Way back before ETFs were cool, State Street launched the definitive S&P 500 Index-based ETF, which they named the SPDR S&P 500, from Standard & Poor’s Depositary Receipts. Unless you’re a trader (even if?), you probably didn’t know where the SPDR acronym came from. More importantly, if you are a trader, you have no trouble remembering the name, because everybody talked about trading the spiders. Within the trading world, it had a kind of clever caché, a memorable code-name. For those not in the trading world, the best analogue is a radio station that managed to grab catchy call letters. If you’re old enough to have watched a lot of WKRP in Cincinnati reruns, you may recall that the radio station’s sad mascot was a Carp (a fairly boring fish), the best they could do with W-KRP. Are SPiDeRs much better? Is the spider an animal-symbol that you’d want representing your brand?
More questionable, perhaps, was the decision to build on the idea; presumably buoyed on the “household” familiarity of the SPiDeRs, as they released new ETFs, they shifted the SPDR designation to the ETF brand as whole. Now we have a family of SPDR ETFs. But there’s the rub: the spiders aren’t really a household name; it’s an industry-insider’s meme, built out of a stock symbol.
I’ve been doing a lot of brand-naming reading & research in the last few months, and the consensus is that acronyms are a pretty dumb idea for a brand name. A little better when they can be turned into a memorable meme or associated with a memorable word, so at least SPDR has got that going for it. Which they’ve augmented by adding a spider to the logo. And it’s hard to criticize the branding of a hugely successful, gazillion dollar business.
But as ETFs go mainstream and SPDRs continue their shift from a trader’s tool to (potentially) something that could be in any investor’s portfolio, I can’t help but wonder if they could do it over, would they change things a little? If I imagine an advisor in conversation with worried clients, is SPDR an easy sell? If they don’t make the connection, the name is four meaningless letters, hard to remember, impossible to feel one-way-or-the-other about; if they do make the connection, a spider is a pretty emotive animal-symbol – consequently, pretty memorable – but the emotions generally aren’t positive or worry-free ones.