E*Trade Baby, Boom or Bust? What Makes Humor in Advertising Work

The deepest circles of hell brought to us: The E-Trade Baby.

Humor in advertising does not work.  Well, at least in the case of E*Trade and their comical new born known to all as the E*Trade baby, it does not; however I could not help myself one night but to watch a new E*Trade Baby commercial.  My epiphany for this article came from fast forwarding through the commercials on one of my favorite TV shows I recorded on my DVR the night before.  As I am on warp speed fast forwarding through the commercials, suddenly I stopped, it was a new E*Trade baby commercial.  I was powerless to the wit of the baby and watched the ad, even though I wanted to skip the commercials.  I then asked myself the question, “I love the E*Trade commercials, but I will never use E*Trade as a portfolio builder, Why?”  Turns out, humor in advertising is more complicated than you might expect and yet humor is everywhere in advertising; but in order to be effective, the positive appeal of the ad must coincide with the products benefits.

One out of every five television ads contains some sort of humor (Eisend, 2008).  Clearly humor has its place in advertising; yet the effectiveness of the humor continues to be a mystery because humor, through several studies over the last half century, has shown to improve product attention and awareness.  The attention and awareness is what forced me to stop my fast forwarding, and my fiancée to actively search for E*Trade Baby commercials on You Tube.  This behavior stems from classical conditioning.  Humor in advertising is based on an active response.  Humor in general evokes an active response of happiness, fun, or pleasure (Eisend, 2008).  Imagine that you are now one of Pavlov’s German Shepherds, a bell goes off and food comes down a shoot into a bowl for you to taste and the tender slices of steak taste great.  Eventually the sound of the bell itself makes you salivate and you become hungry.  Because you have linked the positive experience of enjoying the food with the bell, anytime you hear a bell you begin to salivate.  Humor in advertising must work the same way, the positive experience must be linked with the benefits of owning or using the product.  Now let’s say that instead of receiving food every time a bell is rung we now receive a picture of food.  What benefits does this picture have?  Nothing, it looks great; but we cannot smell, taste, or enjoy the picture of the steak in the same way.  E*Trade has given the world a picture instead of the food.  Instead of linking the positive experience of the humor (the bell) towards E*Trades product (the steak), we are linking the humor to the E*Trade Baby (the picture).  Audiences for these commercials are distracted by the baby’s humor and in doing so, are distracted from the advertisements message.  Now, the E*Trade baby has transformed into his own, witty brand.  He is very good at making audiences laugh and creating awareness; however, he is not making consumers want to use E*Trade.  The improper use of humor in advertising can negatively impact a purchase decision as well as the perceived trust and credibility of a company (Eisend, 2008).  We only need to look at E*Trade’s performance since the Baby’s debut.

E*trade has performed awfully since the debut of the commercial.  February 4th 2008, the next day, E*Trade stock traded for around $51, today the stock price is under $15.  True, the U.S. economy went through a tremendous period of economic turmoil and prices drops; however, E*Trade’s major competitors Ameritrade and Charles Schwab stock prices remained steady.  In contrast, E*Trade sunk.  In February 2008, these three companies where pretty much equal; however, since that time E*Trade stock plummeted nearly 70% in contrast to Ameritrade and Schwab who only saw a decrease of not even 10%.  Perhaps joking around about a person’s financial future is not a joking matter.  As I stated above, humor in advertising if done incorrectly can negatively impact the company’s credibility and consumers trust in the product.  When a company is selling financial security, don’t you believe they should take it seriously?  That would be like trusting your children to be babysat by “Pogo the Clown” (who was John Wayne Gacy).  Sure he seems harmless and funny, but it is what you don’t see which raises alarm bells.  What the other companies advertised was not humorous in nature; instead Charles Schwab ran ads of a real life cartoon that resembled a Roy Lichtenstein painting.  These commercials feature confident, real life examples of how using Charles Schwab benefited them.  Schwab, Ameritrade, and Fidelity advertisements all focused on two things in their advertisements during this time, confidence and benefits.  The Consumer Confidence Index fell dramatically during 2008 ending at -49 in December (Moynihan, 2008).  Interestingly enough, E*Trade saw a drop in Retail Customer Assets of -39% (E*Trade Financial Corperation, 2009) during this same time; where, Charles Schwab lost only 12% and Ameritrade 9%.  These numbers clearly state my conclusion, in order for humor in advertising to be effective, the positive appeal from the humor must coincide with the product’s benefits.

References

E*Trade Financial Corperation. (2009). E*Trade 2009 Annual form 10-K. New York: E*Trade.

Eisend, M. (2008). A meta-analysis of humor in advertising. Journal of the Acedmey of Marketing Sciences , 191 -203.

Moynihan, P. (2008, December 30th). Confidence Closes Out 2008 With Worst 4th Quarter Ever. Retrieved 2010, from ABC News: http://abcnews.go.com/PollingUnit/story?id=6550527&page=1

About these ads

Stand Out: How Creating a Catchy Slogan Wins Customers

Stick in the minds of your customers.  If you are starting a new business, you may be looking at creating a catchy slogan.  A slogan, as well as a strategic business name, helps leave an impression on your potential customers.  Follow these tips to begin branding your company.

  1. Relate customer needs.
  2. Promote an action.
  3. Keep the message simple

These three ideas will create a catchy slogan.  The greatest slogan still ringing in my head is from Fred’s Towing in Davenport, Iowa. Fred’s is one of the most successful towing services in Eastern Iowa because they made a slogan that echoes among stranded motorist.  Fred’s created “Car dead?  Call Fred!  391-9666.” I have remembered this slogan for over twenty years.  Let us look closely on why I will always remember Fred’s.

A little bit of homework is required in order to relate your customer’s needs.  First, you must be able to identify these needs.  Think clearly, what value does your business provide your customers?  Fred’s provides tow services for all type of vehicles.  People rely on their vehicle for transportation; sometimes vehicles have a mind of their own.  When a motorist car does not start or is involved in a wreck, and is now “dead.”  What should I do?  “Call Fred!”

Promote action, just as this example shows.  The action one is taking is calling Fred for his tow service.  This example also has an additional element, which you may want to consider, an easy to remember phone number.  You want your customers to take action, call you, and pay for your services.  The last bit is the most important.

Keep it simple.  The simpler the message the easier it is to remember (Heath & Heath, 2008).  Small, one-syllable words are the easiest to remember (LaRocqu, 2003).  “Car Dead? Call Fred!” comprises only one-syllable words.  The slogan could have said, “If your car will not start, call Fred’s Towing.”  This example communicates the same idea; however, “Car Dead?  Call Fred!” is the simplest form of this sentence.  Alone, it may sound like caveman talk; but just give simplicity a chance.  The rewards will be endless.

Visit Fred’s Towing at http://www.fredstowing.net/

Heath, C., & Heath, D. (2008). Made to Stick. New York: Random House.

LaRocqu, P. (2003). The Book on Writing: The Ultimate Guide to Writing Well. Portland: Marion Street Press.

Invest in PR, Invest in Growth

Investing in public relations is investing in profit.  Let us say that you are looking to purchase a new home.  After days of searching, you find it.  The realtor gives you the keys and you enter your home for the first time as the owner; but something is different.  The home you bought suddenly is eight times larger.  “Surprise,” yells the realtor as they’re dancing around you, pelting you with confetti “We decided to give you eight times the space for free!”  Public relations can do the same thing to business.

One study shows how every $1 invested in TV advertising causes a return of $1.10.  A 10% return.  The same study uncovered that every $1 invested in public relations yields a return close to $8 (Weiner, 2006).  Clear communication is the key to the public’s eye.  In order to capture public attention; one must first gain the trust of the media.

The media acts like a teacher using projector and the press release the transparency.  The projector illuminates the screen with the information provided on the clear plastic to the students (the public).  The teacher must see the information valuable, otherwise he or she will share another lesson.  You want to write the press release as a valuable piece of information people must have.  The tips I am providing will do just that.

The press release’s goal is to answer questions: Who, What, When, Why, and Where.  I am not going to go in detail about writing the press release. Instead, I will offer three key items to remember when drafting a press release:

  • Write in an active voice
  • Use simple writing
  • Place subject first

Writing in an active voice simply means to place items in the present (Friend, Challenger, & McAdams, 2005).  This will show up in verbs.  For instance, instead of using the word created, use creates.  Passive writing (past tense) is not engaging to the reader and they will lose interest.  Consider the following sentence: Imagine Inc created the light display that illuminated the new welcome sign.  The sentence seems bland; now place it in the active voice: Imagine Inc creates lighting display to illuminate the new welcome sign.  The active voice is vibrant and inviting.  It engages the reader’s attention.

The simpler the better, make communication easy for the reader.   The simpler the message, the easier it will be to understand (Heath & Heath, 2008).  Studies show that most people prefer to read under the 10th grade level and a Flesch reading score between 60 and 70.  Often times when we write for business, we tend to complicate the story.  Follow these two tips to create a simple and easy to understand sentence:

  • Use one syllable words
  • Keep sentence length under twenty words.

Remember, the goal is to communicate and idea.  Short words are strong and easily suited for storytelling; long words are heavy and weak (LaRocqu, 2003).  Short, simple words create a clear picture for the reader.  Also, consider human speech.  Writing is just an extension of human speech.  Consider this sentence: John hastily summoned the telephone receiver with his hand listening to the full auditory frequency spectrum emanating from the minute speaker located within the handset.   Unlikely we would say that sentence in normal conversation.  You can see how this might distract readers from the message.  Now let us consider the simpler revision: John picked up the phone, hearing only the quiet hiss of static.  The sentence only uses two, two syllable words: only and static; two commonly used words.  Another way to keep writing simple is by limiting sentence length.

Keep readers attention by limiting average sentence length for 20 words or less and one topic per sentence.  One subject per sentence focuses ideas and creates a clear picture of the story.  This blog, for example, has an average sentence length of 13 words.  The complicated sentence about John and his phone is 28 words long, a readability grade level at 18.3 and a readability score of 0.  The simple sentence is 19 words long presenting a grade level of 8.8 and a readability score of 63.  A great tool to use is the readability statistics feature in Microsoft Word.  Shifting gears, from viewing the sentence; let us look at the subject.

The subject is the “what” of the story.  The subject should always come first in the sentence, epically in press releases.  One record company I worked for always put information first then the artist.

Tropic records presents: guitar wizard and virtuoso Michael Keen, to perform at Memorial Hall.

Revising this sentence with what we learned in this blog might look something like this:

Michael Keen, guitar expert, performing at Memorial Hall…

The fact Michael Keen is a part of Tropic Record is irrelevant at this point.  The reader wants to know: whom it is, what they do, why they are there, and where they are at. Who is playing? Michael Keen.  What is Michael Keen? He is a great guitar player.  Why is he here?  He is performing.  Where is he performing?  He is performing at Memorial Hall.  Did you notice the change from passive to active voice between the two examples?

Public relations require little input resources giving your company a substantial return on investment.  Keep these ideas in mind when creating your next press release for your business.  Remember; send press releases as often as possible.  Let the media work for you.  Be productive.

References

Friend, C., Challenger, D., & McAdams, K. C. (2005). Contemporary Editing. Boston: McGraw Hill.

Heath, C., & Heath, D. (2008). Made to Stick. New York: Random House.

LaRocqu, P. (2003). The Book on Writing: The Ultimate Guide to Writing Well. Portland: Marion Street Press.

Weiner, M. (2006). Unleashing the Power of PR: A Contrarian’s Guide to Marketing and Communication. San Fransico: Jossey-Bass.

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