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.
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