Got gold? Why TV ad men want yours.
Firms that buy gold are doing a brisk business in old jewelry as strapped Americans seek cash.
The TV ad may be memorable for its absurdity. A cash-strapped wife looks on as her husband, dripping gold jewelry, suddenly drops dead at the kitchen table. Next, a slumbering granny yawns, exposing a row of glinting golden teeth – and a relative arrives with pliers.Skip to next paragraph
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The scenarios are morbid, but the ad's message is clear: Misfortune has its opportunity. Make that moneymaking opportunity.
As the recession deepens and a strapped middle class looks for ways to restore a little girth to its pocketbooks, ads for a slew of firms offering top dollar for unused jewelry are blanketing the airwaves. They are a visible sign of a confluence of trends that is making the precious metal brokerage industry, increasingly, a profitable one.
The big reason? As investors look for security in troubled financial times, gold prices over the past year have been hovering near highs last seen two decades ago, closing Feb. 2 at $903 an ounce.
At the same time, costs for television ad time are dropping as more-traditional advertisers cut spending, creating an opening for aggressive advertising by gold-buying outfits. Industry leader Cash4Gold even broke into the elite Super Bowl advertising showcase, shelling out $3 million for a spot. Its ad on Sunday featured MC Hammer and Ed McMahon, both known for their financial woes, kissing good-bye their various metallic treasures, ranging from golden golf clubs to a gold toilet.
These companies operate as online pawnbrokers, encouraging people to mail in their gold in exchange for a check. Most companies promise to send a check within 24 hours and allow about 10 days for a consumer to change his or her mind.
"The entire economy is crumbling, and when that happens people below the line need cash," says Stephen Schneider, head of marketing for Cash For Gold USA, which made the tongue-in-cheek ad with the gold-toothed grandma. The company has grown "a thousand percent" over last year, he says.
Other companies, too, are reporting golden balance sheets. Chad Sharpe, president of Broken Gold, says his firm is growing by 50 percent a year, and he expects a bigger boost after its television ad campaign kicks off next month. "We're planning on 2009 being our best year," Mr. Sharpe says.
Aiding Sharpe are television advertising prices that have plummeted in recent months.
"This couldn't be happening unless there were wide amounts of time that the general advertisers, the big corporations, pulled out of, leaving gaping holes during programming that have to be filled by the TV stations," says Mark Ratner, a senior vice president at Hawthorne Direct, a media buying firm for direct-response ads.