Yesterday, I analyzed an ad in which, by selecting the value to attach to its product, Home Depot communicates the ideological American imperative of mindless over-consumption.
Let’s turn now to a print ad by American Express that tries to fit the round peg of a set of values into the square hole of its product/service. The product/service is a savings account that American Express advertised in the national edition of the New York Times earlier this week, which means that there is a good chance that it was also in the Wall Street Journal, and perhaps USA Today as well.
In this full-page ad, American Express digs deeply into the world of symbols, using gardening as a metaphor for growing net assets for the future. The top half of the ad is a photo of a person’s lower legs and feet, probably a woman judging from the stylish boots and workpants that cover what we see of the person. The person stands in a little patch of dirt surrounded by what looks like a field of young ground cover: a crowded bunch of small plants each consisting of five or six small but very vibrant-looking green leaves. The headline over the boot tops reads: “My reason for saving: To help my dreams take root.”
Doesn’t the image carry you into a pleasant daydream of future happiness?
American Express hammers home the message with a terse but poignant bit of copy: “EVERYONE HAS A REASON. SAVE FOR YOURS. Earning your money takes work. But helping it grow for the future doesn’t have to. Take advantage of our High-Yield Savings account and ensure that your future has a strong foundation to build on.”
In the current environment, we’re all worried about having enough money for future goals, typically retirement and paying for our children’s post-secondary education. We all want to do a little digging in the garden today and have the confidence that with time, we’ll have a nice big harvest.
We would all like to “ensure that your future has a strong foundation.”
One big catch, though. According to the ad, the American Express high-yield savings account currently earns 1.3%. This ridiculously low amount may be the best you can get in the current market for simple savings accounts (or maybe not, I didn’t check), but it most certainly is not a foundation for future growth.
To show you how absurd it is for American Express to try to attach the metaphor of mending your garden to ensure a plentiful future harvest to a 1.3% interest payment, let’s take a look at Yahoo’s retirement planning calculator.
I plugged the following middle-of-the-road assumptions into the calculator: Married couple; age 35 with zero current savings; retiring at age 65; wanting 20 years of retirement income equal to 75% of their current $100,000 in combined income; assume 3% inflation. I ran the calculations twice, and here’s the results:
- Earn 1.3% on your savings and assume you get no Social Security: Must save 75.4% of income every year until turning 65.
- Earn 1.3% on your savings and assume Social Security at current benefit levels: Must save 30.5% of income every year until turning 65.
In other words, earning 1.3 % just doesn’t hack it. American Express knows it. Anyone who has had a savings account knows it. Anyone who can do simple math knows it.
In simple fact, American Express embarrasses itself because it tries to connect 1.3% with building a future. Better it should take another approach, e.g., earn as much as you can on the money that you have to keep liquid.
Whether it was in the age when savings accounts made 4% or 5%, or the current no-interest environment, most people have always opened a simple savings account where they currently have other accounts or close to their home or business, or they comparison shop for rates. American Express might win the comparison with other savings accounts, but because it has connected its product/service to future growth, it now has to compete with corporate bonds, municipal bonds, mutual funds, exchange traded funds, common stocks, preferred stock and a bunch of other investments that all tend to do a lot better than 1.3% over a long time frame.
In other words, except to the completely inexperienced rube, instead of building a case for opening its so-called high yield savings account, American Express has actually hurt its cause in this ad. Somebody misread or misapplied the research big time.
Thanks for this post. I learned a lot from it. Hope to read more.
ING Direct has a better rate. Interest rates are low now, but inflation recently has been either zero or slightly negative. Still, 1.3% gain isn’t enough to bank on for the future. But interest will go up when inflation goes up (if history means anything).