Fidelity Aims to Build Online Brokerage Through Ad Campaign
Boston, April 20 (Bloomberg) -- Fidelity Investments, the
world's biggest mutual fund company, wants to increase the
visibility of its Internet brokerage business with an ad campaign
aimed at attracting online investors who don't already own
Fidelity funds.
Beginning Monday, ads for Fidelity.com will emphasize the
site's speed and reliability with the theme ''Every second
counts,'' said Stephen Cone, president of Fidelity's personal
investing and brokerage group. The company will spend 20 percent
to 30 percent of its roughly $200 million 1999 advertising budget
on building its brokerage business, he said.
''We need to get the story out more,'' said Cone, who is
Fidelity's top marketing executive. ''We have very low awareness,
and not many people know that we are the second-largest online
broker'' in number of accounts, behind Charles Schwab Corp.
Boston-based Fidelity ranked fifth in online stock trading
volume as of Dec. 31, behind companies, including Datek Online
Holdings Corp. and E*Trade Group Inc., according to Credit Suisse
First Boston. More than 100 companies trade stocks for customers
over the Internet, creating a competition for customers that
pushed No. 3 E*Trade to spend $60 million on advertising in the
first three months of 1999 alone.
''We have an uphill battle,'' Cone said. Fidelity, which
charges $14.95 to $25 for Internet trades, will target customers
of full-service brokers such as Merrill Lynch & Co.
Fidelity has discussed and rejected the idea of selling some
stock in the brokerage business to the public as a way to raise
its profile, Cone said. ''It's been talked about, but it's highly
unlikely,'' he said. ''We don't need the capital,'' and Chairman
and Chief Executive Edward C. ''Ned'' Johnson ''feels very
strongly about remaining private,'' said Cone.
Fidelity made an average of about 51,000 online trades daily
in the first quarter, up 54 percent from 33,100 trades in the
fourth quarter of 1998. That may let Fidelity regain the No. 4
spot in trading volume, ahead of Datek, when Credit Suisse
releases its rankings later this month. Datek last week said it
averaged 50,345 trades in the latest quarter.
Fidelity said 72 percent of its stock trades are now made
online, compared with 70 percent as of Dec. 31. The company had
2.3 million online accounts containing $152 billion at the end of
February.
Schwab last week said it had 2.5 million online accounts
with assets of $219 billion on March 31. Those customers made an
average of 138,000 trades daily, indicating that Fidelity's
customers trade less than half as often as Schwab's.
''We don't target the hyperactive trader,'' said Matthew
Sadler, Fidelity's senior vice president of retail brokerage. |
