Brokers Beef Up Their Ad Budgets

If it already seems like every ad on CNBC or in the financial pages is from an online-brokerage firm, just wait.

Discount brokers Ameritrade Holding and Mydiscountbroker.com said Wednesday they will soon ramp up advertising spending amid an intensifying battle to lure customers.

At an industry conference in San Francisco sponsored by investment bank Putnam, Lovell, de Guardiola & Thornton, Ameritrade said it will boost its ad budget next year to $200 million from $40 million this year.

“This market is just exploding and and now is the time for us to gain market share,” said Tom Lewis, Ameritrade co-chief executive.

Mydiscountbroker.com, which was formed in 1996, will kick off a three-year, $40-million ad blitz on Labor Day. That’s about 10 times the total amount the company has spent to this point. Mydiscountbroker.com is a unit of Southwest Securities Group, a Dallas-based firm that processes stock trades for other companies and makes markets in about 500 Nasdaq stocks.

Securities and Exchange Commission Chairman Arthur Levitt criticized online ads in a speech last month, saying some of them present stock investing as an opportunity for quick riches with no risk involved.

Levitt singled out an Ameritrade ad in which a woman cuts short a jog with a friend to rush home and trade stocks.

The new ads will be “exemplary” in meeting regulatory standards and in portraying investment risk accurately, Lewis said.

Ameritrade had originally planned to spend $100 million on advertising this year, Lewis said. But the company voluntarily scaled that back to first update computer systems to handle the crush of new customers that the ads could generate, he said.