone, no matter what their previous level of financial expertise had been, could become a smarter investor with Schwab’s help. Supporting print ads used the campaign’s tagline, ‘‘Creating a world of smarter investors.’’ Subsequent TV spots featured entertainment celebrities, and then the campaign evolved to shift the focus away from celebrities and onto Schwab’s retirement-planning products and services.
The campaign attracted favorable industry attention and awards, but a sputtering stock market led Schwab to rethink the do-it-yourself ethos embodied by the ‘‘Smarter Investor’’ campaign. The terrorist attacks of September 11, 2001, dramatically heightened the investing public’s already palpable anxiety, and Schwab further changed its advertising message, in the subsequent months and years, to suit a more anxious investing public.

HISTORICAL CONTEXT
Stanford graduate Charles Schwab founded his eponymous company (then Charles Schwab & Co.) as a fullservice brokerage firm in 1971. When the Securities and Exchange Commission banned fixed brokers’ commissions in 1975, Schwab’s competitors responded by increasing commissions. Schwab instead lowered commissions and positioned itself as a no-frills alternative to traditional full-service brokers. Between 1977 and 1983 Schwab revenues grew by a factor of 30. Throughout the 1980s and 1990s Schwab diversified into banking, retirement, personal investment advising, mutual funds, and other products similar to those offered by its full-service rivals. But those rivals also diversified during this time, as did most other key players in the financial-services industry. Schwab had, however, built an unparalleled system of local branches over the course of its first three decades, along with a corresponding reputation for accessibility and value that distinguished it from its pricier rivals. In addition to competing against this wide range of financial-services giants, Schwab had to contend with new down-market rivals as well. The number of online investing services went from none in 1995 to 82 in 1998, and though Schwab was early to establish itself in the online brokerage wars, upstart companies continued to undercut one another (and Schwab) in pricing, with online transaction fees falling below $10, a significant difference from Schwab’s fee of $29.95. By 1998 more than 50 percent of Schwab’s brokerage customers were trading online, and Schwab had almost 30 percent of the online trading market. To maintain its position atop the online investing industry, and to remain competitive with higher-priced rivals, Schwab embarked on its first concerted effort at brandbuilding (it had focused most of its previous advertising on specific products). When it hired BBDO in 1998, Schwab dramatically increased its advertising budget, setting out to unify its products and services under an umbrella concept and to define its image for the investing public. Initial BBDO spots included documentary-style branding work featuring ordinary Schwab customers praising the company.

TARGET MARKET
Though it continued to stress Schwab’s accessibility and usefulness to a wide range of investors, the 1999 ‘‘Smarter Investor’’ campaign took Schwab beyond BBDO’s initial ordinary-investor approach and into glitzier territory. As a broad corporate-image campaign, ‘‘Smarter Investor’’ did not focus on specific Schwab products or segments of investors but instead sought to communicate the firm’s position amid the wide range of available financial-services companies. According to BBDO’s creative director, Jimmy Siegel, the agency wanted to play up Schwab’s reputation for offering ‘‘a very down-to-earth, honest way to invest,’’ and the use of celebrities underscored the firm’s desire to seem affable and in tune with the interests of ordinary people. Each spot revolved around the humorous use of investing jargon by people who were well known for reasons other than their stock-market savvy, which sent the message that anyone, with Schwab’s help, could become knowledgeable about investing. Poised between the world of conventional full-service brokers and that of discount, limited-service online brokers, Schwab wanted investors to see it as unique in that it did not charge exorbitant fees but still provided its customers with solid advice and market knowledge. The idea that Schwab was in the business of creating knowledgeable investors was, in the words of BBDO senior creative director Charlie Miesmer, ‘‘a compliment to investors and Schwab alike.’’

COMPETITION
E*TRADE Financial Corporation, second to Schwab in online-brokerage market share, spent more than a quarter of its 1998 revenues on the rollout of its new website. Targeting investors who used the web to research financial matters but who did not yet use it for trading, the E*TRADE push included direct-mail promotions offering $50 signing bonuses to select new customers. The company also ran text-heavy print ads detailing the site’s features. TV spots were aired on cable television, and a significant portion of the advertising budget was devoted to online media.
Merrill Lynch & Co., the nation’s largest brokerage firm at the time, was hardly immune to the challenges of the evolving financial-services marketplace. With its ‘‘Human Achievement’’ campaign it had positioned itself as a desirable, people-focused firm that was preferable to the electronic realm of online brokerages. Observers were surprised, therefore, when Merrill did an about-face in June of 2000, announcing that it would begin offering low-cost online trading. Merrill phased out the ‘‘Human Achievement’’ message and began the process of refining a marketing approach that could reconcile the company’s full-service brokerage heritage with its new discount online offerings.
FMR Corp., also known as Fidelity Investments, was the world’s leading mutual fund company in addition to offering a range of financial services, such as brokerage, life insurance, trust services, and securities clearing. Fidelity had in the preceding years been using a significant proportion of its marketing resources to spread the word about its capabilities beyond mutual funds, focusing on its brokerage business in particular. In 2000 the company launched the ‘‘See Yourself Succeeding’’ campaign, which showed Fidelity advisers teaching customers about new products or helping them find solutions to investment problems.

MARKETING STRATEGY
The factors that set Schwab apart from other companies—its heritage of no-nonsense investing capabilities and customer service provided via its comprehensive branch system—formed the basis of BBDO’s vision for the ‘‘Smarter Investor’’ campaign. Additionally, the campaign’s reliance on humor was a departure from traditional financial-services advertising, a contrast, in the words of BBDO co-CEO and chief creative officer Tedd Sann, to the ‘‘heavy and amorphous’’ marketing of competitors. Celebrities had the obvious advantage of attracting attention to the ads, and further, as Adweek columnist Barbara Lippert noted, the presentation of the celebrities as ‘‘knowing users of complicated information’’ was a refreshing departure from typical endorsement ads.
The first four spots in the campaign began running in late August 1999. They were featured during CBS’s coverage of the U.S. Open tennis tournament as well as during tennis, golf, and football programming on both network and cable stations throughout that year. The professional athletes featured in the ads were tennis players Anna Kournikova and Mary Joe Fernandez, football players Shannon Sharpe and Jason Sehorn, skier Picabo Street, and basketball player Dikembe Mutombo. In each case an athlete showed an unexpectedly sophisticated grasp of financial matters while engaged in his or her acknowledged field of expertise. For example, in one spot Fernandez remarked about the Russian Kournikova (known for her attractive appearance as well as for her tennis playing), ‘‘I’m not really friends with Anna Kournikova. First of all, there’s that whole language thing.’’ The scene then shifted to Kournikova telling an umpire, ‘‘A P/E ratio is price divided by earnings,’’ before she turned to a group of tennis students and asked, ‘‘Can anyone say asset allocation?’’
In another spot, called ‘‘Trash Talk,’’ New York Giants cornerback Jason Sehorn bemoaned the verbal abuse he had received from Denver Broncos tight end Shannon Sharpe. Sharpe was shown, at the line of scrimmage, bad-mouthing Sehorn with putdowns such as ‘‘Your mama pays full commission!’’ and ‘‘I bet you pay transaction fees on your mutual funds!’’ The ads used the voice-over line ‘‘When we created a smarter kind of investment firm, we created a smarter kind of investor,’’ and the primary campaign tagline was ‘‘Creating a world of smarter investors.’’ Print ads featuring the tagline alone ran in such publications as the Wall Street Journal, Forbes, and Fortune.
The second series of television spots featured nonsports celebrities and employed the same concept and tagline. In one ad, first aired during the 2000 Super Bowl, Beatles drummer Ringo Starr was shown rhyming various financial catchphrases with the word ‘‘elation.’’ Another spot depicted two lovers on a seaside balcony, with a female voice-over supplying their dialogue. The man asked, ‘‘What’s wrong?’’ and the woman replied, ‘‘My portfolio is totally unbalanced. My mutual funds are underperforming.’’ The voice behind the dialogue was revealed to be that of romance writer Jackie Collins, supposedly reading from her new novel. Schwab similarly featured celebrities in a humorous way to pitch its retirement-planning capabilities during and after the main campaign’s run. In ‘‘Retirement Home’’ a group of sports superstars who had only recently passed their prime were gathered at a retirement home, variously napping, knitting, and playing bingo or shuffleboard. A voice-over stated, ‘‘These days, it’s never too early to think about retirement.’’ Another spot featured baseball slugger Barry Bonds, who was then on the verge of breaking Hank Aaron’s career home-run record, being subliminally encouraged by Aaron, via a stadium loudspeaker, to think about retiring.

FUNNY BUSINESS
Schwab’s ‘‘Smarter Investor’’ campaign was a departure from much financial-services advertising in its reliance on humor, but ‘‘Smarter Investor’’ was not Schwab’s first foray into the business of trying to be funny. In 1998, advertising shop BBDO’s first year helming Schwab’s corporate-image efforts, the agency came up with a series of spots employing the tagline ‘‘Ready to Move Up?’’ The ads featured such professionals as a plastic surgeon and an airline pilot who, because they had to spend so much time thinking about their finances, botched their primary, high-stakes jobs. Schwab pulled the campaign following complaints by organizations such as the American Medical Association, and BBDO went with a more palatable brand of humor in the ensuing ‘‘Smarter Investor’’ spots.

OUTCOME
Schwab’s ‘‘Tennis Player’’ ad, featuring Fernandez and Kournikova, was named an Adweek Best Spot of 1999. The ‘‘Jackie Collins’’ spot also garnered Adweek Best Spot honors in April 2000. ‘‘Retirement Home’’ won a Silver Lion at the 2000 International Advertising Festival in Cannes, France. Barbara Lippert called the campaign ‘‘truly deft, delightful work, mostly because it’s smartly written and well-executed.’’
But as the stock market declined, Schwab began to phase in new messages and marketing approaches, beginning with spots featuring the company’s founder, Charles Schwab, comforting anxious investors in a town-hall setting. During the September 11 terrorist attacks Schwab lost its World Trade Center headquarters, but all of its employees survived. The company was the first financial-services firm to launch a new campaign after the attacks, running spots that compared Schwab advisers to the most trustworthy people in investors’ lives. Because the stock market had plunged and consumer trading had fallen dramatically, Schwab had to cut its advertising budget, and it dropped BBDO without a review in 2002. Instead it appointed GSD&M, the Austin, Texas shop that had been in charge of advertising for Schwab online, as its primary creative agency. Between 2000 and 2003 Schwab laid off more than a third of its workforce and struggled to return to the levels of profitability it had enjoyed in years prior.