• by Judy Warner , October 13, 2006

Making good on its promise of a free lunch, Zecco Holdings launched its commission-free online brokerage in New York by giving away soda and hot dogs on Wall Street. It brazenly claimed that Bank of America's announcement to offer some free equity trades on Tuesday was a direct response to the launch of Zecco.com on Monday. The press noticed.

Zecco (an acronym for Zero Cost Commissions) wants to attract do-it-yourself investors interested both in free trades and in becoming part of an online community that shares opinions, tips and research.

Executives at the company, based outside of Los Angeles in Ontario, Calif., say Zecco.com will make money on interest, premium products such as options trading--and to a lesser degree, advertising revenue generated at first by Google-placed ads.

"The actual cost of a trade is quite small. It's a commodity, and we can absorb it as the cost of doing business with a low cost of overhead," says Sabin Speiser, director of sales and marketing.

"We look at online brokerages that have spent hundreds of millions of dollars to acquire new customers and say traditional advertising doesn't work," he adds. "Consumers are bombarded by advertising, so as a start-up we need to find other ways to break through."

For now, Zecco is planning to build awareness with a mostly viral campaign that is expected to evolve after more customers plunk down a minimum of $2,500 to begin trading for free and their data is collected and analyzed.

Public relations is vital to the strategy.

Speiser says free trading is "a great" newsworthy concept that when coupled with the social networking functionality of the portal "will keep us in the news all the time."

That doesn't mean Zecco will never use paid advertising. "At some point I'm sure we'll be on blog ad networks such as BlogAds.com and on specific blogger sites, because those are the investors we want."

He says Zecco's business model precludes it from running any big broadcast or print campaigns. Even so, Speiser says he's talking to some undisclosed agencies in an effort to find one that shares his passion for what he calls "radical disruptiveness."

A design firm in Copenhagen, Denmark called Hello Brand created the Zecco.com Web site. The agency was brought on by Danish venture firm Lundkenner Ventures, which seeded the startup.

So far, industry observers can't seem to decide whether Zecco.com will sizzle or fizzle.