Over its 160-year existence, financial brokerage A.G. Edwards has relied on word-of-mouth and local advertising to grow its business. But now, with competition increasing and controversy in the financial-investment category, the company believes it is time to start building a brand.
"The people who know us love us," said Peter Miller, director of sales and marketing, "but not enough people know us."
The St. Louis company last week tapped Carmichael Lynch to create a branding campaign, following a review in which the Minneapolis agency bested finalist McKinney + Silver in Raleigh, N.C.
Sources said A.G. Edwards' billings will be about $20 million, which is about 10 times more than the company spent on media last year, according to CMR. Miller and agency execs would not comment on spending.
CL's effort, which will launch in the fall, will highlight the company's customer-first philosophy and top ranking from J.D. Power and Associates for customer satisfaction among brokerage firms, said CL chief marketing officer Roman Paluta.
The timing may be ideal for A.G. Edwards' message, in part because of the scandals that have beset several big names in the financial-services industry, including Merrill Lynch and Salomon Smith Barney.
"[Given Americans' skepticism of corporations], Edwards' way of doing business is more relevant than it was four or five years ago," Miller said.
A.G. Edwards' account move is the latest switch in a category that has been volatile on the ad front in the past year. Salomon Smith Barney is considering two shops to handle its $15 million account. In January, E*Trade began, and then abruptly aborted, a review for its $40 million account. And last April, Charles Schwab & Co. consolidated its $140 million account at GSD&M in Austin, Texas.
As the dot-com bubble burst, financial-brokerage spending in the U.S. dropped from $1.6 billion in 2000 to approximately $960 million in 2001, according to CMR. Spending fell further last year, to about $820 million, according to CMR (see chart).
"There's a fair amount of competition out there," said Rachel Barnard, a stock analyst at Morningstar in Chicago. "A.G. Edwards, when you compare them to Merrill Lynch or Schwab, is much less well-known."
In addition to traditional brokerage houses, the category has seen increased competition from new players in the category, such as insurance companies Allstate and State Farm, and accounting firm H&R Block. Peggy Dyer, svp of strategic marketing for Allstate Financial, said the company is not yet where it wants to be in the category since it launched Allstate-branded financial products last year. But Allstate is hoping its well-known brand name—and "good hands" symbol—will help it grow, she said.