Driving Traffic to Online Investing Sites; Quote.com Case Study

*** MarketingSherpa’s FinancialMarketingBiz.com ***
Practical News & Case Studies on Marketing Financial Products
& Services Online
January 9, 2000 - Vol. II, Issue 2

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http://www.financialmarketingbiz.com

1. NEWS: House Financial Services Committee,
Ameritrade, OnMoney, iAnalyst, Dresdner Kleinwort
Wasserstein, 401kExchange.com, MoneyLine

2. MORE HEADLINES

3. CASE STUDY: Quote.com Grows Long-Term Investor Traffic
by Adding Community to its Site

4. EXCLUSIVE INTERVIEW: Irv Mermelstein of Profits Over Time
Discusses the Realities of Online Investing Web Sites

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*House Financial Services Committee Created; New Chairman
Announced
EYE ON CAPITOL HILL: Rep. Michael Oxley (R-Ohio) was
nominated Chairman of the new House Financial Services
Committee, recently created from the stripping of securities
and insurance issues from the House Commerce Committee and
adding them to the existing House Banking Committee. Will the
new structure and leadership make more of a concerted effort
to make financial services on the Internet more accessible to
consumers? A spokeswoman from the House Financial Services
Committee declined to comment, and calls to Rep. Oxley’s
office were not returned.
http://www.house.gov/banking

*Ameritrade Plans to Slash Ad Spending for OnMoney
NO MORE BILLBOARDS?: Ameritrade plans to slash ad spending
for its personal finance Web portal OnMoney, having spent
$48.7 million in advertising in 2000, according to the
company’s year-end financial statement. And according to
Ameritrade’s latest 10-K filing with the SEC, funding for
OnMoney isn’t assured beyond March 2001. Representatives from
OnMoney could not be reached for comment.
http://www.onmoney.com
http://www.ameritrade.com

*iAnalyst No More
BUH-BYE: Unable to secure a second round of venture capital
funding, iAnalyst has shut down its Web site. iAnalyst
promised to connect individual investors with live Wall Street
research analysts using chat technology. “Taking a lesson
from online banking, the Internet works well for transactions,
but not for advice,” says Avivah Litan, VP of financial
services research at Gartner Group.
http://www.ianalyst.com

*Dresdner Closes Wasserstein Transaction
DONE DEAL: Dresdner Bank announced that it has completed the
acquisition of Wasserstein Perella Group, a deal that was
first announced in Sept 2000. The combined investment banking
and securities operation will now be called Dresdner Kleinwort
Wasserstein. (OK, you try typing that three times really
fast!) When asked if the firm will be making a stronger foray
into online services, Dresdner spokesman Jon Hartzell
explained that Dresdner will continue to develop its
institutional research and trading product, Online Markets.
The acquisition of Wasserstein will not affect Dresdner’s
Internet initiatives, yet “it is a great transaction in other
ways,” explains Hartzell.
http://www.drkw.com
http://www.onlinemarkets.com

*401kExchange.com Introduces “Smart Compare”
SHOPPING FOR RETIREMENT PLANS: 401kExchange.com, a portal and
free information site for plan sponsors, retirement advisors,
and service providers, launched Smart Compare, a search,
comparison and analysis tool that utilizes the company’s
proprietary software and database, which includes 450,000 plan
sponsors and 5,700 service providers. “We’re the J.D. Power &
Associates of the 401(k) industry,” explains Donald Lanman, VP
Marketing and Advertising for 401kExchange.com.
http://www.401kexchange.com

*MoneyLine Gets $36 Million to Grow
WOW: MoneyLine, a provider of Internet-based trading systems
for banks and institutional investors, announced that it has
raised $36 million in new funding from a syndicate of
investors, which include Merrill Lynch, Bank of America, and
Global Crossing. When asked how much of the kitty will be
earmarked for marketing, MoneyLine VP Marketing Philip
Cenatiempo explained that “the funds will be used to drive our
entire business forward,” and that the marketing plan had not
yet been finalized.

===MEDIA BUY OF THE WEEK===
Adopt a Highway
http://www.adoptahighway.com

Claiming that their program beautifies over 34,000 miles of
highway per year in nine U.S. states, Adopt A Highway is
better known to hard-core marketers as a more affordable
alternative to costly billboard advertising.

A typical, full-size highway billboard costs approximately
$15,000 per month while Adopt A Highway signs are about $600-
700 per month and offer monthly traffic numbers of 1-3 million
vehicles.

But you may have to wait: Adopt A Highway is sold out in
every major market, including New York City, Los Angeles, San
Francisco, and Orange County, Calif.

Financial services advertisers include Schonfeld Securities,
GBI Capital Partners, and Early Bird Capital.

For further information contact Robb Dorf, senior account
manager, 800-358-0231 x.306, robb@adoptahighway.com.

*****
MORE MARKETINGSHERPA HEADLINES
*****

* How to Avoid the Most Common Myths and Blunders of Search
Engine Optimization
http://www.b2bmarketingbiz.com/sample.cfm?contentID=1310

* Top 10 B-to-B Internet Marketing Tactics That Worked Best in
2000
http://www.b2bmarketingbiz.com/sample.cfm?contentID=1300

* Special Report: Best Practices in Internet Marketing to
Small Businesses
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* Online Content Industry Growth Predictions for 2001: Books,
Magazines, Newsletters and Newspapers
http://www.contentbiz.com/sample.cfm?contentID=1307

* Check out FinancialMarketingBiz's back issues at:
http://www.financialmarketingbiz.com/archives.cfm

*****
CASE STUDY: Quote.com
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* Lycos Quote.com Gains 535% ROI When Adding an Online
Community

CHALLENGE
Lycos Quote.com’s goal for the year 2000 was to
expand to a broader investor demographic beyond its initial
audience of day traders. To do so, the site needed to become
more attractive to longer-term investors, and get them to
return repeatedly even though they weren't trading as often as
day traders.

CAMPAIGN
Quote.com decided to add online community to its
site in order to new and existing members to interact and
return regularly. The site promoted the community a way for
personal investors to learn from experts, and communicate with
peers.

Rather than just offering me-too message boards, Quote.com
tried to make its community offering as appealing as possible
to a broad cross-section of investors, by also including
online seminars, live chats and volunteer programs.

Perhaps the most valuable service the community offers is the
monthly expert seminar. A community manager chooses the topic
(culled from posted comments and questions), recruits industry
experts to conduct the seminars, and announces the topic on
the community home page. The experts then lead daily
discussions on this and closely related subjects and respond
to members’ questions. Topics are broad enough to encourage
participation by all and have encompassed industry investment
tactics, tax strategies, and personal finance techniques.

RESULTS
Just 7 months after the community’s launch, Lycos
Quote.com witnessed a 535% ROI on the cost it took to build
and maintain it. Community registrants comprise about 15% of
Lycos Quote.com’s paying customer base, and tend to spend more
time on the site than non-registrants. Quote.com is
especially pleased that activity in the sections dealing with
long-term investing is both high and steadily increasing.

Additionally, industry experts show increased interest and
continually request to fill speaking slots as they become
available, which helps keep the community growing.

VENDOR NOTES: To create and maintain its community, Quote.com
used the Community Management Center service from
Participate.com. For more info, contact David Woodrow,
Director of Consulting, 312-279-9565, dwoodrow@participate.com.

Lycos Quote.com: http://www.quote.com
Participate: http://www.participate.com

*****
EXCLUSIVE INTERVIEW: Irv Mermelstein of Profits Over Time
Discusses the Realities of Online Investing Web Sites
*****

Irv Mermelstein is the Publisher of Profits Over Time, an
independent personal investment news service online.
Mermelstein has managed to bootstrap a thriving business,
despite the fact that dozens of big name sites are spending
millions to shout for personal investors' attention. We
called him to learn more about his business model and what
he's learned personal investors really want from the Web.

Q: Why did you start Profits Over Time?

Mermelstein: We started Profits to fill two specific market
niches. These are (1) long term investors looking to use the
Internet, but lacking the investment expertise to use the many
research sites on the net; and (2) day traders and swing
traders who are also long-term investors (usually in mutual
funds). Our objective was to be a place on the net where the
long term investor would be welcome and where long term
investors would be provided with continuing, weekly
information on investments we suggested.

Q: How do you measure success?

Mermelstein: We are about to begin charging for subscriptions
in about three weeks. To the present, we have had measured
success in three ways: growth in subscriptions, retention of
subscribers, and market returns on behalf of subscribers. We
have doubled our mailing list this year. Our retention rate
has always been high and has increased in the last few months,
even in a poorly-performing stock market. Our subscribers have
been able to stay in the market with positive returns over the
last twelve months, considering market conditions.

Q: How is Profits Over Time developing differently from other
online financial newsletters and sites?

Mermelstein: There is continuing growth in the number of
research sites, i.e., sites where investors are offered a
variety of sophisticated tools for evaluating and picking
stocks and mutual funds.

We're puzzled by this, because we think most investors either
lack the skills to use these sites effectively or have the
skills but lack the time. In effect, these sites seem to be
offering more and more data and tools to a shrinking market.

We are developing a site for a much larger market, including
investors with only basic to moderate investment skills, or
more sophisticated investment skills but very limited time to
devote to their investments. In that vein, we place mutual
funds at the top of the list of financial tools for investors
because we think mutual funds remain the favored vehicle of
individual investors, particularly in a difficult market. Many
other newer sites seem to place their focus on picking
individual stocks.

Q: What strategies are you using to get the Profits Over Time
name out to potential subscribers?

Mermelstein: We have not used any paid advertising or public
relations. Subscription growth during the last year has come
mostly from the use of search engines. To be effective, paid
advertising requires a larger budget most Web sites (including
us) can afford. Banner advertising is extremely ineffective.
We are currently working on strategic partnerships with other
Web-based businesses that have subscribers who would be likely
users of Profits Over Time's services. Finally, we try to
interest print media in our site.

Q: How do financial institutions, being transaction players,
leverage news and information to convert readers to customers?
Does this always work and, if so, how effectively?

Mermelstein: Free content is, in my opinion, a hard way for
many financial institutions to really sell their transactional
services.

This is not a simple issue, but let's just take large
brokerages as one example. One problem here is that investors
on the Web don't have a high level of trust for these
institutions, so the content is often viewed as advertising
rather than real "information." Here I'm talking more about
information (advice, how-to's, etc.) rather than news, per se.
(As far as news is concerned, it’s hard for a transactional
site to compete with free sites like MoneyCentral or
relatively cheap ones like WSJ.com that are already doing a
very good job in that area.)

A second problem is that the content is often very shallow and
intended more as a come-on. Lehman Brothers "10 Uncommon
Values" is a good example. The name is catchy, but the reader
soon finds that Lehman is really trying to make him a customer
as a condition of getting the information and brokerages are
very prone to doing this sort of thing.

Third, you can't overcome a consumer's preexisting resistance
to your product by giving him free information. And financial
consumers on the Web are resistant to using large brokerages
because they think their fees are too high. To use a rough
analogy, you may be able to get a smoker to try your brand of
cigarettes by giving him free cigarettes, but you can't get
former smokers to try your cigarettes that way. An example of
a transactional site that has some success in this regard, on
the other hand, is Fidelity.com. The research and information
tools that they offer enhance their competitively priced
transactional services.

There is also a more fundamental issue involved here, and that
is the unbundling of financial services on the Web. For many
consumers today, the use of news and information to sell
transactional services is just a non-starter: they have an
affirmative desire to purchase news and information in
different places.

Q: What are the challenges for the online financial news
space going forward?

Mermelstein: That's a question for a seminar, I think, but
here are just a few thoughts. First, for those of us who want
to provide financial news online, one question is how we can
be profitable. Advertising is turning out not to be the holy
grail a lot of people thought it would be—-we never wanted to
rely on it at Profits Over Time. Major portals can provide
the answer for some sites; we think it works pretty well for
Raging Bull, for example. It’s a better solution, in my
opinion, than captive sites for transactional businesses where
the consumer has a somewhat negative attitude toward the site
owner (large brokerages, as discussed above, and perhaps
banks). In contrast, financial news (as free content) could be
a successful draw for non-traditional, Web-based transactional
businesses, like Manhattan Beach Trading.

A second issue is making financial news on the Web more user-
friendly. TheStreet.com, for example, tries to do this with
its educational pieces, and sites like IndividualInvestor do
it as well with a great deal of educational content. But the
real issue, I think, is not providing lots of content that is
aimed at helping consumers to use a site that is maybe
overwhelming to most investors (especially the demographic
segments that represent the most growth in use of financial
information sites), but actually improving the usability of
these sites, themselves, as dynamic tools for investment
advice. Motley Fool comes to mind, in this vein and our own
site as well. The bottom line is that a site that is not
useful to an investor (taking into account the fact that most
investors are not investment experts) is not one that an
investor is going to keep visiting.

Contact Irv Mermelstein at nrglaw@mediaone.net.
http://www.profitsovertime.com


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