ORLANDO - Richard Braddock, chairman of Priceline.com and a former president of Citibank, predicted that 80% of Internet companies will fail - but said that his will not be one of them.

He articulated this view Monday in a keynote address to the American Bankers Association's marketing conference. At the conference, he also downplayed Priceline's ambitions as a competitor to banks.

The online auction site has been bringing its brand of Internet retailing to financial services by holding auctions for mortgages, and it plans to do the same by yearend for auto insurance, term life insurance, and credit cards.

Nevertheless, Mr. Braddock said that Priceline has only "modest designs with regard to financial services."

PricelineMortgage has closed loans in 45 states. Though its mortgage volume was not available, the company has said that within its first 10 months PricelineMortgage received requests for more than $3.5 billion of mortgages, refinancings, and home equity loans. Loan volume has increased every quarter since the service was introduced.

Mr. Braddock has brought several former Citigroup Inc. colleagues to Priceline, including Heidi Miller, former chief financial officer, who joined in February as senior executive vice president and chief financial officer.

Mr. Braddock also has attracted one of Citigroup's largest investors. On Monday, Prince Alwaleed bin Talal bin AbdulAziz Alsaud, a major Citigroup shareholder, agreed to invest $50 million in Priceline. The Saudi Arabian prince already purchased $50 million of Priceline stock in May.

Despite the financial services momentum on the Internet, banks have a few tricks up their sleeves, Mr. Braddock said. Internet companies are inept, he said, at handling what has become a routine aspect of banking - scalability, the ability to continually add processing volume.

Banks should use the Internet to extend their reach into new markets and to serve their customers better, and not try to imitate pure-play Internet companies, Mr. Braddock said.

"If one goes on defensive on the Internet, you set yourself up for the Internet to become not your friend but your enemy over time," he said.

To succeed, banks should treat the Internet as a marketing opportunity, focus on a strategy that combines traditional parts of the business with the Internet, and create a brand.

Having first-mover advantage helps, along with intellectual property, a unique business model, and distinctive product design, Mr. Braddock said. Priceline has a patent on its pricing model and has 25 patents pending.

There is also benefit in borrowing from established models, Mr. Braddock said.

Cross-selling, a staple of Citigroup's strategy, has become an important source of revenue for Priceline, he said. Thirty-nine percent of Priceline's business comes from repeat visitors, up 273% from the second quarter of 1999, he said.

"During the initial stages of the Internet, the multiples got out of hand," he said. "The quality controls broke down" in bringing Internet companies to the market.

Managerial immaturity, unformed business propositions, and insufficient cash helped to create the current environment of skepticism toward Internet companies, Mr. Braddock said.

He did not romanticize the possibilities. The Internet does not assure business opportunities, nor does it ensure consumer or brand loyalty, Mr. Braddock said.

"Internet marketing is generally unsophisticated, technologically limited, and expensive. On the Internet, using a portal relationship is a precarious situation," he said.

The high cost of aligning with a portal was one reason Priceline chose to create its own brand identity. It began first by advertising on the radio and then on television earlier this year.

Using William Shatner, Captain Kirk on the original "Star Trek" series, as celebrity spokesman has helped boost Priceline's brand recognition to the point where 130 million Americans recognize the company's its name.

Such marketing has helped Priceline to achieve the lowest customer-acquisition cost at any Internet company: $10.81.

Mr. Braddock spent 19 years at Citibank, rising to chief operating officer and president. He left the banking industry in 1992, saying he would never return.

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