Charles in Charge - Brief Article

Brandweek, March 19, 2001 by Kenneth Hein

With Wall Street suffering its heaviest losses in two years, Charles Schwab & Co. is storming ahead with new TV, radio and print ads starring its founder, that seek to reassure jittery investors with the tag: "Smart answers for today's market."

By month's end, Schwab will escalate its "Smart answers for today's market" effort with a TV ad starring the company namesake. The 30-second spot, via BBDO, N.Y., will depict Schwab answering questions about the volatile economy in a town hall-style setting.

"The campaign addresses the market environment we find ourselves in with the Nasdaq down and many investors having suffered losses," said Dan Hubbard, a company rep.

Moving forward with a full-scale campaign, may be questionable considering that Schwab has cut salaries, implemented a hiring freeze and warned that layoffs may be inevitable. "It doesn't serve them well to go gangbusters. In this climate customers aren't receptive to advertising," said Tim Butler, analyst for Pacific Crest Securities, Portland, Ore., predicting that Schwab may be forced to "throttle back" on spending.

Schwab last week said a drop in consumer trades will likely cause Q1 earnings to fall short of expectations. As a result, J.P.Morgan lowered its 12-month price target to $25 a share from $40 a share. As of Friday its stock was hovering near its 52-week low of $16.

Schwab's online rivals have been similarly bruised. Ameritrade Holding Corp. lowered its 2001 revenue outlook last week and said it will slash its staff by 9%. CSFBdirect, a unit of Credit Suisse First Boston, is axing 10% of its domestic workforce.

Schwab's budget, now at $330 million, was set to hit $400 million this year, per Butler. While spending was cut, Schwab won't abandon plans altogether." Investors no longer look at the market as the lottery or a casino. They want handholding and financial advice more than ever," said Butler.

Print ads kicked off March 8 in Barron's, Business Week, Investor's Business Daily, New York Times and newsweeklies. Creative features Schwab beside copy that reads: "It's times like these that Charles Schwab can help."

A second ad, featuring investment specialist Paul Meinville, breaks this week. Copy reads: "Today's market conditions may have you asking a lot of important questions about investing. You're not alone." Radio ads will run next month.