As the Web has brought customized marketing within grasp of more companies than ever, financial firms have not sat on the sidelines. In some cases, financial industry professionals have taken the lead - taking methods built for vertical markets and recasting them for broader application.
Card companies have been particularly nimble at using credit profiles to decide what to offer individual consumers, and the Net has enhanced their efforts.
Among the companies in the vanguard, well before the Internet made everyone's life easier, was Capital One Financial Corp., which often boasts that its "information-based strategy" lets it pitch an appropriate product - not just a credit card - to virtually any consumer.
People have known for years that Capital One has hit on a good way to do business, but it also turns out that the company may be something of a talent incubator.
One former executive, Scott Ferber, took the expertise he gained in developing new products and decided to do what the company's two top honchos have always said could be done: apply it to a product that has nothing to do with credit cards.
He saw that Capital One's customization technique would work well in developing banner ads for the Internet. His idea was that by tracking people's Web clicks, a computer could determine mathematically what they liked to buy, and could present an advertising offer that was most likely to generate a purchase.
In August 1998 he left Capital One and founded Advertising.com to "go after the Holy Grail of Internet marketing" by sending specific advertising to a particular person in real time.
Mr. Ferber's partner in the venture is his brother John, who used to develop interactive games for the Internet. The idea was hatched at their parents' home in Owings Mills, Md., at Thanksgiving dinner in 1997, when John Ferber demonstrated the newest aspect of Hover, an Internet race car game that lets people from all over the world compete on an ice course.
To increase revenue opportunity for his game, John Ferber had added billboards on the side of the racetrack that flashed advertisements at the competitors. The messaging system later became the technical backbone for Advertising.com's ad server.
"We thought we could build a better mousetrap by providing the intelligence advertisers need to reach customers," says Scott Ferber, chief executive officer of the Baltimore company.
Though the brothers are polar opposites - Scott, 31, a former banker, is comfortable in suits, while John, 26, is a long-haired poster child for the wired generation - they saw eye-to-eye about the company. Advertising.com is trying prove that the value of Internet advertising "is significantly different than the value of tracking one piece through the mail and saying, 'Did they respond?' " Scott Ferber said.
Sales have been brisk, and investors are eager to hop aboard. The company raised $11.75 million of equity in its first round last September from New Enterprise Associates, the Capital Group, and Blue Chip Venture Capital Company Ltd.
The company now has 250 employees - in Baltimore, where the two brothers started it, and in New York and San Francisco.
Advertising.com also has 250 customers, 25 of them financial institutions. The company has made relationships with 5,000 Web sites, including high-profile ones like theglobe.com, Monster.com, and SNAP.com, on which it broadcasts the one-to-one ads.
The company is trying to keep up with its larger competitors, such as DoubleClick Inc., Engage Media, and 24/7 Media.
"It's a competitive market, and [Advertising.com] is doing well creating innovative products and advanced targeting technology," said Michele Slack, a senior analyst in the online advertising group of Jupiter Communications in New York.
"The company is smaller" than its competitors, Ms. Slack said, and "it's important to offer particularly desirable sites within their network."
Advertising.com is a private company with no profit and no immediate plans to go public. The company reported $36 million of annual revenues, and its first-quarter revenue increased 72% from the fourth quarter last year.
The greatest challenge, the brothers say, is the hesitation of companies that are still afraid of the Internet, or think that banner ads are ineffective. "We have everything in place, and we could be much farther along if the people we work with were more comfortable," Scott Ferber said.
The Ferbers said they can prove that banner ads attract customers. While only 0.3% of consumers click on most banner ads, three times that many click on their ads, they said. From there, people who view the Advertising.com ads are far more likely to take the next step of filling out a form or calling for information, they said.
The financial Web site Motley Fool has already seen results from the service. The site says that 0.95% of its target customers clicked on banner ads designed by Advertising.com to receive more information.
John Ferber designed Click-Tracker, the Internet sales and tracking software that serves as the company's technological foundation. So far it has generated one billion ads, which have produced $75 million in electronic commerce sales.
Scott Ferber applied the direct marketing lessons he learned from his mentor, Richard D. Fairbank, chairman and chief executive officer of Capital One, and his two-and-a-half years of marketing experience at Procter & Gamble Co.
He developed the mathematical formula that determines "who do we offer what to when," he said. At the same time John Ferber worked to improve the ad server which actually carried the message to Web surfer.
He adapted the instant messaging from his games to identify particular consumers by the fingerprint, or "cookie," left by their Internet browser. The cookie allows Advertising.com to identify a customer in relation to past action on its alliance sites. Since the computer, not the individual, is leaving the fingerprint, the consumer's name and personal information remain hidden.
"What the technology does is observe what happens in different one-to-one relationships, and, based on those observations, it updates the targeting on an ongoing basis," Scott Ferber said.
Though the financial services industry was a logical first target for Advertising.com, it also presented one of the most complicated marketing puzzles.
"The secret sauce is creating a math problem that could handle all of the complexities of the financial services industry," Mr. Ferber said. Manipulating a basic formula to be able to pitch all sorts of products from a single financial institution to college students, parents, small businesses, and high-net-worth individuals was harder than generating the formula, he said.
The brothers have hired three Capital One executives, each with different specialties. Their chief strategy officer comes from DoubleClick.
The culture of Advertising.com "is like a religion," said Con Way Ling, executive vice president. "It is exciting, and the ideal is pretty high."
Though the company is just starting to build its customer base, it has already made the next technological leap by offering its ad network on wireless devices. The brothers say the Adbroadcast.com service could prove particularly attractive to financial services companies, which could use it to reach a broad consumer population looking for better rates on loans, mortgages, or investment products.
Advertising.com pays cellular phone and Palm users up to 50 cents to receive targeted advertising via email. The service, introduced in January, has delivered four million advertisements to 93,000 subscribers.
The company says consumer privacy is a big priority. It never attaches a personal identity to the "cookie" left by each browser; it simply extracts the date and time, what Web site the print was taken from, and how the browser reacted.
Though Advertising.com knows whether a customer has filled out an application associated with a banner ad, and whether a wireless customer has opted to receive e-mails about certain products, that information is kept separate from the database that tracks the travels of a particular browser.
"Advertising drives the world," Scott Ferber said. "We are the intelligence behind the how-and-to-whom to deliver the ads."
