Bullish on the Recession
With the economy and, in particular, the stock market at the top of peoples’ minds these days, online brokerage firms have seized the opportunity to get their brands in front of consumers. As the market continues its free fall, some consumers — most notably first-time investors who previously shied away from higher prices — believe this is the optimal time to invest because stock prices are more affordable than they’ve been in years. Add in the fact that many consumers see this as their chance to get in on the ground level before markets begin to rebound, and you have the ideal growth environment for online brokerage firms.
Realizing these factors, online brokerages have upped their marketing efforts. And these efforts appear to be paying off. A recent survey from market research firm comScore shows the overall number of visitors to online brokerage sites grew 14 percent last year, more than twice the rate of the total U.S. Internet audience.
“It’s interesting — the economy’s a mess right now, but we’ve seen, and continue to see, very strong account growth,” says Gabriel Dalporto, chief marketing and strategy officer at Burlingame, Calif.-based Zecco Trading. “The big movements in the stock market have really piqued a lot of individual investors’ interest. In particular, a lot of people who weren’t in the market have decided to open up new brokerage accounts. And maybe other people who were in the market have decided to move their money over from an expensive adviser relationship.”
In fact, when things turned for the worst in the stock market in late September and early October, Zecco saw a surge in new accounts, says Dalporto. He also points to an internal survey that showed 80 percent of respondents citing a great buying opportunity. It turned out to be the best couple months in the two-and-half-year history of the company.
Down to the penny
But, with marketing budgets becoming the first victims of corporate cost cutting, online brokerage firms are learning to do more with less.
Zecco, for example, has completely eliminated offline marketing spending (TV, print) for 2009, with 100 percent of the marketing spend now online. This comes after the online channel consistently outperformed offline in driving results in 2008. The company will invest heavily in paid search, refer-a-friend e-mails and online display advertising campaigns — but only if it’s seeing a positive ROI.
“We think of things exclusively in terms of customer acquisition,” Dalporto says. “Of course, everything we do has to be on brand; it has to communicate our core brand values. But mostly what we focus on is, ‘What’s going to generate the most new brokerage accounts for the least money?’”
That’s not to say Zecco isn’t willing to experiment. It was a forerunner in using Google TV as an auction site for TV time. While the channel only hits about 13 percent of U.S. households, it’s one of the places Zecco went to get very low-cost TV placements. It also consistently uses ad networks for behavioral targeting.