How Investors Became Consumers

Sample

We collected ads that appeared from 1960 to 2010 in Forbes magazine (through 1971) and then in Money magazine from the time it began publication (1972 -2010). Money is the publication used in most of the prior literature on advertising appeals to investors (e.g., Huhmann and Bhattacharyya 2005; Mullainathan, Schwartzstein, and Shleifer 2008), inasmuch as during much of this period, it represented the leading investing publication directed at a mass audience (Nocera 1994). We collected magazine ads rather than newspaper ads (e.g., the Wall Street Journal) because among media vehicles, magazine ads offer more scope for pictorial persuasion due to superior color reproduction, and more opportunities for indirect appeals and brand building, since, unlike newspapers, magazines may be retained for months.

Periodization is a fraught subject in any historical account (Hollander et al. 2005), and beginning points tend to be arbitrary. We selected 1960 as a starting date to capture the 1960s boom, when investing first began to diffuse to a mass market (Nocera 1994). This date places the beginning of the sample approximately 15 years into the period of post-war affluence in the United States, and well after the stock market had recovered all the ground lost in the Great Depression. The ending date of December 2010 is approximately 21 months after the stock market bottomed in March 2009, following the worst plunge since the Great Depression, but is an arbitrary reflection of when this research was first conceived.

One possible approach to periodizing an account of investment advertising is to focus on turning points in the markets (Hollander et al., p. 37). It is conventional to speak of bull and bear markets, booms and busts, crash and bottom. However since markets are always in motion, finding a useful set of boundaries, within a fifty-year span that begins and ends at arbitrary points, remains a matter of art and judgment. Based on our reading of market history, and of the development of investing as a mass market (Nocera 1994), we selected a set of stock market peaks and bottoms as the basic boundaries for our periods. These are named in the headings that organize the results, and each period is briefly introduced after being named.

There was one additional turning point during these fifty years. Fink (2011, p. 100) states: “for most of mutual funds’ history, it was illegal for mutual funds to advertise.” However, Fink goes on to acknowledge that there was “a limited statutory exception for a tombstone advertisement.” This limited exception was expanded by the Securities and Exchange Commission in the early 1970s, but until late 1979 the SEC continued to prohibit any advertisement relating to past performance or implying achievement of investment objectives. Before 1980 mutual fund advertising had to meet the standards of a legal prospectus; after this point, funds were free to talk about pretty much anything, including the high returns received by past investors. Accordingly, we expect that there may differences in the content of fund advertising after this hinge, independent of other trends.

Ads were collected for 1) mutual funds; 2) stockbrokers; 3) banks; and 4) life insurance and annuities. Ads appearing in these magazines for non-investment products were not included. The goal was to examine only ads which, directly or indirectly, ask the reader to invest funds with the ad sponsor. Mutual funds dominate the total, accounting for 79% of the sample. The incidence of ads for other products varied over time, as seen in Figure 1, and the total number of ads increased greatly in the late middle of the time period.

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Figure 1.

Incidence of ads, by investment product category over time, relative to stock market returns.

Where possible, three issues per year, spaced approximately equally, were sampled (only one issue each could be obtained in 1978 and 1979). This four-month gap was designed to minimize the number of repeated executions. All ads for investment products ¼ page or larger were collected and product category, ad size and the presence and size of a picture were tabulated. The authors performed Study 1. As explained below, a pair of research assistants coded Study 2 ads for additional properties, as explained below. A total of 2372 ads were available for analysis.

Rhetorical Text Analysis

We analyzed the rhetorical devices found in these ads, and took a qualitative approach to historical understanding (Jones and Shaw 2006; Witkowski and Jones 2006). In addition to the rhetorical figures studied by McQuarrie and Mick (1996, 1999) and Phillips and McQuarrie (2002, 2004), we examined ethos and appellation.

Ethos covers inferences about the message source, which in advertising will typically be the brand. Every message, in addition to being about its topic, is also about its source. Every message provides a raw feedstock for inferences about who delivered this message and with what intent. Ethos can refer to motivation, personality, social position, taste or anything else that can be attributed to a person. Rhetorical analysis can reveal the ethos likely to be inferred for the advertiser, as readily as the claims likely to be inferred for the product.

Williamson (1981), drawing on Althusser (2006), French structuralism (Foucault 1980) and semiotics (Eco 1984), introduced appellation to describe how every advertisement calls out to its intended audience—hails the consumer as a passerby. Just as every message has a source, every message is addressed to a particular audience, names that audience, and instructs as to who should approach this message, and how. This naming is not separate from the claiming which is the ostensible purpose of an ad. From a rhetorical perspective, every mass-media message, in being broadcast to an uncompelled audience, is addressed as well as sourced.

A message offers an identity to anyone willing to take the proffered name. Appellation forms the subject of the viewer: to engage this text, you have to be this person (Foucault 1980). Appellation can offer an identity not previously carried by the consumer. It can call out to a sober, thrifty person of means, invite a speculator to take a fling, or name a caring father who provides for his children. Appellation can be more or less explicit, as when a headline begins with “You,” or otherwise makes its topic the investor rather than the investment. A picture of the investor provides a more explicit appellation than a chart of investment returns, which nonetheless appellates implicitly, by calling out to a data-oriented person.

Procedure

The authors reviewed each ad beginning with the earliest and proceeding through the most recent. Each headline was assessed for the type of appeal being used: whether it was primarily a rational appeal, consistent with standard finance, discussing return, risk or cost; or whether it represented some other kind of appeal. The picture, if present, was analyzed for style: was it a simple illustration of people, or did it introduce metaphorical, fictive, or fantastical elements?

Once all ads had been reviewed, elements that changed over time were identified. Ads from each time period were selected to illustrate these changes, and are included here to serve the same function as quotes from interviews in ethnographic studies: to provide representative instances of the changes seen. The statistical assessment of patterns, over time and across product categories, is deferred to Study 2.

The 1960s & 1970s: From Just the Facts through Boom and Bust

During the 1960s, the post-war economic and market recovery reached the boom stage by 1966-67, when stocks attained an inflation-adjusted peak that was not exceeded until after 1980. The phrases “go-go years” and “guns and butter” date to this epoch. The nominal market peak was late 1972, followed by the worst market decline since 1929. By the late 1970s, Business Week could publish a famous cover story asking whether stock investing was dead.

Ads from the earliest portion of this period tend to conform to a rational, utilitarian model in which the primary purpose of the ad is to provide market information to the prospective investor: facts about return, risk, costs and terms. Figure 2, for a bank, provides a good example.

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Figure 2.

An almost purely rational, factual bank ad from the 1960s (Forbes, April 15, 1962).

The ad shows a simplified balance sheet and a list of board members. The bulk of the ad consists of financial numbers and names. No rhetorical device is used nor is any emotional appeal made. There is no invitation to coarse thinking. This ad could be a page drawn from a prospectus or other legal filing. Ethos and appellation are limited; the ethos, to the extent one is present, is that of a bank examiner, laying out the facts of the bank’s condition; the reader is appellated only as someone who peruses financial statements. Likewise, WA-Figure A ² advertises a savings account. The headline consists simply of the interest rate offered, and the body copy provides strictly utilitarian information about government insurance and the terms of the offer. In these ads the ethos is one of “just the facts” or “numbers don’t lie”. The reader is appellated as one who scrutinizes the numbers to allocate his funds optimally.

An ad for Metropolitan Life Insurance is different (Figure 3). This ad is dominated by its large picture, and this picture is metaphorical, emotional, and almost allegorical, a kind of parable. It captures a frozen drama—if Mother does not manage to retrieve that oar, she and the kids are probably sunk. But if she is not both fortunate and careful, her action in simply reaching for that oar could well tip them over. This pictorial metaphor is richly layered and allusive: mother and children are “at sea,” “up a creek without a paddle,” “storm-tossed,” and “in fading light.”

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Figure 3.

A fictive, figurative, pictorial ad that predates modern graphics technology (Forbes, February 1, 1960).

Expressive elements also appear in the headline, with its metaphor of reaching the shore, and the gratuitous rhyme with “oar.” Visual elements re-appear in the logo, with its (literally) shining tower. The rays of light from the tower echo those from the word “security” placed in the setting sun position on the horizon. The mythic element of rays of light, an advertising motif that was old by the 1920s, is extensively discussed in Marchand (1985). No numbers or financial data appear anywhere in the body copy, which confines itself to evoking the plight of a family that has lost its breadwinner, and personifying the solution as “your Metropolitan Man.” Only the barest rudiments of a utilitarian appeal are present (“reach the shore,” attain “security”).

The point of including this insurance ad from February 1960 is to demonstrate that neither Photoshop nor any other technology that emerged over the past 50 years is required to construct an expressive, emotional, fictive, figurative ad for a financial product. A hand-drawn illustration sufficed. ³ Figure 3, juxtaposed against Figure 2 above and Figures 4 and 5 below, establishes that throughout the five decade period under examination, and even before, advertisers of investment products have always had the choice whether to make utilitarian or expressive appeals, and whether to elaborate the visual portion of the advertisement or confine themselves to the use of verbal and numerical elements. Neither kind of appeal was ever mandated by external or technological contingencies.

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Figure 4.

A verbal, factual mutual fund ad supplemented by a rhetorical figure (Forbes, June 1, 1960).

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Figure 5.

An early instance of a picture supplementing a utilitarian appeal (Forbes, February 1, 1963).

In contrast to the Metropolitan Life ad, and consistent with Figure 2, during the early 1960s advertisements for mutual funds and stockbrokers mostly restricted themselves to verbal and numerical elements. Figure 4, for T. Rowe Price, is factual and descriptive, with selected numerical data, and a list of the names and titles of its executives. The only departure from a strictly utilitarian and factual presentation is the mild antanaclasis (a rhetorical figure in which the same word is used in two different senses, here growth stocks, the category, versus the growing assets under management at T. Rowe Price) of the headline. Most mutual fund ads in the 1960s and 1970s took this utilitarian approach, limited to naming the funds offered, and offering some descriptive information about the fund management company.

Figure 5 shows a somewhat later ad for a savings bank. The headline is as utilitarian and rationally pertinent as can be envisioned: “Best Possible Returns.” What is new is the addition of two visual elements, including a photograph of a man standing by a desk and a piece of paper with three percentages written on it. To describe the photo in this way, however, doesn’t begin to do justice to it, or explain why the advertiser was willing to spend approximately 40% more to expand the ad to include this picture. The man is of a certain age (receding hairline), and located in a particular social milieu (the suit, the suggestion of a skyscraper window). He holds reading glasses, with hand to chin—an image of thoughtfulness at a moment of decision, or alternatively, a stance of care and concern: What is the right thing to do here? The viewer is appellated as a successful man of means who faces a challenging decision about where to put his money. The headline, combined with the progression of percentages, which grow figuratively and literally larger, supply the answer: you place your savings where they will earn the best possible return. An entirely rational course of action (given the government guarantee that these savings will be risk-free) is here reinforced by means that are symbolic rather than propositional, connotative rather than denotative.

Stockbroker ads, here at the height of the go-go years (Nocera 1994), were more thoroughly transformed by this point, as seen in Figure 6 and WA-Figure B. In each case there is a large photo that depicts the investor, not the advertiser. The photos are both expressive, offering a somewhat quizzical smile of pleasure in Figure 6, and in WA-Figure B, the slumped shoulders of exclusion and insignificance, the feeling of being banished, on the outside looking in. An entirely new attribute for an investment provider is invented: “Bache-ability,” punning on “bankability,” but otherwise unconnected to risk or reward. Each of the photos provides a rich ground for socio-cultural inferences about the investor at whom they are aimed: the kind of person who would wear that sort of hunting vest and cap, and have access to property with that stone wall. The ad is no longer a pitch for an investment, but a pitch to an investor, by a brand.

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Figure 6.

A very early pictorial and fictive ad for a stockbroker (Forbes, December 15, 1966).

By contrast, mutual fund ads do not change during the late 1960s (WA-Figure C). The ad is purely verbal: it states the balance of risk and reward to be had from each fund, mentions some terms of the offer, and that is all. No coarse thinking is called for or likely to occur.

To summarize findings from these early ads, ads to investors from a variety of financial service providers tended to be factual and utilitarian in focus, with the exception of ads for life insurance, which then, as now, were often expressive, figurative, and stylized. For banks, the 1960s saw some introduction of expressive and figurative elements, but primarily as add-ons to the standard utilitarian appeal. For brokers the transformation was more thorough in selected cases, with user-focused and pictorial advertising beginning to supplant strictly factual description. But mutual fund ads remained unaffected by these changes, even during the go-go years at the height of the 1960s.

Later, by the end of the 1970s, we see ads for insurance companies and banks that have completed the transition from an almost purely verbal and utilitarian approach, to a predominantly expressive approach in which the visual element eclipses the verbal element and there may be no or little utilitarian argumentation. An ad by Equitable Life (Figure 7) uses a photograph, rather than the drawing in Figure 3, but like that drawing, this photograph is fictive and idealized, down to the bow-tied youngster with the gulping expression, the benevolent apron-wearing grandmother, the antique radio cabinet, and the cornucopia of food spread out for the young visitor. The offering, an investment in whole life that will require a literally life-long contribution of substantial funds each year, is nowhere evident in the picture, which nonetheless occupies almost ¾ of the page. As with the Bache-ability of Figure 6, this ad again features a distinctive neologism, “Nobody Else Like You Service,” now with the playful follow up, “We stole the idea from your grandmother.” No information in the text explains either the return or the risk of this investment. But to describe it as coarse thinking does not seem to do the ad justice—the reader is not being asked to view the investment as a grandmotherly kind of offering. Rather, a fantasy of inexhaustible love and support is on offer. This investment offers more than financial rewards. It will not be the last to do so.

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Figure 7.

A fantastic, fictive and pictorial ad from an insurance firm (Money, November 1977).

About this time, a multi-execution campaign for Manufacturers Hanover bank moves in the same visual and expressive direction as the Equitable life insurance ads. Each execution consists of a two page full color spread—reflecting an enormously greater expenditure than seen in the fractional page, black and white, savings and loan ads from the 1960s. One of these pictures consists of nothing but a white crane in a green marsh, depicted in the style of Monet. Another consists of a rooftop view of a European village; another of a snow covered alpine scene with a town below. Each headline consists of a personification with an ellipsis: The Naturists …, The Generators …, The Geobankers …, with scant body copy. A tag line appears beneath the bank’s name: ‘The financial source. Worldwide.” Strictly speaking, the tagline is meaningless (source of what, exactly?), and offers no information to investors.

If these ads had appeared in a Forbes or a Business Week, they might be categorized as part of the bank’s corporate image campaign aimed at executives, and not as ads aimed at investors deciding where to place their savings. But these ads ran in Money, a magazine directed at individuals, and appeared in the midst of ads for brokers, insurance companies, and mutual funds, while surrounded by editorial matter such as “Amateur investors who outperform the pros” (February 1977). The gap between these ads and the bank ad in Figure 2 is notable. Here the reader is appellated as a worldly wise connoisseur who will recognize the Monet touches in the one image, or who might actually have visited that European locale in another. He does not need to see a financial statement or an interest rate; he needs to acquire an image of the bank’s brand—and the pictures that makes up the ad provide a direct experience of this brand (Brakus, Schmitt, and Zanantonello 2009).

Stockbroker ads in the 1970s sometimes moved in an expressive direction, but sometimes stuck with mostly rational and verbal appeals. Likewise, most mutual fund ads remained almost completely verbal and utilitarian, with few moving in the pictorial and expressive direction seen in the other financial categories. WA-Figure D shows the limit of movement. Here the visual clichés of the eyeglasses and the cluttered desk express a stance of concern, of wanting to do the right thing, along with a willingness to study the facts and wade into the details. But the body copy remains utilitarian, concentrated on issues of return and risk.

To summarize this initial twenty-year period, early ads, and especially ads for mutual funds, conform to the expectations of standard finance that ads for investments should provide factual information. Early on, however, ads for other financial services, especially life insurance, show evidence of branding, most notably in figurative and evocative pictures.

1980 to 1994: Markets, and Mutual Fund Advertising, Take Off

As noted earlier, mutual fund advertising begins anew in the 1980s, with SEC restrictions relaxed. In the markets, inflation and interest rates peaked about 1981, and a multi-decade bond rally began, followed by the beginning of a great bull market in stocks in 1982. The liberalization of IRA plans dates to this era, along with the great shift from defined benefit plans, where employers did the investing, to 401(k) plans, where tens of millions of individuals became investors. A mass market for investment products came into being and matured (Nocera 1994).

Given the new legal freedom to advertise facts about performance, it is no surprise to find many mutual funds in the 1980s continuing to advertise in a relatively factual manner, in rough keeping with the dictates of finance theory. For some years into the 1980s, mutual fund advertising remained predominately verbal rather than visual, utilitarian rather than expressive, and focused on facts about risk and return. The contrast with the more expressive and pictorial ads already seen for insurers and other categories is noticeable.

This is also the great age of decontextualized and potentially misleading performance claims, of the sort expected in first wave behavioral finance. Mutual fund families expanded into multiple offerings, and then cherry-picked which funds to advertise based on which had the best performance records of the moment. Superlatives abound: “best ___ fund,” “the leader in ___,” where the blank is filled in by whatever asset category was coming off a good stretch: growth, value, small, or international. A sample of fund advertising confined to this time period would show little evidence of the phenomena expected by normalcy behavioral finance and consumer research, and much to satisfy the expectations of standard finance and first wave behavioral finance. Ads mostly talk about the money that investors could make.

Exceptions soon begin to appear, however. An ad for the Nuveen Tax Exempt Bond Fund devotes an entire page to a photo of a middle-aged couple in tennis attire, holding racquets, along with three close-up photos of the woman, lined up as if stills from a video, who now wears a business suit, and is captured speaking expressively (WA-Figure E). There are also two testimonials from the woman. The first quote is highly unusual in talking about spending rather than earning or gaining or saving. Only the body copy sticks to a conventional appeal in terms of maximizing after-tax return on a risk-minimized savings vehicle. In short, this ad is a branded appeal that positions the investment offered as both the accoutrement of a lifestyle (enjoyed by the sort of married couple who would own tennis whites), and a means to enjoy that lifestyle. This ad is among the most expressive yet seen for the mutual fund category.

Figure 8 and WA-Figure F show two ads for the Franklin U.S. Government Securities fund. In both, the Franklin brand trades heavily on its namesake, using a large picture and multiple quotes from Poor Richard in WA-Figure F, and then adopting this image as part of the brand’s logo in Figure 8. The logo image, which will appear on all subsequent Franklin fund ads for many years, is reminiscent of the portrayal of Franklin on the $100 banknote—a subtle means of associating the brand with both money and big money. Where WA-Figure F trades on a mix of nostalgia and thrift as a homely virtue, Figure 8 shows a just-married couple, tossed rice still in the air, suffused with joy. Both these mutual fund ads are far more expressive than those seen earlier; moreover, the emotion expressed in Figure 8 is novel for the financial category: money has never before meant joy, nor has investing ever before been linked to marital bliss. Of course, more ordinary consumer products, such as soap, have been linked to such intangible and remote outcomes of product use for many decades (Marchand 1985).

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Figure 8.

An early instance of a pictorial and expressive mutual fund ad (Money, August 1986).

By the mid-1980s, then, a few ads for mutual funds had progressed most of the way toward more contemporary styles of appeal, by using expressive photographic imagery, rhetoricized headlines, and copy that explicitly appellates the consumer as much as describes the investment. A notable example is seen in Figure 9, an ad for Kemper Total Return fund. This ad introduces a staple of more contemporary ads: the picture that captures an event, or freezes an ongoing narrative, together with a headline that makes the picture-story into a parable. It appears that tennis at the Country Club has been rained out, but the protagonist remains quite happy because he has turned lemons into lemonade by treating his rained-out match as an opportunity to make an investment. His youth, vigor and happiness contrast with the hunched-over misery of the waiter in his drenched uniform of servitude, left out in the rain (perhaps because of his ignorance of investing?). The antithesis in the picture is amplified by the antithesis of the headline. The overall parable concerns the contrast between the good fortune of the clever investor and the misery of those ignorant of what the Kemper brand has to offer.

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Figure 9.

An early narrative and fictive appeal (Money, August 1986).

These ads are still the exception rather than the rule, however, with most ads for mutual funds in this period sticking with a purely rational appeal based on risk and return. Figure 10, an ad for Fidelity, a leader in stock fund advertising then as now, is representative. It has no photo, no wordplay, no explicit appellation of the consumer, and no logo. Expressive elements are virtually absent. The ad exclusively contains information on risk, return, and terms, cunningly selected to make this fund and, by extension, the fund company appear superior.

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Figure 10.

A brand promise with explicit appellation (Money, June 1984).

Utilitarian ads for stock funds proliferate toward the end of the 1980s, and become extremely numerous in the early 1990s. These ads by and large conform to the template seen in Figure 10. The typical stock fund ad contains no photo, names the fund in the headline, and features carefully couched but rationally relevant claims about performance, risk, and terms in the ad text. There may or may not be a visual element, but if present it is most likely be a chart or diagram, or an emblem or visual device—a stylized globe, for instance, if the fund invests in international stocks. Dozens of such ads appear in our sample through 1994. Only very rarely in this time frame does a stock fund ad go as far along the expressive, metaphorical, and allegorical route as the Kemper ad in Figure 9.

Two gradual changes during the 1986-1994 period represent departures from the utilitarian template laid out above. First, all major fund companies had introduced a logo by the end of the 1980s. In the majority of cases the logo is figurative and carries associations suitable to promoting the brand, like the Franklin logo in Figure 8. Vanguard introduces its sailing ship with rigging, Fidelity its shining pyramid top (compare the image on the back of a $1 bill), Twentieth Century (renamed American Century after 2000) its bountiful tree, T. Rowe Price its doughty ram, Scudder its sailor in Sou’wester rain hat, Van Kampen its lighthouse, and so on. No utilitarian or rational justification can be made for the inclusion of these visual metaphors as part of the brand mark identifying the investment manager. It can even be argued that appealing visual devices such as these are an impediment to the rational consideration of where best to invest one’s funds. But neither does it seem accurate to describe these logos as coarse thinking. Rather they call on the visual intelligence and semiotic acuity of the investor, cueing up allusions such as “stay the course” for Vanguard, or the “shining city on a hill” for Boston-based Fidelity, or protection on the storm-tossed seas of investing for Scudder.

The second change is more subtle, and not necessarily incompatible with an overall utilitarian appeal. Particularly in their headlines, stock fund ads from the later 1980s and early 1990s begin to make brand promises. These claims represent a departure because the topic is no longer the investment and its properties, but the investment’s sponsor—the fund management company—and its capacities. An initial small step in this direction took the form of firms citing their rank or rating according to one or another metric. In one example, Fidelity trumpets its performance over the preceding year, claims to have the “#1 Overseas Fund” and footnotes Lipper. In another, T. Rowe Price gives its raw performance figure as a total return, without rank or citation, but goes further in claiming “proven international expertise” for the brand. Each of these gambits becomes common as the later 1980s give way to the early 1990s. But we do not at this juncture see the even more expressive pictorial and emotional appeals already common among banks and insurance companies. For mutual funds, these expressive appeals will not increase until the late 1990s and 2000s.

The 1990s Boom: Widespread Diffusion of Contemporary Appeals

After hiccups in 1987 and in the early 1990s, one of the greatest bull runs in the history of stock investing began in 1995 and ran through early 2000. At the time it was called the “dot.com boom,” since many of the individual stocks that soared the most were Internet start-ups. The S&P 500 returned in excess of 20% per year, over and over, and the NASDAQ zoomed 86% in 1999. During this period fund advertising transforms into the sort of expressive, figurative, and pictorial phenomena expected by both second wave behavioral finance and consumer research. But this transformation only slowly gathered steam.

The early boom years

By this point, a dozen years after the beginning of the great 1982-2000 bull market, numerous funds had very strong performance records over a seemingly long period. With the number of investors steadily increasing, and flows into funds increasing accordingly (Fink 2011), these funds had every incentive to advertise these performance records, and they did. WA-Figures G and H for PBHG and Alliance Capital are illustrative. These contain data-rich tables and large headlines trumpeting the sponsor’s successful track record. This richness of numerical data, and the use of tables and charts, is common early in the boom years. Figure 11 shows an ad for T. Rowe Price that includes a graph of the efficient frontier for allocations across domestic and international funds, a type of graph closely associated with Markowitz (1968) and the origins of Modern Portfolio Theory, and one now found in every introductory Finance textbook. These ads cannot easily be dismissed as a violation of the dictates of finance theory, nor are they obvious instances of the sort of hucksterism decried in first wave behavioral finance.

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Figure 11.

A mostly rational appeal supported by a scientific diagram (Money, February 1996).

From one perspective, then, the early boom years saw continued use of rational appeals based on performance and risk, with these claims given detailed factual support by means of numbers, tables, and charts. But the PBHG, Alliance, and T. Rowe Price examples are actually somewhat unusual in being purely textual and diagrammatic. More common in this period is an ad that includes performance metrics, but that also devotes space to a picture, generally intended to provide metaphorical support, and that may also include a playful or figurative headline. Along with a data table, a Janus ad includes a porthole showing stormy seas, and a headline that figuratively implies that the investor may be feeling sick about the volatility of international investments (WA-Figure I). The focus of the ad, then, is as much on the investor’s emotional reactions to risk, as on the fund’s promise of a less risky alternative. Likewise, a CGM ad shows a fencer, epee held aloft in triumph, next to its performance figures; the picture of the fencer occupies as much space as the data table (WA-Figure J).

The other kind of visual support that appears frequently during this period is a picture of the fund’s manager. This may reflect the cult of the star manager that began with Peter Lynch at Fidelity (Nocera 1994), or it may be a response to an early dictum that emerged from research on the marketing of services versus products—the idea that it behooves an intangible service to put tangible cues in its advertising (Lovelock 1983). A close-up photo of the fund manager, looking sharp, capable, hard-charging, or whatever brand ethos may be desired, fits the bill. The two ads in WA-Figures K and L, for Neuberger Berman and Robertson Stephenson, are representative. From a rational finance perspective, a photo of the individual who proposes to manage one’s funds cannot contain any information relevant to making an investment decision. Conversely, from the standpoint of branding an intangible service within an increasingly crowded category, a photo of a person, toward whom the investor might make positive attributions (dedicated, trustworthy, competent), might be quite helpful. This tactic of featuring the fund’s manager in a prominent photograph continues for years following its appearance early in the boom period (there were also a few such examples in stockbroker ads during the 1960s boom).

Another trend that becomes more visible as the boom continues is the use of emotional appeals. Some of these are calm and positive, while others are more aggressive: “Don’t let high commissions bite your assets,” proclaims a discount brokerage, juxtaposed against a picture of a snarling dog, teeth bared and ready to take a bite out of the investor’s rear end.

Still somewhat uncommon in the early years of the boom are picture dominant compositions in which the bulk of the ad is taken up by a photograph with no obvious relationship to investing, return, risk, or cost. But such ads do begin to appear: for instance, an ad for Berger funds fills most of the page with a beautiful picture of the green Irish seacoast—to advertise their partnering with an Irish firm to offer an international fund (note that on stock traders’ monitors, rising stocks are presented in green). Another from American Century funds, a two page spread, consumes the entire left page with a picture of the shoe and pants leg of a man flat on his back. Only when the first line of the body copy is read does the meaning of the picture become clear: “Help me, I’m working and I can’t get up.” The ad puns on a pop culture reference from that era (i.e., “help me, I’ve fallen and can’t get up”). The copy goes on to explain the importance of retirement investing for ordinary working people seeking to get ahead. This kind of picture-heavy ad, inviting and even requiring interpretive effort from the reader, is still not very common in the early years of the boom. But the occasional appearance of such appeals in 1997 signals a trend that will mount in importance over the next few years; and a large gap now separates the appeals used in the American Century ad from those seen in the T. Rowe Price and Loomis Sayles ads of the 1960s and 1970s.

The later boom years

Here the number of ads in Money magazine devoted to investment products climbed at a rate that recalls the increase in the NASDAQ itself, peaking with the market (Figure 1). At this juncture expressive, picture-heavy, fictive and even figurative ads proliferate. Illustrations become metaphorical and polyvalent, and may show elaborately staged stunts, or be infused with narrative elements. Some headlines no longer even mention return, risk, or cost and instead offer an aspirational image for investing, rather than describe the investment product offered, and position the brand rather than provide market information.

A kind of picture now appears that might best be described as brash, cheeky, or even bordering on scornful, in which the advertiser essentially razzes the investor. The message in these ads takes the form of an imperative to the effect of, “get your act together, or you’ll be left behind.” In Figure 12, Conseco pictures a fountain in a city square. A snorkel is visible and a wet-suited arm reaches out of the fountain to drop coins in a pail. The headline reads “How do you plan on funding your retirement?” Other ads in the Conseco campaign use the same headline, combined variously with a picture of an elderly woman at the door, dressed incongruously as a girl scout selling cookies, or a young bride at a hospital bedside, evidently about to marry the old man hooked up to an oxygen tank, just before he expires.

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Figure 12.

A cheeky ad from the boom that challenges investors (Money, May 1999).

Other ads for other sponsors, also in this scornful vein, occur at this time. WA-Figure M, a two-page spread for the Evergreen funds, devotes the left page to a full length portrait of a tattooed hipster with shaped goatee smoking a cigar and wearing a beret. The headline on the right page delivers the punch line: “Pardon us, but have you fallen victim to the latest investment trends as well?” E*TRADE shows a tired-looking older man, in overcoat and suit, on the subway heading home after dark and asks, “If your broker is so great, how come he’s still working?” Morgan Stanley shows four elderly women on a bench in lush garden, with most of the other page devoted to the headline, “There are lots of sound investment strategies. Gossip isn’t one of them.”

These brash ads are notable in several respects. First, they demand an enormous amount of interpretive effort on the part of the viewer. They virtually compel the reader to fill in the narrative that led a man to snorkel for coins in a fountain, or an elderly lady to dress up in a Girl Scout uniform. The mode of persuasion is highly indirect and rooted in the picture. Only the application of a great deal of tacit cultural knowledge permits these representations to be understood as an appeal to invest in this company’s funds rather than some other. Understanding these ads is not a function of ratiocination so much as cultural embeddedness. Investing, one might say, has evolved akin to a consumption subculture (Schouten and McAlexander 1995). Individuals embedded in that culture have no difficulty understanding the visual references, such as the connection of old ladies gossiping → hot stock tips → ineffective investing strategies, or the idea that a fountain may contain a large sum of money in the form of coins tossed in by those making a wish. Yet, this form of understanding is not the same as that allowing one to appreciate the import of the efficient frontier graphed in Figure 11. There is nothing rational about the persuasive work done by these pictorial ads.

One more form of advertising evident during the late boom is, if anything, even more striking than those thus far reviewed. Consider the intimate portrait of the couple, shown lying in bed together in Figure 13, with the headline “Imagine rolling over and saying ‘that was better than investing’.” This provocative ad implies that only a rare sexual congress would be as pleasurable as investing via this online broker. However, it is not alone in representing investing as a supremely pleasurable and satisfying activity, at the pinnacle of life’s delights. Other ads of the era show a honeymooning couple, or a father holding his child aloft, all depicting how the investor will feel if s/he invests with the sponsor.

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Figure 13.

An ad using emotion and hyperbole (Money, June 2000).

Pictures during this period are not only expressive, or suggestive of a narrative, but metaphorical as well. WA-Figure N shows a young girl about 4-5 years of age, with inflated life preserver around her waist, contemplating whether to jump off the dock into the lake. Morgan Stanley makes the metaphor explicit with dotted lines: the investor is the vulnerable child, Morgan Stanley is the life preserver—and to invest is to take a plunge into deep water. In WA-Figure O, a standard summer backyard scene—young boy in bathing suit, pool, beach ball—is punned with the label: “The palace grounds. The prince. The royal ball.” Investing success and the pleasures of family life are one and the same. Even so staid a firm as Vanguard departs from its more conventional text and data heavy ads, running a full-page ad in which almost the entire page is taken up by a picture of ship’s rigging on the high seas, with the playful headline, “Before you set sail, you should know the ropes” (WA-Figure P).

One can also see in this Vanguard ad an instance of a trend in which the brand logo, once a small emblem occupying less than a square inch of space at the bottom of the ad, swells to take over almost the entire ad. In addition to Vanguard’s sailing ship, the Dreyfus lion looms ever larger in ads of this period, while the T. Rowe Price ram takes over the ad in WA-Figure Q. Logo becomes totem in these ads, an emotionally invested, symbolically fraught representation of what the investor, who is now a consumer, might hope to obtain from these fund companies: fortitude, courage, hardiness. Vanguard, Dreyfus, and T. Rowe Price now approach the investor as brands with distinct personalities (Aaker 1997), more than as purveyors of investment products.

The 2000s: Bust, Recovery, Crash, and Slow Revival

The bull market that began in 1982 is generally perceived to have ended in 2000. Crosscurrents, volatility, and downward lurches characterized 2001, up until the terrorist attack of 9/11, when a severe bear market took hold. After March 2003, a multi-year recovery then took some market indexes above their old highs by late 2007. As 2008 proceeded, the stock market began a new plunge, bottoming in March 2009, after enduring the most severe decline since the Great Depression. “Shell-shocked” appears as good a phrase as any to describe investors as this research got underway in 2011-12. Most never imagined that stocks could decline by 50% twice in a decade and did not believe there to be a historical precedent (Siegel 2007). The hit to investor mood and sentiment may explain the precipitous drop in ad count after 2000, as seen in Figure 1.

In what follows, we examine in succession the fallback evident in 2002-03 ads, the return to a more expressive and even ebullient style in 2005-07, the renewed sobriety of ads in 2008-09, and the tentative recovery of sentiment in 2010.

The post-2000 bust

Ads from this era tend to emphasize risk rather than reward. An ad for Janus mutual funds in WA-Figure R is illustrated only by a standard formula for calculating volatility, with the headline, “The new math at Janus.” Pictures do not disappear but become more focused and hard-hitting. An ad for Strong Money Market funds shows a faucet with a thin stream of water and asks, “Has your money fund yield slowed to a trickle?” One for Franklin Tax Free Income funds shows a stack of currency on a table, with bills blowing out the open window one by one, and with the headline, “A lot can happen between making your money and keeping it.” A T. Rowe Price ad shows the yellow diamond road sign for curvy road ahead and proclaims, “Markets twist. Markets turn. Bond funds can help smooth out the ride.” Loss and the risk of loss are themes in this period. Pictures are present, but small—about 2-3 inches square in these examples—and provide a visual reiteration for verbally stated claims, rather than a fictive, narrative or metaphorical expansion.

The ethos of advertising in this era switches away from the brash, cheeky, or giddy to the sober and stern. A friendly but firm older gentleman looks out from ads for the discount broker TD Waterhouse and proclaims variously, “Homework always comes before success. In the dictionary and in the stock market,” or “You can’t plan for tomorrow if you don’t know where your money is today.” In WA-Figure S another stern older gentleman, the actual portfolio manager in this case, shot in very tight close up to emphasize the steel-rimmed glasses and the grim set of his mouth, proclaims “Return on invested capital is the essential measure of value.” An almost moralistic tone crops up in ads from this period. The ethos is that of a responsible friend addressing the investor as if he were a drunk sobering up from a bender. American Century devotes half the page to a black and white photo of a peanut butter sandwich on a paper plate, labels it “American Values,” and devotes the body copy to a description of how the firm’s founder has this sandwich for lunch every day, and takes care to re-use the paper sack in which it was brought to work—evidently, an exemplar of thrift and sobriety.

As variously seen in the metaphoricity of the American Century ad and the persistence of pictures, ads in this era by no means revert all the way to the purely rational, verbal and utilitarian approach seen decades ago. What changes is the nature of the appeal, the tone of the message, and the ethos of the speaker. More emotional, figurative, pictorial appeals do not so much disappear as become less common. Interestingly, several of these appellate the investor as a parent. In WA-Figure T Fidelity shows three pre-pubescent girls in bathing suits in an expansive backyard, one squirting the others with a hose, and the headline, “Yes, we do manage a Federal tax-free college savings program for your precious little tax deductions.” The metonym (substituting tax deduction for child) captures the manner of speaking of a certain kind of successful male head of household, someone who could more easily celebrate the value of children as tax deductions than as beloved family members. The ad hails the reader as a financially savvy but emotionally constricted individual, worldly wise but a little weary.

In Figure 14, also from Fidelity, the headline states, “The idea isn’t to retire with the most retirement accounts. It’s to retire with the most money.” The picture is of a smiling older man on an expansive lawn edged with a stone balustrade, ocean in the near distance, conversing with a young girl. The scene is of settled and secure wealth. In point of fact, very, very few individuals will acquire such property by means of effective investing in tax-sheltered retirement accounts. That kind of Hamptons or Nantucket property is either inherited, or captured by a select few on Wall Street. The picture is fantastical and bears no relationship to the prospects of the average Money magazine reader. It is a fantasy of wealth. Yet the ethos in both headlines remains blunt and no-nonsense, despite the evocative pictures.

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Figure 14.

Investing as fantasy and wish fulfillment (Money, January 2003).

Recovery

In ads from 2005-2007, from after the recovery was well under way up until its peak, we see a return to more upbeat appeals, including the occasional more brash or aggressive gambit. In early 2005 the Edward Jones brokerage firm ran a two page spread of a man on a city street, perhaps in front of the stock exchange, cell phone to ear, wearing a nice suit—except for the missing pants, so that he stands there in his boxer shorts (WA-Figure U). The headline reads, “Having an incomplete investment strategy doesn’t make much sense either.”

Expressive ads with a wish fulfillment theme now return. In an ad for John Hancock, a white haired man stands in front of a large, newer beachfront house, presumably his, holding a rod and reel; an inset black and white photo, blurred with age, shows a young boy with a cheap fishing pole at the beach. The headline reads, “You once made a promise to yourself about the future.” An ad for Prudential shows a baby elephant sheltered beneath a mother elephant, labeled respectively “growth” and “protection.” A multi-execution campaign for Marsico funds uses warmly lit, soft-focus photography of family scenes: an extended family at the dinner buffet in their luxurious mountain lodge; a father putting a sleepy child to bed; an older husband and wife watching the limo take their just-married child away (WA-Figure V). In each of these executions an electronic stock ticker substitutes a life goal for one ticker symbol. The ads equate investing success with some of the warmest and most intimate moments of life. This is investing as fantasy and wish fulfillment, not ratiocination.

A final trend is toward increasing metaphoricity in the pictures, in which the structure of the image carries the message, and away from what might be called simple illustrations, in which the picture simply provides a visual anchor echoing the verbal claims. A good example is the multi-execution campaign by the A. G. Edwards brokerage firm, which features a giant size egg, representing the investor’s “nest egg.” In one, a piece of construction equipment, a Bearcat front-loader, dwarfed by the egg, moves or lifts it; in another execution, the nest egg is tied down by ropes, evoking Gulliver among the Lilliputians. In an ad for Franklin Mutual Shares fund, the picture consists of nothing but magnified small candies, while the headline reads, “You see a little known candy. We see a sweet deal.” Body copy explains that the manufacturer of the candy is the kind of overlooked investment opportunity that this fund specializes in finding. Visually similar is the ad in Figure 15 for Vanguard, which shows nothing but a series of brightly colored men’s ties, displayed folded as they might be found in a fine department store.

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Figure 15.

Investments presented as brightly colored fashion items (Money, January 2008).

The headline reads, “With Vanguard, choosing the right investments can be easier than getting dressed.” What is striking about both ads are the rich, saturated colors, which take full advantage of a key strength of magazines among print media. This is investment as bauble, a brightly colored object to be consumed like candy or a silk tie.

2008-2009 crash

From late 2007 through March 2009, the US stock market declined about 57%. The magazine covers tell the story: the December 2008 Money issue leads with “Make your money safe,” and shows a fist from a suit of armor tightly grasping a bundle of currency. “Rescue your retirement,” in bright red ink, leads the March 2009 cover, which also shows a (nest) egg wearing band aids. Inside the, ad topics switch from stock funds that might soar, to fixed rate annuities that promise a safe albeit limited return. The tone is grim. Prudential advertises the RetirementRedZone.com with a two page ad bordered in blood red and the headline, “I’m anxious about retiring in a market like this,” issuing from the silhouette of a woman attempting to meditate. For TD Ameritrade brokers, a man shaving stares back at himself in the bathroom mirror. The somewhat bitter headline reads, “They say I should save $3000 a month for retirement? Great. I’ll just stop paying all my bills.” Times are hard.

Although the volume of advertising ticks down, and the tone changes, the overall secular trend toward more visual appeals remains intact; and, of course, ads that evoke negative emotions are no less expressive than those that evoke positive emotions. Among the more dramatic is the ad in Figure 16 for an Exchange Traded Fund (ETF) offered by State Street, showing a couple standing outside of their car to gaze at a glowing meteor that has crushed the roadway and blocked their passage. “Okay. Your investments hit a bump in the road. How do you get over it?” The ethos of the headline is very sensible and pragmatic, but the disjunction between its studied understatement (calling a meteor a bump in the road is the rhetorical figure of litotes) and the pictured scene is risible. And the glowing meteor looks evil and menacing, a fine metaphor for how many investors felt about market events in late 2008.

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Figure 16.

An emotional and humorous ad from after the stock market plunge (Money, July 2009).

Another ad for this ETF appears in WA-Figure W. It features a cloyingly cute scene of three kangaroos playing, a smaller one in the middle being both cuffed and hugged by a larger one. The headline reads, “If the middle is so boring, why is everyone so happy there?” The body copy continues, in Rodney Dangerfield style, to play on “middle”: middle of the road, middle of nowhere, middle age. The importance of this ad is that it is impossible to subsume under the category of coarse thinking. This is not a case of an actor wearing a police uniform and drawing inappropriately on that authority to recommend an investment as safe or protected, as in Mullainathan, Schwartzstein, and Shleifer (2008). Kangaroos bring no authority. Kangaroos do not offer the investor a role model. Midcap stock indexes don’t jump around like kangaroos. But kangaroos do offer wonderfully cute eye candy when photographed as here, drawing and holding the reader’s attention. And they do express an emotion of carefree joy, an emotion not much felt by investors at this junction. Last, but not least, the photograph powerfully and memorably conveys the quite abstract idea of middle; which, in terms of capitalization size, is the key factor differentiating this investment from other offerings.

Discussion

The rhetorical text analysis reveals a substantial change in the nature of the advertising directed at investors over the 1960-2010 period, from a focus on verbally stated propositions about return and risk to expressive visual representations. We also saw a difference in the appeals used, between mutual funds on the one hand, which most definitely are investments, and banks, brokers and above all life insurance firms, which although they also call for investment, have perhaps been more ready to act as, and adopt an ethos appropriate to, financial services promoting their brand. The text analysis further suggests the presence of both a long term trend toward appellating investors as consumers, and also important fluctuations around, and even occasional retreats from, the long term trend, as a consequence of shifts in market sentiment.

The inherent shortcoming of any text analysis of a large corpus of ads is the inability to test for trends and for differences across product categories, or even be certain that perceived trends are actually present. Given the greatly increased frequency in the rate of advertisements per year seen in Figure 1, the text analyst can never be certain whether he or she has mistaken an increased count of expressive ads in later years for a shift in the proportion of ads that are not utilitarian. As the key strength of a content analysis is the ability to test for trends, changes in trend, and category differences, in Study 2 we supplement the rhetorical analysis with a content analysis of the same sample of ads (cf. McQuarrie and Phillips 2008).

The content analysis tests for differences in the incidence of rational versus non-rational appeals. The tests consider, respectively, (1) product category differences with respect to mutual funds as a baseline; (2) trends over time, that is, increases or decreases in the odds that a text property will be present; and (3) cyclicality, which refers to fluctuations around the long term trend line, as in the case of the stock market itself, which features both a linear trend component that points up, and important deflections, as when stocks fall.

Ad Coding

Two MBA student research assistants coded the ads, with disagreements resolved by discussion, and inter-rater reliabilities as stated below.

Findings

Descriptive information is given in Figure 1 and Table 1. The count of ads per year and the incidence of products other than mutual funds varies greatly, confirming the importance of expressing the dependent variables as proportions and means rather than counts, and of including dummy variables for product category to clarify trends over time.

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Table 1.

Incidence (Mean) by Year for Five Different Types of Appeal.

Year	Ad count	Rational headlines	Non-Rational elements	Picture weight (M)	Brand promise	Explicit appellation
1960	12	5	3	0.146		5
1961	1	1		0
1962	1	1		0
1963	1	1		0
1964	4	3	2	0
1965	6	3	2	0.021	2	2
1966	8	5		0.227	3	2
1967	3	3	1	0.083
1968	13	9	1	0.163	3	1
1969	12	4	2	0.208	3	5
1970	2	2		0
1971	7	4	2	0.250
1972	11	4	1	0.102	3	4
1973	9	2	1	0.194		4
1974	6	2	1	0.125	1	2
1975	10	3	1	0	2	3
1976	11	1	2	0	1	6
1977	18	6	6	0.250	8	9
1978	2	2		0.125
1979	4	2	3	0.188		1
1980	24	10	10	0.234	7	12
1981	34	16	14	0.158	6	13
1982	34	16	12	0.213	4	11
1983	21	12	6	0.113	3	4
1984	26	10	8	0.115	6	7
1985	64	24	11	0.076	14	17
1986	93	49	9	0.050	5	21
1987	99	47	14	0.063	18	31
1988	64	43	4	0.029	4	10
1989	79	44	13	0.043	14	11
1990	94	57	4	0.048	12	19
1991	110	75	9	0.044	7	22
1992	137	71	13	0.095	12	30
1993	82	32	13	0.123	14	29
1994	112	46	14	0.137	25	36
1995	99	43	10	0.152	11	32
1996	121	45	26	0.157	15	37
1997	140	33	33	0.242	31	67
1998	108	22	31	0.260	30	40
1999	92	18	26	0.255	38	35
2000	127	16	57	0.403	33	58
2001	63	5	26	0.409	18	35
2002	61	9	26	0.379	17	20
2003	45	10	24	0.456	21	19
2004	50	10	19	0.425	11	25
2005	57	11	28	0.419	14	19
2006	50	9	28	0.413	13	20
2007	40	6	22	0.425	12	18
2008	41	4	25	0.384	17	12
2009	32	5	13	0.383	14	11
2010	32	5	6	0.227	20	15
Total	2372	866	582	0.198	492	780

Rational headlines and non-rational appeals

Relative to mutual funds, which make up the bulk of the sample, banks, stockbrokers, and insurance companies were significantly less likely to use a strictly rational headline, and significantly more likely to include non-rational appeals in their ads (Table 2). When first introduced into the regression, calendar year had a highly significant negative (positive) coefficient, showing a decline (increase) over time in rational (irrational) appeals. However, the coefficient for year became non-significant following the introduction of the NASDAQ variable, which has a highly significant coefficient in both regressions. We interpret this result to mean that the NASDAQ variable, with its dramatic acceleration in the 1990s, and fall off in the 2000s, better maps the temporal pattern of both the decline of rational headlines, and the increase in irrational appeals, relative to a simple linear trend as captured by calendar year. The coefficients for the NASDAQ support the intuition from the text analysis that there has been both a long term change in the nature of the appeals directed at investors, and cyclic fluctuation, corresponding to whether the stock market is up or down.

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Table 2.

Regression Results for Five Different Types of Appeals.

	Dependent variables
Predictors	Rational appeal only		Any non-rational appeal		Picture weight		Brand promise substituted		Explicit appellation
	B	Wald	B	Wald	B	t	B	Wald	B	Wald
1. Product category and year
Insurance	−1.14	31.7***	1.31	68.8***	0.24	11.7***	0.45	7.8**	1.11	53.3***
Stockbrokers	−1.10	36.1***	0.56	13.2***	0.18	9.6***	0.70	20.3***	0.58	17.0***
Banks	−0.93	8.8**	1.47	26.2***	0.24	6.6***	1.18	16.7***	0.27	0.9
Calendar year	−0.063	133.1***	0.049	67.0***	0.01	15.2***	0.043	47.3***	0.020	15.8***
2. Add NASDAQ	−0.00064	45.4***	0.00038	33.2***	0.000067	8.1***	0.00011	2.5	0.00019	9.1**

Note: The picture-weight regression was OLS, the other four were logistic regressions. In the first regression run on each dependent variable, three dummy variables distinguishing insurance, stockbroker and bank ads from mutual fund ads were entered, along with the calendar year the ad appeared. In the second run, the value of the NASDAQ index (which comprises smaller and more volatile stocks) was added and tested for significance. When significant, the NASDAQ beta coefficient indicates some degree of non-linearity in the trend for the dependent variable (the coefficient for calendar year provides a measure of the strength and direction of the linear trend).

*p ≤ .05; **p ≤ .01; ***p ≤ .001.

Discussion

The trends quantified in the content analysis are consistent with those uncovered in the rhetorical text analysis: over time, advertisers of investment products began to approach the audience of these ads more as complexly motivated consumers, and less as the fact-focused utility maximizers of standard finance. Use of non-rational and pictorial appeals also appears to be sensitive to bull and bear periods, with reliance on these alternatives increasing in bullish climes and falling off in bearish times. We interpret the product category effects as evidence that stock brokers, banks and insurance companies understood earlier and more completely than mutual funds that the target of their advertising was a consumer of financial services, more than an investor making a rational calculation of return against risk.