Today, The Wall Street Journal looks at Yahoo's latest efforts in mobile search where it holds a substantial lead over its online nemesis Google. According to figures from Telephia, Yahoo has a 7% penetration of U.S. mobile subscribers vs. 3% for Google. In addition, MSN has a 4% penetration and AOL 3% (see article here).

Yahoo will be encouraging users to download a search application to their phones, see  <mobile.yahoo.com/search>. Advertising revenues will be shared with wireless carriers. Mobile search results are more "managed" than website results in attempt to better display a single answer to the search so phone users can avoid surfing to other websites for answers.

Why is this important for online banking? Most consumers, especially the 35-and-older crowd, will get their first taste of a mobile phone app through search. Once users begin to to get comfortable with Googling or Yahooing from their mobile, it won't be long before other ecommerce apps become popular, and mobile banking will be at the front of the next wave.

And early mobile banking users are likely to share one key attribute that sets them apart from online banking users, a willingness to pay fees for service. Most mobile applications such as sports scores, mapping services, or games currently carry small monthly fees. Whether or not banks choose to charge directly for mobile banking is yet to be seen, but we believe there is an excellent potential for profitable fees from at least a portion of the mobile user base (see previous post here).

Several interesting tidbits surfaced from today's presentations at BAI's SmartTactics conference in Las Vegas:

Citibank online account acquisition
In 2002, 6% of Citibank's new checking accounts were generated online; in 2005, the number was 20%.

Our comments: Keep in mind that Citi's experience is unique. It has a huge brand and relatively small branch network, so many of its new accounts have no choice but to open online, or over the phone. And part of the growth can be attributed to non-checking products, such as its high-yield savings, that REQUIRE a companion checking account.

Bank of America's SiteKey rollout
The rollout of mandatory two-factor authentication is complete, except in Oregon and Washington where it is expected to go live in June. Prior to becoming mandatory, users had a period of time where it was an optional feature; however, only 8% opted in during this phase. When the PassMark-powered system became mandatory, users were served notice during their first two logins that they needed to sign up before it became required on the third login. Only 4% signed up during the first two warnings, and 96% put it off until the third try.

Note: PassMark was acquired by RSA Security today.

Our comments: Taken together, only 12% of users opted for stronger security before it was required, far below the 60% or so that say they want more security in consumer-research studies.

Zions remote deposit-capture results
Zions Bank has grown its remote-deposit client base from 364 in January 2005 to 3,697 in January 2006, and they are adding nearly 100 clients per week. The bank has bagged more than $200 million in incremental deposits and has increased loans and fee income. The Utah bank is now looking for new business worldwide with clients in 49 states and five countries outside the United States. It has clients of all sizes, from the Fortune 500 to small businesses that use it for just one check per month.

Our comments: If you needed ammunition to move this up the priority list, keep your eye on Zions: It said that its main problem now is just keeping up with the all the requests.

Research results from Yahoo Search Marketing
A Forrester study of all U.S. banking customers (not just online bankers), commissioned by Yahoo and OgilvyOne Worldwide, found that 61% of all banking-product research is being done online vs. 5% via phone and 30% in branch. Similarly, 64% of account monitoring is now down online vs. 16% via phone and 13% in-branch. But account opening at branches still dominates at 84% of new account openings, compared to 14% online and 2% via phone. 

Yahoo also said they expect 50 million online credit card applications in the United States this year.

Our comments: Wow, time to pull out all the stops in your online account-opening initiatives.

Is there a single online financial services customer that wouldn't want an iPod nano? Even if you didn't like sticking white tentacles in your ears, surely someone in the extended family would graciously accept one as a gift.

At $200 a pop, it's a pricey premium, but TD Waterhouse <tdwaterhouse.com> is using it to attract new brokerage customers. Small banners located in various spots within Yahoo Finance <finance.yahoo.com> say exhort users to, "Get an iPod nano" (see inset). The brokerage doesn't actually use the word FREE in the banner or on the landing page (click on inset for a closer look); but it's certainly implied, and in fact, it is free if you follow the rules (see below). The offer is not mentioned on the broker's main website.

Details
As an industry analyst, we love these offers; not because of the flashy premium itself, but for the mountains of fine print we get to dissect. Unlike Citi's free iPod Mini offer, which has users jumping through hoops such as making at least two bill payments per month, TD's offer is pretty straightforward:

     - Open a new account with at least $50,000
     - Keep it there for at least 6 months
     - New or existing customers qualify

The biggest exclusion: RETIREMENT accounts don't qualify, nor do corporate, custodial, partnership and 529 college savings plan. Retail value is estimated at $249 and the company warns that it may be considered taxable income.

--JB

If you'd like to some more original financial marketing ideas, check out the Interactive Financial Marketing Database from our sister publication, the Online Banking Report.

Disappointed in your conversion rates on prospects attracted to your site via search (paid or natural)? Compete and Yahoo Search Marketing (formerly Overture) released results of new research at the recent Net.Finance conference.

The study looked at a pool of 75,700 searchers who conducted 250,000 financial information searches. Of that total, just 5,640, or 7.5%, ended up submitting an application for a financial product. Since they are often looking at more than one provider, your "expected" share would be less than 7.5%.

So if you are closing 5% or more of your visitors, you are hitting it out of the park. Even a 3 or 4% close rate is exceptional. On the other hand, if you are closing 2% or less, your creative and/or offer may be lacking.

--JB

Did you see Yahoo's full-page ad in today's Wall Street Journal (or was it the New York Times)? Anyway, it was on the back page of one of the interior sections, and it declared:
                -----
A free website for every small business in America.

Now, everyone reading the paper knew it was a come-on; when you go to the Yahoo Local website they try to upsell you on the $9.95/mo premium version (click on the inset for details). Furthermore, the ad probably cost more than the sum total of "free" websites given away. I don't know if it will pay off, but it certainly got my attention.

Financial Institution Opportunities
I got to thinking, what could a bank give away that wouldn't sound too hokey or cost too much? The free website isn't a bad idea, especially if you wrapped some ecommerce services around it, but Yahoo and many others have been doing that for years.

What about bill payment? If you were willing to open up your bill payment system to allow payments to originate from other banks, you could mimic the Yahoo ad in your market with:

A free online bill payment for every business in <yourtown>!
(exclamation point optional)

But a lot of banks already offer free bill payment, so try this on for size:

Free lifetime storage of your checks* for every business in <yourtown> *images of course

The creatives would have a blast with that one.

Finally, since those both have system implications, here's something anyone could offer:

Free local online directory listing for every business in <yourtown>

To pull this off, you'd need to create a database (ideally) or an even an HTML page that lists the web and business addresses for every business in your market. Bank clients could be given premium listings/linkages. And you'd need to give the directory exposure with visible links off your website.

--JB

Overture

Overture, the IdeaLab venture that pioneered the pay-per-click auction process originally under the name GoTo.com, also reaches a significant number of Internet users: 80% of the total according to the company. The majority of the volume is through MSN, AOL, Yahoo, and others that display its paid listings for a cut of the revenue. Overture.com itself attracts 6 million unique search users each month.

Overture PPC ads displayed on Yahoo.

Overture’s 100,000 advertisers have their listings displayed at Overture.com before any non-paying websites. Some banking terms have more than 200 paid listings. However on partner sites, such as Yahoo (screenshot above), only the top three or four advertisers are displayed on each page, leading to intense bidding for top slots.

For example, in early May the top four bidders for “home equity loan(s)”¹ were all paying about $4/click. Converting one of every 100 visitors would result in an acquisition cost of $400/loan.

Other financial services terms had even higher bids, especially anything to do with debt or credit. For example, the top four bidders for “debt management” were willing to pay more than $9/click (Table 5, right).

More targeted search terms such as “home equity loan(s) Seattle” had much lower bids, in this case just an average of $0.11 per click for the top-four spots.  However, geographic targeting doesn’t always result in lower CPCs. In the case of “mortgages yourstate” average costs for the top-4 bidders were 15% higher than for the unmodified “mortgage”.  

¹On Overture, but not Google, singular and plural versions are covered by a single bid, e.g., mortgage and mortgages return the same search results.

Table 1

10 Most Expensive Financial Keywords

average pay-per-click cost on Overture, May 2003

Source: Overture, 5/29/03

Yahoo, MSN, AOL

Advertising placed through Google and Overture will get you placed on AOL, Yahoo, and MSN. However, all major search engines except Overture limit the number of paid ads to eight or fewer per page of search results.

Table 2

PPC Listings Displayed at Major Search Engines

includes pay-per-click sponsors only

Source: Online Banking Report, 5/03

*Not all keywords display Overture paid ads.

LookSmart

Maybe it’s just our imagination, but do the holiday’s bring more online sweepstakes? One of the most eye-catching examples in the financial services arena is the Yahoo/HSBC MINI Cooper giveaway. The only way to enter online is by signing up for Yahoo PayDirect. All others, including existing registrants, can enter through the mail. To maximize the return on the investment, the contest runs for eight months, Sept. 2002 through May 2003.

One of the more promising new developments for companies with extensive Web offerings are custom toolbars, now relatively easy to build with Internet Explorer 5+ extensions. Several top Internet companies have already deployed toolbars including Google, eBay, Yahoo, and Ask Jeeves. Many more are in the planning stages. Also, numerous companies have deployed the toolbars internally to better navigate company intranets.

Our first practical experience with a custom toolbar began last year when we downloaded Google’s version (above). Since then we’ve used it thousands of times and have found it to be a great time saver. Instead of going to its Web site, you simply enter your search term directly into the Google search box embedded in the browser. The toolbar also has a number of other features that we rarely use, such as page rank and site info. It’s currently available in 15 languages, with more in the works.

Ebay is the newest entrant, officially launching its toolbar a month ago following a six-month beta. It was officially launched July 11, but it’s still not widely promoted on the site http://pages.ebay.com/ebay_toolbar . Ebay spokesperson Kevin Purseglove declined to provide usage figures but told us that initial feedback was very positive and the company was thinking about promotional ideas to get the word out. With 43 million users, eBay is rolling out the service slowly so as not to overwhelm its resources.

Like Google, the key feature is the embedded search box. But for power users, that’s just the beginning; you can elect to receive popup alerts whenever a flagged auction is about to end. Users needn’t even be online to receive alerts, they are triggered by the auction end-time. Assuming its acquisition goes through, it shouldn’t be long before PayPal is incorporated into eBay’s toolbar.

The eBay toolbar is the result of a yearlong project by @Hoc  (pronounced at hoc), the Burlingame, CA-based company that has also built toolbars for Wired Magazine, Dreyfus Brokerage, HSBC’s Bourse, Multex Investors and a couple dozen others.

Privately held @Hoc  www.athoc.com  was founded in mid-1999. At that time a number of other companies were building proprietary toolbars they hoped would attract end users and ultimately advertisers to pay the freight. By the time @Hoc launched its product in mid-2001, those efforts had gone by the wayside, victims of the Internet advertising downturn. @Hoc has survived by focusing on private-branded toolbars for company intranets.

Initially the company targeted financial services, experiencing an early win with Dreyfus Brokerage Services. But the Dreyfus toolbar is gone, a casualty of its acquisition by Brown & Company. Other promising discussions with banks such as Wells Fargo, Bank of America, and Bank One were scuttled post-911.

@Hoc believes the best opportunities in banking are on the commercial and small business side. Co-founder Ly Tran sees little need for a consumer-oriented banking toolbar. While we agree the B2B application makes sense, we think a consumer toolbar is just as useful, especially if combined with popular search applications such as Google .

One limitation of customer toolbars and buttons is that most users do not want to hassle with changing browser settings. And for those that attempt to make changes, your tech support lines may be overloaded with questions from novice users. A less labor-intensive, but more expensive, approach to keep your name on the desktop is to ride on the coattails of the Web’s sixth most popular site, WeatherBug. This turnkey program requires little user involvement, reducing confusion and tech

Private-branded browser extensions
can make online services easier to use and more prominent on users’ PCs

In late 1997, I spoke at a tech-company user conference in Santa Clara,
CA. Immediately preceding me was MECA founder and CEO Paul Harrison.
He was introducing a new online banking program MoneyScape, an
extension of the company’s pioneering, and now defunct, personal finance
software Managing Your Money (MYM). MoneyScape was an online banking
application that used so-called “push technology” to deliver banking
information directly to the user’s desktop. The innovative program died as
MECA changed ownership three times during the next three years.¹

Push technology was one of the first Internet ideas to experience a
consumer and media backlash. The streaming of unfocused news and advertising
content grew old quickly once the novelty wore off and the whole concept
fell to earth rather quickly.

Were Mr. Harrison to make the same presentation today, however, he would
have a much better chance of selling the idea.² Several of the
most successful Internet companies, including eBay, Google,
and WeatherBug, now push content via browser extensions and plug-ins
. The difference this time: a focus on delivering small, highly important
bits of information to users.

WeatherBug¾the sixth most-visited Web site with 13 million registered users³¾owes its success to a remarkable program that pushes weather information directly to the desktop. The current temperature, sourced from the closest of more than 5,000+ weather stations in its network, is displayed next to the time in the Windows’ system tray. Clicking on the temperature triggers a quick download of the complete weather picture. The resulting mid-sized window loads on top of whatever application you are working in.

Table 1

Companies Offering Custom Toolbars

Source: Online Banking Report, 8/02;        *For Internet Explorer only; Netscape version of Google’s toolbar available from third parties

Financial institutions should consider similar programs to position their brands directly on the browser, desktop, and/or system tray. The simpler concepts, such as providing a shortcut button that sits on the Internet Explorer toolbar, can be deployed for a few thousand dollars or less
Or, for those with larger budgets, ride the coattails of WeatherBug with a private-branded weather service. For those with even more resources, forget about the weather, create a “bank bug” that rides in the system tray alerting users to any changes in account status

¹MECA was purchased by Bank of America and NationsBank in 1995. NationsBank (now Bank of America) distributed Managing Your Money software extensively in 1996 and 1997 as its primary online banking platform prior to the launch of Web banking. The MECA unit was sold to Concentrix (formerly CFI ProServices) in 1999. John Harland subsequently purchased Concentrix in Aug. 2000, which quickly sold the Concentrix online banking assets to NetZee in Nov. 2000. Bank of America discontinued Managing Your Money support in early 2002.

²Microsoft Money and Intuit’s Quicken use many of these push features today.

³Unique users at WeatherBug and WeatherBug’s parent, AWS Technologies, for the week ending July 21, 2002 per ComScore Media Metrix.

dotBank

www.dotbank.com

Dotbank was purchased by Yahoo! on March 23 and will be relaunched later this year as Yahoo PayDirect. DotBank, despite launching on Dec. 7, just three weeks after PayPal, had attracted virtually no following on eBay despite a $5 new account bonus (see table, p 3); an indicator of how entrenched X.com/PayPal has already become.

Checkfree/Yahoo

bills.secure.yahoo.com

Yahoo! launched its much anticipated bill pay center, a co-branded effort with the preeminent bill pay provider, Checkfree. Banks can breathe a sigh of relief. It’s a good, solid service that will appeal to hardcore Yahoo! users (if they can find it), but it’s no market share grabber, as it might have been. It seems Yahoo!/ Checkfree are looking at the business as a fee-based profit center rather than a traffic-building loss leader.

Checkfree’s new “icon” and transaction guarantee.

Say What?

The screenshot above clearly demonstrates that Yahoo! operates in a different legal and regulatory environment than a bank. Can you imagine what
your compliance officer would say if you proposed running this copy? “Try (yourbank) Bill Pay as low as $2 per month,” given that the only way to pay $2 is to sign up for the service and then not use it! A typical customer, paying five to 10 bills per month, will pay $4 to $6 per month.

Weak Features:

•  Most significantly, the service is premium priced, $7 per month for 25 payments, then $0.40 each; or $2 per month plus $0.40 for every payment.

•  The product is plain vanilla Web-based bill payment, with none of the value adds one might have expected at Yahoo! such as, email alerts, bill presentment, linkages to online banks, and so on.

•  The user interface is surprisingly uninspired. We understand Yahoo! has built a $45 billion business on based on a straightforward and relatively boring interface. But Yahoo! Bill Pay is worse than boring, it’s so sparse that it’s hard to use. We don’t understand why it wasn’t modeled on the excellent interface at Checkfree’s MyBills.com site (see screenshot).

•  So far, the product is difficult to find on Yahoo! It’s not listed in either the Banking or Finance centers. Even searching on “bill payment” doesn’t lead you directly to the service. EDocs had an exclusive on the banner space when we tested (9/16/99). You have to scroll through to the fifth page of search results to find the link to Yahoo! Bill Pay. However, searching on “pay bills” or simply “bills,” does return Yahoo! Bill Pay as the first link.

Boring. The Yahoo! Bill Pay user interface leaves a lot to be desired. Here the first screen that greets a new user upon successful login.

•  In both of our test emails, the company responded the same day. However, because the responses are not sent to an Internet email address, but instead are posted to the users Yahoo! Bill Pay account, they lose much of their effectiveness. There isn’t even a message at login notifying users they have mail.

Mediocre Features:

•  The eight-screen demo is slow and uninspired.

•  No third-party guarantees (e.g., Travelers SafeWeb) or security reassurances (e.g., Verisign).

•  The sign-up process is easy enough, although Yahoo! users have to go through a separate sign up for a Security Key if they don’t already have one. Input is completely electronic but users are told they must wait up to 10 days for a snail mailed Payment Activation Code. (It only took three days in our test.) There are valid security reasons for using snail mail, but the company could have used credit bureau info to verify our application and authorize an initial dollar amount of payments immediately.

•  Although, the payee list contains only 200 names (as of 9/9/99), that doesn’t include the thousands of credit card issuers that are pre-programmed into the system. Users simply select Visa or MasterCard as payee, enter account number twice , and Checkfree’s system automatically recognizes the correct issuer. Users can easily set up their own payees using

Excellent: In comparison, Checkfree’s own WebBillPay features an excellent user interface www.mybills.com

a Web-based form. New payees can be paid immediately, there is no waiting for merchants to be approved or set up offline.

Good Features:

•  Checkfree’s revised payment guarantee is a winner, although it stops short of being the clear-cut promise needed to instill broad consumer confidence in the service. Any financial institution using Checkfree can post the company’s icon, although we’re not sure it adds much to an existing bank’s credibility. In fact, it might be a slight negative, since users probably don’t know (or care) that Checkfree is processing their payments, not the bank.

•  New account setup and customer service were flawless. In our test, the initial Payment Activation Code was mailed promptly the next day (a Saturday) despite the fact that we submitted our application at 4:30 p.m. Pacific Time on Friday afternoon. In addition, two emails sent to customer services were answered accurately the same day.

•  A generous three-month free trial is included.

•  FAQs were concise and included an imbedded inquiry form to ask additional questions (see screenshot on next page).

Contact: At Checkfree, Matt Lewis is EVP Product Management and Marketing, (770) 441-3387. At Yahoo!, Tim Brady is VP Production and Executive Producer, (408) 731-3300.

Checkfree uses an old data entry trick, requiring customers to type their account numbers twice
(on different screens) to catch typos.

Yahoo! Bill Pay FAQs include an imbedded email query form after each answer.

First USA/Yahoo!

www.firstusa.com

FirstUSA banner ad on Yahoo! (2/4/99).

FirstUSA (Wilmington, DE; $65 billion; 61 million customers), the card unit of Bank One (Columbus, OH; $260 billion), is featuring the instant credit capabilities of its Yahoo! co-branded card in banner ads running on the popular portal.

Yahoo’s new tax center features a tax-form finder.
In our test, the tax center was sponsored 50% of the time by SecureTax and 50% of the time by World Wide Web Tax, another tax prep site at www.wwwebtax.com .

TeleBank

www.telebankonline.com

TeleBank’s banner ad on Yahoo!

Brick-and-morterless TeleBank (Washington D.C.: $2.3 billion; 51,000 accounts) is basking in the in the glow of a dynamite 1998 earnings report which saw total accounts and deposits more than double during 1998 to 51,000 accounts (from 22,000) and $1.1 billion in deposits (from $522 million). As nice as those results were, we were far more interested in hearing more about their Yahoo! relationship. In a Feb. 3 conference call with analysts, CEO Mitchell Caplan, reported that phase two of the Yahoo! business agreement would be announced the next day (phase one was a banner advertising buy which began in fourth quarter, see above).

The next day we awoke to a somewhat anitclimatic announcement of the so-called ATM Refunder. Yahoo! users that sign up for a checking account will receive a refund of up to $1.50 per surcharged ATM transaction with a maximum of four refunds per statement period.

The gimmick makes for a good banner ad and is a low-cost way to remove one of the barriers to checking at a virtual bank. It reinforces TeleBank’s positioning as a smart place for savvy Web users to do their checking, but it won’t move sigificant market share on its own.

We have to wait for phase three of the Yahoo! relationship for the bigger story. All the bank will say is that it involves a “strategic integration” on Yahoo! Finance that will be announced at the end of frist quarter. Speculation revolves around a bill pay center with Checkfree (see footnote). Separately, the bank sent postcards to prospects offering a $25 bonus to start a savings account.

Yahoo!

www.yahoo.com

We’ve added Yahoo! (Palo Alto, CA) to our list of top Net-only banking and lending operations (see OBR 6/97). Not only do they have more than 26 million unique visitors each month (source: Relevant Knowledge, 8/98) and the leading brand name on the Web, its investment area is the single most trafficked financial Web site. (Intuit is the leader if you count co-branded traffic at CNNfn, AOL and Excite). Look at the banking services Yahoo! has launched in the last nine months, the latest being credit reports from QSpace:

Yahoo! makes it so easy to change your preferences to make it your home page. A Javascript program performs the task automatically at www.yahoo.com/promotions/home/netscape_4.html

E-Loan & Yahoo!

loan.yahoo.com

The main page of the Yahoo! Loan Center.
E-Loan is the exclusive provider of mortgage
information and products.

Yahoo’s new loan center uses classic “Yahoo style” with numerous links and a smattering of graphics, one of which leads you directly to its primary partner,
E-Loan (Palo Alto, CA) www.eloan.com Here’s what you’ll find in the Loan Center:

We think the Yahoo! Loan Center is a sign of things to come on the Web. Financial service providers will develop partnerships with Web-based companies to integrate financial services information and products into popular Web sites. We were surprised to see a tiny mortgage brokerage such as E-Loan become the sole provider on Yahoo. However, as Jeremy Lent, CEO of NextCard said when explaining his business model, “The Web favors the small and the quick.” No doubt, Yahoo wanted its users to have access to the broad range of mortgage products a broker can bring to the table. That, and the fact that E-Loan has one of the best lending sites on the Internet.

Rate comparisons, co-branded with Bank Rate Monitor, show national averages along with links to rates in major metro areas and all 50 states. Note: Banner ad on the top is for GetSmart .

Custom Mortgage Quotes from Yahoo/E-Loan.
All interactive features are co-branded with E-Loan.

Since we first discovered E-Loan last fall has received $5.5 million in venture capital and tremendous amount of press, almost 100% positive. For example, a single article in the Jan. 12, 1998, San Francisco Chronicle www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/1998/01/12/BU65526.DTL sparked 240 application in a single day (at that time nearly a month’s worth of business). The story told how a 36-year-old Oracle manager purchased two $600,000 homes in a single transaction at E-Loan, saving $10,000 in closing costs and shaving $600/mo off the mortgage payments (which still totaled $6,700 after the savings).

E-Loan is currently receiving 50 to 200 applications per day (Source: Mortgage Bankers Association 5/8/98) from 285,000 monthly visitors.

*Actually it’s only been 11 months, but we think the marketing and publicity folks deserve to take June off!

E-Loan’s added a few features to the lower half of its main page since our analysis last fall (see table below).

In the eight months since E-Loan earned OBR Product of the Month honors it has added a couple small, but important improvements to the main page (screenshot above):

•  physical address is back
•  GII and CommerceNet award logos
•  rate lock button (for current clients)
•  How to Contact Us button
•  Realtor Tools (see following table)

The most innovative Realtor tool is the Instant Flyer. Realtors can create free flyers by inputting their name, company, slogan, phone number, property price, location, and three financing options to show on the flyer. It literally takes less than a minute, and you can print out as many flyers as you like right from your desktop. Naturally, the E-Loan logo and Web address appear at the bottom of each flyer.

Contact: Co-founders are Christian Larsen, President and Janina Pawloski, CEO, (650) 617-0403, janina@eloan.com .

Use Non-Financial Content Areas to Support Your Online Strategies with

Yahoo promotes its email service when
searching on “free email.”

One of the hotter areas online is “free email” Web sites. The largest of the group, Hotmail purchased in January by Microsoft for $400 million, is registering 80,000 new users each day. These Webs allow users to set-up a unique email address, such as yourname@hotmail.com, and then send and receive email directly from that Web site at no charge. Banner ads and other forms of promotion foot the bill for the email services. Users must still purchase Internet access elsewhere.

Users usually have free email bundled with their Internet service, so why would anyone subject themselves to numerous advertising pitches in order to use free email at these sites?

•  Email Address for Life: No matter where you work, or where you purchase Internet access, your HotMail email address stays with you.
•  Better/Disguised Email Address: Many users would prefer not to disclose their employer, university or ISP within their email address. Email addresses such as anyname@hotmail.com meet that need.
•  Privacy: Users accessing the Internet from their company’s machines can use the email services at HotMail to keep their email off the corporate servers where it could potentially be read.
•  Simplicity: During the past two weeks I visited with two new Web users who were successfully using the Web but were frustrated because they couldn’t use services that required an email address. As far as these users were concerned, they didn’t have an email address. Of course, they did have one, they just didn’t know how to use it. Heavily promoted free email services with simple, intuitive user interfaces can snag new users before they learn how to use the email in their browsers.
•  Public Terminal Users. The growing number of users accessing the Web from Internet cafes, Kinko’s, and other public venues, need email.
•  Travelers. Travelers accessing the Internet from a variety of places may find a central Web-based site the most convenient method of staying on top of their email.

Financial institutions could offer “advertising free” email on their Webs. Free email could be a standalone function designed to draw traffic, or it could be partitioned off within your online banking service, augmenting the standard “email the bank” function. Either way, users would register, select an email identity and password, then send and receive email directly from your site. For maximum appeal, select a generic domain name such as yourtown.net. Be sure to incorporate anti-spam functions such as a limit on the number of recipients for each email message.

A number of licensing sources are available for the email software. The largest providers are listed in the table to the left, others are available on Yahoo! www.yahoo.com/Business_and_Economy/Companies/Internet_Services/Email_Providers/Free_Email/ .

and www.yahoo.com/Business_and_Economy/Companies/Internet_Services/Email_Providers/ .

Intuit & Yahoo!

biz.yahoo.com/taxes

Banner advertising in Yahoo’s stock quote service.

Intuit’s online reach is phenomenal. They’ve extended the Quicken.com franchise with co-branded sites at Excite quicken.excite.com , CNNfn cnnfn.com/quickenonfn , America Online, and the latest, a co-branded tax information and preparation site on Yahoo! biz.yahoo.com/taxes/ . Beside information, tax forms, and links to the IRS, you can use TurboTax Online to complete your taxes and file them electronically for $9.95 (for relatively simple returns).

Quicken on Excite.

Quicken on CNNfn.

Co-branded TurboTax area on Yahoo! biz.yahoo.com/taxes .

Quiz: What’s odd about the Yahoo! screenshot above? (Hint: look closely at the banner ad.)

Answer: It’s an advertisement for Intuit’s primary competitor, Kiplinger TaxCut, touting its free online filing feature. This is more than a bit confusing for the poor user who just wants to get their 1040 done.

In other news, The Wall Street Journal’s Personal Technology columnist, Walt Mossberg, gave his annual run-down of tax preparation software (WSJ 3/5/98, p. B1). He compared Intuit’s TurboTax with Kiplinger’s TaxCut, giving TurboTax the nod by a slight margin.

Mossberg noted the advent of free electronic filing from both companies, a service that had cost as much a $20. He also liked both company’s Web-based online preparation and filing systems, though he was uncomfortable with Intuit’s method of storing his confidential financial details on its server. TaxCut stores data locally, but you must download software to use it. He mentioned SecureTax’s Web-based program but dismissed it as cluttered and prone to crashing his browsers (both Navigator 4.0 and IE 4.0).

Finally, just when you thought it was safe to link your customers to TurboTax.com for tax prep, Intuit has something new in the works that your small business clients are going to love, but your board won’t. Quicken Business Cash Finder, according to Intuit’s Web site www.intuit.com/bizservices will allow users to:

Easily compare, select and apply for business credit - including loans, lines of credit, credit cards and leases - from multiple financial institutions, all at once.

Cash Finder, with a posted March launch, sounds much like the company’s mortgage emporium, Quicken Mortgage mortgage.quicken.com.

Intuit is about to hatch yet another financial emporium on the Web, this time for small businesses looking for money at www.intuit.com/bizservices .

First USA & Yahoo!

www.firstusa.com

Cardholders can pay their First USA bill at its Web.

First USA (Wilmington, DE; 15.9 million credit cards) now owned by Banc One (Columbus, OH; $114 billion; 4.2 million ATM cards) has pioneered several innovations in recent months. First, the card issuer now allows you to pay your bill on its Web using National City Processing’s Virtual Pay.

Second, the long anticipated Yahoo! co-branded card made its debut on the Yahoo! Web in late February (see banner below.)

First USA’s banner in Yahoo’s 411 Directory, yahoo.four11.com.

Clicking on the banner takes users to a
co-branded site on First USA’s Web
www.firstusa.com/fin_solc_cards/Yahoo!/index.htm.

The First USA/Yahoo! platinum card is one of the lowest priced cards in the country with a rate of 9.9% (not an introductory rate). And it comes with a clear fraud-protection (shopping) guarantee sure to make the card more marketable to the online-savvy crowd.

First USA/Yahoo! Shopping Guarantee

Yahoo! and First USA are confident in the security of online shopping. You pay nothing if unauthorized charges are made to your Yahoo! Visa Card.

First USA/Yahoo! Platinum Card Features

•  no annual fee
•  24-hour online statement access
•  risk-free online shopping guarantee
•  email customer service
•  reward points at online merchants: CD Now, Amazon.com, Sharper Image, Toys.com, Garden Escape, Cyberian Outpost, Mother Nature’s General Store, Yahoo! Style
•  9.9% fixed APR (not an introductory rate)

Web-based indirect lending follows the business model used by financial institutions marketing installment loans at auto, boat, RV and other dealers of high-ticket items. The successful lenders will integrate their lending presence tightly with the end-product Web site itself.

Not surprising the first bank/merchant partnerships have sprung up in the online car sales marketplace, already a multi-billion dollar business in the United States.
Auto-By-Tel, the granddaddy of virtual auto sales (screenshot below), processes nearly 75,000 automobile purchase requests per month. At $20,000 each that’s $1.5 billion per month. Financing is provided by Chase Auto Finance, Key Corporation, and Triad Financial. Leases are from GE Capital.

ABT features “One-Click Financing and Leasing.”
Note the customer testimonial below the menu:
The Auto-By-Tel Acceptance Corporation rate was one and one-half points lower than the bank I’ve used for 25 years!

Collin Wood
Hood River, Oregon

CarFinance.com is featured on CarSmart’s front page.

Another example of Web-based indirect lending is at the popular car information site, CarSmart www.carsmart.com (screenshot below). Visitors to this online emporium will naturally be drawn to the CarFinance.com logo featured prominently on the CarSmart site. The financing site is operated by Barnett Bank at www.carfinance.com (screenshot below).

CarFinance.com is operated by Electronic Vehicle Remarketing, a subsidiary of Barnett Bank.

But, you don’t have to be a Barnett or Chase to become an indirect cyberlender. According to the latest count on Yahoo (below), there are 241 Auto Buyers’ Services and 143 Automobile Buying Directories online. In addition, 4,493 dealers are listed online. By comparison, there are only 125 financing sources listed and 93 of those are lease agents. Among the remaining 32, only two are insured depository institutions; one is a non-bank financial services provider; and five are the captive financing arms of car manufacturers (see table below).

Sometimes it’s the little things that are most important. Here are four improvements for your small business Web that could be implemented for a couple thousand dollars.

1. Include “small business” in your Web site description posted on Yahoo and other directories. If you could do just one thing to improve traffic at your site from small business prospects, this would be it. Amazingly, only 19 banks out of the 2,000 or so with Web sites show up on Yahoo when searching for “small business” and “bank.” Refer to the table on the right for the exact bank descriptors that allowed these banks to land in the elite 19.

Cost = $0

2. Give your small business Web its own address such as <smallbiz.yourbank.com> or <www.yourbank.com/smallbiz/>. Better yet allow users to type either of these two addresses to get to your Web.

Cost = minimal depending on how much file restructuring is necessary

3. Post telephone, pager, e-mail, and fax numbers for each of your small business lending officers. Include a hyperlink to a short bio of each lender and a few comments from each person on their particular areas of expertise, unique qualifications, or sales buzz.

Cost = a few hundred at most

4. Make commercial loans the centerpiece of your Web site. The primary (only?) reason a non-customer business owner will pay a visit to your Web is to find out about your commercial lending programs. Within a few seconds of visiting your site, they should be able to identify the pertinent link(s).

Cost = several hundred on up

Yahoo Search Results for
“Small Business” and “Bank”

• Banco Sabadell (Spain) - specialized in individual clients and small, medium businesses and in overseas trade.
• Bank of Melbourne - large regional bank in Victoria providing services for small business and personal customers.
• Cole Taylor Bank - personal banking, small business banking, loans, mortgages.
• Crestmark Bank - specializes in financing small business with factoring, ABL, leasing and traditional loans.
• Enterprise Bank and Trust Company (Lowell, MA) - locally managed commercial bank providing highly responsive service to individuals, professionals and small to medium-sized businesses.
• Franklin Bank - Metropolitan Detroit's bank for small businesses and entrepreneurs.
• First National Bank in Pinckneyville - retail banking for individuals, small businesses and farms.
• First Waco National Bank - An innovative community bank meeting the needs of Small Businesses and Consumers in the Central Texas area.
• Gulf Coast Bank & Trust Company - On line commercial and small business loans, home mortgage loans, consumer loans, and Master Card and Visa.
• Industrial Bank of Korea - bank for the small and medium enterprises
• Lexington Savings Bank - community banking franchise for small businesses and individuals.
• Metropolitan State Bank - Fairfield, NJ - deposit and loan products, specializing in Home Equity, Small Business loans and Mortgages.
• MidFirst Bank - Oklahoma City, OK - offers checking, savings, and investment accounts, as well as consumer, mortgage, small business, and commercial loans.
• NatWest - more than just a bank: news and information about personal, small business and corporate banking services.
• Republic National Bank of Arizona - Arizona's leading small business lender and a full service commercial bank.
• Savings Bank of Walpole - savings, loan and investment services for individuals and small businesses.
• Valley Bank - provider of U.S. small business administration loans in Riverside and San Bernardino counties in Southern California.
• United Bankshares, Inc. - full service community bank geared to small business needs.
• Westamerica Bancorporation - multi-bank holding company serving communities located in northern California from 57 banking branches. mainly targets small businesses and professionals.

Source: Yahoo! www.yahoo.com , 9/17/97; descriptions are provided by banks when submitting to Yahoo (italics ours).

When you finally get to the point of having a Web capable of closing a sale, or at least motivating someone to pick up the phone and buy, you’ll want to begin experimenting with ways to pull new prospects to your site.

Users searching for “banks” or “banking” on Yahoo receive this advertisement from Intuit (7/3/97).

Just by being on the Web you already benefit from one of the most powerful business-generation tools ever invented, the “Internet search engine” (Lycos, Excite, Yahoo, AltaVista, InfoSeek, etc.). Users simply type your company’s name (with multiple words in parenthesis) into the search engine and usually your Web address will be shown prominently in the results.

But those people are already your customers. What about reaching prospects where you are not “top of mind?” Searching on bank and yourtown will likely result in thousands, or hundreds of thousands of Web addresses. For example, “bank” and “San Francisco” returns a million Web pages in AltaVista’s simple search mode (10,000 in advanced search mode.)

And as more and more financial institutions, brokerages, and miscellaneous purveyors of financial information go online, it will become even harder to attract the random prospect via the search engines. (Note: Search engines are evolving and will eventually be able to better sift through the millions of Web sites. For instance, users will be able to search just the Webs of federally insured depository institutions.)

But you don’t have to be lost in the crowd. All the search engines allow companies to sponsor keywords and run general advertisements. And you can target your ads with more precision than any other medium since the search engines know precisely what is of interest to their users at a given moment in time (after all, you pretty much give yourself away when you type “New Orleans” and “restaurants” into a search engine).

The cost of advertising on search engines ranges from about $15 per thousand impressions (CPM) for run-of-site ads (appearing wherever space is available) to $50 or more for more targeted campaigns. For instance,
XYZ Bank could design a campaign so that its ad appears only when someone searches for “bank,” “credit,” and/or “mortgage.” But don’t expect to be billed $25 for the 500 people who searched on these keywords. Monthly minimums apply to most keyword ad buys. For example, Lycos has a $500 per word minimum, InfoSeek a $1,000 monthly minimum. But everything is highly negotiable when it comes to Web advertising, so you may find considerable flexibility on monthly minimums, especially if you sign-on for a long-term commitment.

Online advertising activity is not limited to just search engines, though their share of total Web advertising is estimated at 30-40%. As advertisers clamor for even better targeting, new advertising models are unfolding. DoubleClick is a leader in this area using tracking technology, cookies, to allow advertisers more precision in who they deliver banner ads to. Cookies are generally used to track users as they move through your Web site and when they return later. Blasted by some as an invasion of privacy, cookies actually capture very little private information. Even so, Microsoft and Netscape are working on standards to give users more control on of this aspect of their Web browsing, so the controversy should abate down the road.

DoubleClick, which charges $10-40 per thousand impressions, uses cookies in an ingenious way, at least from the perspective of the advertiser. An ID number is assigned to users when they visit any site displaying DoubleClick advertising (e.g., AltaVista, Quicken Financial Network, InvestorsEdge, The Dilbert Zone and Travelocity). As they move through the sites, data is gathered on what ads they have seen and which they have responded to. The data is then used to target individual users with banner ads they are more likely to find interesting, and to filter out ones they’ve already ignored three or four times (research shows click rates drop dramatically after two or three views).

DoubleClick also enables advertisers to target specific geographic areas and/or places of employment. By comparing user information to their own database, DoubleClick was able to develop a campaign for 3M Visual Systems’ $7,000 multimedia projector targeted to software, media, advertising, publishing and training companies. The campaign achieved a “click-through rate” (number of viewers clicking on an advertising banner) three times higher than the typical 2-3% experienced industry-wide. In another campaign, IBM used DoubleClick to target ads to Web users dialing in from specific university domains: “There is life after Boston College,” one ad read. “Click to see why.” That campaign garnered first-viewing click-throughs of 5-30%.

Another way to reach a geographically targeted audience is by advertising on online newspapers. The NPD Group, an international market research company based in Port Washington, NY, released a study in April which found that 40% of Internet users “frequently” read a newspaper online. Other than the larger papers, such as New York Times or Wall Street Journal, most people reading online local news probably have some connection to the geographical area. It makes sense to test ads in any online venue serving potential prospects in your target markets. And don’t give up if your test results are initially disappointing. Go back in six months to see if the cost dynamics have tilted in your favor (either due to lower CPM, different readership profiles, or both).

The RealMedia Network bundles local newspapers (and some other content providers) into a single purchase point for advertisers. By purchasing ads on those papers in, say, eastern Pennsylvania, a bank can do fairly precise Web advertising. Mellon Bank is among those companies which have advertised through RealMedia.

Determining how to get maximum benefit from your online advertising budget is no easy task. Even comparing asking prices, or rate cards, isn’t easy. Most Web publishers charge advertisers per impression or exposure, the number of times your ad is seen. And the largest publishers offer numerous advertising plans, from “run of the server” to key positions such as home page, business page, etc. Long-term commitments carry hefty discounts and monthly minimums may apply. A few will accept advertising on a per-click basis, meaning you only pay each time a user clicks on your ad. While advertisers prefer per-click pricing, most Web publishers are resisting this billing practice, arguing that the creation of compelling banners is not within their control. In any event, make sure it’s clear exactly what you are buying up-front.

While you’re at it, ask for detailed logs. Many sites provide weekly or monthly traffic summaries which include information, such as number of impressions, number of click-throughs, which of your ads performed best (rotate banner ads frequently to avoid burnout), and the domains (e.g., aol.com) of those who saw your ads.

Outside a few heavily trafficked Web sites that command premium rates, there is still far more Web content seeking advertisers than vice versa. So you may be able to write your own ticket in the short term. Financial services advertising is expected to become a large market for Web publishers. Their desire to get a foothold in that market can work to your advantage negotiating an initial ad buy.

Buying ad space in cyberspace is at least as complicated as traditional media, so you are probably best off using an agency. There are a number of specialists cropping up that concentrate solely on Web advertising (e.g., Website Promoters Resource Center, www.wprc.com) or your current media-buying agency can probably do the job. Agencies may be able to negotiate better rates, and since they earn a discount directly from the publisher, your costs could even go down.