The DEMOfall 07 conference is a big gathering of upstart tech companies, so I was surprised to see credit card company Advanta (Nasdaq: ADVNB) exhibiting there. The company's promoting its cool new Web 2.0 social-networking site, ideablob.com.
For more than 50 years, Advanta has served mostly small businesses, boasting a customer base of about 1.3 million people. From 2003 to 2006, the pre-tax income from its business card segment increased from $56 million to $136 million.
However, it's not easy to reach small business customers, or to compete against big names like American Express (NYSE: AXP). Moreover, traditional marketing techniques -- such as direct mail -- are losing their effectiveness.
That's why Advanta has an "innovation team," and why it thinks more like Google (Nasdaq: GOOG) or Amazon.com (Nasdaq: AMZN) than a crusty old financial institution. In a Fool interview, Chief Innovation Officer Ami Kassar said, "If we don't continue to innovate, we die."
Ideablob.com, is an online community for anyone to post novel business and product ideas. Examples include a combination of a karaoke machine and mechanical bull; a website to allow people to donate used books to educators; and a food container that changes color when the food gets old or spoiled. Some are less original, such as a yoga studio that sells supplies. Isn't that lululemon athletica (Nasdaq: LULU)?
The community has the power to vote on the ideas, with a $10,000 prize for each month's top idea.
This is kind of wacky, but it can help Advanta build a strong brand and customer loyalty. Ideablob may also allow for some viral marketing, especially if people start urging their friends to vote on their ideas.
It's not advisable to buy a stock based solely on innovative ideas -- but it's still something to consider. Large companies can have a tough time launching new concepts like ideablob. Advanta seems serious about innovation, and given the strong growth of websites like Facebook and MySpace, its ideablob site could hold lots of promise.
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