Financial advertisements are everywhere these days. Just catch one commercial break on CNBC or Fox Business and you’re guaranteed to see an ad for gold, silver, mutual funds, ETFs, or my favorite: a book about the secrets of stock trading! I guess its not a secret anymore, oh well. All this financial mass marketing to the public started in the mid 1940’s, before that there was virtually none. In fact, advertising in any services industry was considered gauche prior to the 1950’s. Many industries, like accounting, had professional bans on marketing. However, this was ruled unconstitutional in 1977 and a flood of advertising then hit the streets.
But when it comes to the birth of financial ads, one has to look no further than Charlie Merrill. Merrill Lynch was founded in 1914 but Charlie got out of the securities industry right before the stock market crash of 1929. During the great depression he was a consultant for many of the chain stores he helped underwrite during his time at Merrill Lynch. Merrill eventually came back to wall street in the early 1940’s and rejoined the firm he started. It was at this time that he started to pitch his idea of marketing securities to the public, much like chain stores he had consulted for. On October 19th, 1948 a one-page ad was taken out in the New York Times. It was titled “What everybody ought to know about this stock and bond business.” It was literally just blocks of words describing what securities are, how they are bought and sold, and why you might want to own some.
Up until this time brokerage firms were small family run businesses and were uninterested in small accounts. Merrill Lynch theorized that it would not be long until people of average means were going to be in the securities business, and that by getting out in front of them with advertising campaigns, they could capitalize on a market that, while fragmented, had huge potential for volume. And they were right; by 1950 Merrill Lynch was the largest brokerage house in the country and ten years later it was four times the size of its nearest competitor.