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How Alibaba IPO gives financial startup a leg up on business

The debut of the world’s biggest Alibaba IPO has stormed the stock market throughout the week.

It has opened up a wealth of business opportunities for brands, particularly start-ups.

For instance, Hong Kong-based financial trading start-up 8 Securities has rolled out a campaign to give out US$1 million Alibaba shares to the next 8,888 new customers.

The campaign, done in collaboration with NDN Group, runs in four languages including Japanese, English, traditional and simplified Chinese, targeting both the Hong Kong and Japan markets.

Launched in early September, the campaign has so far recorded a 5,000% month-by-month increase across metrics such as web traffic, the number of online accounts and campaign customer satisfaction rates. In the first few days of the campaign, the company’s USD deposits doubled.

“Rather than invest heavily in advertising, we prefer to spend our marketing budget directly on customers. As long as there’s a wave coming, then you have to be ready and be in a position to ride it,” Mikaal Abdulla, group CEO of 8 Securities, said.

This is not the first IPO campaign done by 8 Securities. Two years ago, when Facebook announced their first IPO, the brokerage firm rolled out a similar Facebook IPO campaign.

In the Facebook IPO campaign, customers who open an online account with a minimum of HK$10,000 received at least US$200 of free Facebook shares, with no strings attached. Customers were allowed to sell their shares.

Abdulla said that less than 1% of participating account owners sold their shares.

“The other 99% held onto their Facebook shares which almost doubled in value,” he said.

“By offering free Facebook shares, it gave us a chance to let customers experience our product. Everyone checked their accounts, many bought more shares and some have done very little.  But we engaged everyone.”

Today, the typical customer who opened an account through the Facebook campaign holds an average of HKD$200,000 worth of deposits with the company.

“This is an enormous increase in their trust and loyalty compared to their original HKD$10,000 deposit at 8 Securities. In fact, we have seen our customer assets grow almost every month since we launched that campaign in 2012,” said Abdulla.

The key is timing with a bold promotion like free Alibaba shares, when the media frenzy is at its peak.

“Facebook opened the eyes of many people in Hong Kong to the fact that they can simply trade US stocks they admire for a flat fee.  Currently, the most popular stocks are Apple, Google, Amazon, Tesla and Chinese companies listed in the US such as Baidu, Sina and now Alibaba.

“However, we knew the demand for free Alibaba shares would be higher than for Facebook because of its roots in China and the sheer amount of media interest around the story,” he added.

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