This is scary. NDB and SI in a partnership:
February 7, 2000
Dow Jones Newswires
Natl Discount Brokers Sees Lower Acct
Acquisition Costs
By ALLISON BISBEY COLTER
NEW YORK -- National Discount Brokers Group (NDB) Chairman Dennis
Marino said a three-year deal to provide exclusive brokerage services over
the Go2Net Inc. (GNET) network will help reduce the company's average
cost of acquiring new accounts.
National Discount Brokers spent an average of $378 per account to acquire
19,000 new customers in its fiscal second quarter, largely through $7.3 million
in advertising. The company, which announced earlier Monday that it had
reached 200,000 customer accounts, has budgeted another $16 million on
advertising in the second half of its fiscal year.
Now the brokerage has agreed to pay Go2Net at least $7.5 million a year for
access to the 11.5 million new users who visit the network each month. That
audience could grow later this year as Go2Net is developing an interactive
TV device.
But the 250,000 customers who pay a subscription fee to use Silicon
Investor, Go2Net's financial discussion and information site, are the real
target. Sometime in the next few months, Go2Net and National Discount
Brokers' online unit, NDB.com, will roll out an integrated platform that will
allow these customers to trade, as well as talk about, stocks on the Silicon
Investor site.
"This deal will bring customers to NDB at a much more attractive rate than is
available through traditional media advertising," Merino told Dow Jones
Newswires.
He said the deal is "a perfect example of how we continue to grow our
customer base by investing in long-term strategic partnerships, as opposed to
paying $2 million for a 30-second spot during the Super Bowl," he said.
Marino declined to estimate how many new clients National Discount Brokers
could attract as a result of the deal. But he said a similar strategic relationship
with AST StockPlan, an independent provider of stock plan administration
services, has generated 30,000 new customers over the past two years.
National Discount Brokers has the option to cancel the agreement after two
years if Go2Net fails to achieve certain performance goals.
Chairman and Chief Executive Russell Horowitz said Go2Net had been
looking to partner with an online brokerage firm and was attracted to National
Discount Brokers because of the quality of service it provides to both
seasoned and first-time Internet investors.
While clients who use Silicon Investor tend to be active traders, the
interactive TV device Go2Net is developing will probably reach an audience
of less experienced investors. The device will likely first be used by some of
the 6 million subscribers in cable TV operations controlled by Vulcan
Ventures Inc. (X.VVI), the holding company of Paul Allen. Vulcan owns
about one-third of Go2Net.
Vulcan and Go2Net have agreed to purchase 500,000 common shares of
National Discount Brokers at $27 a share, and warrants for another 500,000
at $33 a share.
As part of the agreement, Horowitz will join the National Discount Brokers
Group board of directors.
-By Allison Bisbey Colter, Dow Jones Newswires,
201-938-5298; allison.bisbey-colter@dowjones.com |
