• by Joe Mandese  @mp_joemandese, January 16, 2004

In what is both literally and figuratively one of the most "interesting" media buys so far in 2004, financial services provider Washington Mutual is turning its interest rates into a new form of advertising and promotion. In a promotion beginning today, the bank is using eBay to auction interest rates for its certificate of deposit accounts. But instead of posting a low rate and letting consumers bid them higher, Washington Mutual will offer the CDs at a relatively high interest rate, which eBay members will bid down.

Aside from being a radical form of banking, the promotion is the latest in a series of innovative marketing deals to come out of eBay's new Strategic Partnerships Unit, which also developed such surprising stunts as Seven-Up's "Liquid Loot" and Hasbro's "Jedi Knights" promotions.

But Washington Mutual's new "Bid Your Rate" promotion could be the most newsworthy of all. While an eBay spokesperson said the promotion is in line with federal banking regulations, it is bound to strike a chord within the normally conservative and highly regulated financial services industry.

It should also draw attention among a whole new class of consumers that Washington Mutual is looking to attract, not just to its CDs, but also to its entire portfolio of financial services. "Selling CDs on eBay is yet another extension of our retail approach to banking," explained Doug Marshall, senior vice president-manager of deposit strategy and product management at Washington Mutual.

Executives said it was unlikely that the limited nature of the eBay stunt could actually impact prevailing interest rates during the six weeks Washington Mutual will be running the event on eBay, but depending on how the promotion rates actually net out, it could cause some consumers to think twice about how rates for financial instruments are actually established.

Over the course of the six-week stunt, Washington Mutual will auction off 600 - 100 each week - six-month CDs of $1,000 each. Just to cover its bets, the bank is doing what other eBay auctioneers do, it has set an undisclosed "reserve," meaning a bottom line that it will not drop below no matter how low the bidding goes.