Schwab Strikes Deal With AOL

Online alliance is brokerage's biggest

By Maria Trombly

November 6, 2000 12:00 PM ET

Computerworld - Though company executives said the timing was purely coincidental, Charles Schwab & Co. last week struck an alliance with America Online Inc. to market its investment services to AOL's users just as growth in new online investors appears to have ebbed.
Under the nonexclusive deal, AOL will aggressively promote Schwab.com to its users.
Neither Schwab nor AOL would disclose the financial terms of the alliance, but a spokesman for the San Francisco-based brokerage said this is the largest deal the company has ever struck for an online marketing alliance.
Most important to Schwab are the relatively low customer acquisition costs and potential returns associated with the AOL deal, said Paul Jamieson, an analyst at Lincoln, Mass.-based Gomez Advisors Inc.
The deal with Dulles, Va.-based AOL gives Schwab access to a very attractive demographic, he said.
The alliance comes at a time when the stock market - and online investing - have cooled.
"I think a lot of the online brokers are in a wait-and-see kind of mode," said Larry Tabb, an analyst at Needham, Mass.-based TowerGroup.
Schwab passed $1 trillion in assets last month - five years earlier than expected. However, the brokerage slid back to $961 billion after the stock market tanked last month, said Isabelle Georgeaux, Schwab's vice president of customer acquisition and online business development.
"That has to do with the market being soft," Georgeaux said. However, the brokerage remains strong and the alliance with AOL wasn't a defensive deal, she added.
"It's the right time to bring together two of the most prominent brands in the online world," she said.

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