This budgeted amount is well over half of what Ameritrade is expected to receive in revenue this year. That would be more than Merrill Lynch, Paine Webber and Morgan Stanley Dean Witter combined, according to estimates of brokerage firm marketing budgets, as compiled by an investment bank. 98 Total accounts reached approximately 2.8 million. With these huge dollar amounts being invested in advertising and marketing, online brokers should be careful to not get carried away by the rush to gain market share. In the face of these extraordinary advertising and marketing budgets, online brokers should be prepared to address concerns that their technology may not be able to keep pace with the influx of new accounts.
Many online brokerages continue to suffer major service outages, downtimes and glitches.
Although there have been great technological strides in the past few years, and trading systems are improving at an accelerated rate, it is difficult to ascertain how individual online brokers will service their accounts in the wake of a market crash or correction, increased demands of 24-hour trading, or the decimalization conversion. Thus, the crush of new business may tax the capacity of trading systems that cannot accomodate major adjustments or upgrades due to these technological freezes. Firms must be wary that the pressure to garner greater market share does not compromise the services they deliver. In other words, online brokers must ensure that their ubiquitous and aggressive advertising strategies do not have the effect of sacrificing reliability or capacity for the immediate satisfaction of obtaining a bigger slice of the marketplace. These companies should not advertise without regard to technological restraints on their capacity to take on new business.