This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Ads Don't Cure What Ails Your Investments

JPMorgan Chase (JPM - Get Report) is in similar straits. It's the sixth largest advertiser, according to AdAge, with 2011 spend of $2.35 billion. It has been dramatically increasing spending for its "Chase" branch banking and credit card brand, based in Chicago.

But with its New York management increasingly under fire over the "London Whale" trade, how effective is that ad spending? Again, the shares have done all right this year, up 14.24%, but remember the S&P is up 15.72%. JPMorgan Chase trails the averages.

As Phoenix Marketing noted in a press release last year, trust is the key value pushed by bank advertising, and Chase is by far the largest bank brand, in terms of total ad spend, as it has opened new branches aggressively.

But while ads have grown its deposits quickly, they haven't grown its lending as quickly. Business Week reports that, at the end of last year, JP Morgan Chase had only 61% of its deposits out in the form of loans, the lowest figure among the big banks.

Citigroup (C - Get Report), by contrast, had 70% of its deposits out on loan, and that stock is up 27.14% in 2013. Remember that, for a bank, a deposit is really a liability. It's loans that are the assets.

The point is there's a myth on Wall Street that Madison Avenue can save it from the consequences of its mistakes, that with enough advertising all will be made better.

It's just not true.

At the time of publication, the author had no investments in companies mentioned here.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
C $50.52 -2.50%
JPM $61.30 -2.20%
TGT $76.33 -1.40%
WMT $63.75 -1.70%
AAPL $108.90 -1.30%

Markets

Chart of I:DJI
DOW 16,077.89 -296.87 -1.81%
S&P 500 1,916.16 -34.97 -1.79%
NASDAQ 4,672.0680 -61.4290 -1.30%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs