New-look PayPal spends on digital marketing to fend off Google and Amazon

Until a few weeks ago, eBay’s management was locked in battle with activist investor Carl Icahn who wanted to force the firm to hive off PayPal, the firm’s fastest-growing unit.

But with rapprochement achieved, it’s full steam ahead with a new mobile-first image for the payments service, albeit with the Icahn-friendly caveat that all options will be considered moving forward.

John Donahoe, President and CEO of eBay, says:

“eBay and PayPal are both great businesses and they support and reinforce each other. We will continue to aggressively drive synergies that enhance our overall growth and competitive position. And our board is committed to continuing to evaluate all strategic options over time. We will make the right long-term decisions for shareholders.”

But whatever happens in the future, for now PayPal is getting some serious investment to raise its profile and brush up its brand as it finds itself facing stiffer competition from the likes of Amazon, Google and start-ups such as Square, particularly in the fast-emerging mobile payments sector.

A lot at stake

The US mobile payment market alone will top $90 billion by 2017, according to Forrester Research, while the never-knowingly-underestimated Gartner pitches the global market for the same year at $721 billion.

So it’s time to get PayPal in front of more people with the offering’s first-ever global marketing campaign, complete with a mobile-friendly new logo that looks less like something that belongs to a bank and a TV advertising campaign with Joe Six Pack talking about the benefits of using the service.

The campaign launches tomorrow using the tagline "People rule". PayPay pitches the new campaign as reflecting:

"a people first approach, informed by customer research around how consumers view the world and what we can do to make their lives easier and simpler. It is being launched in the UK, US, Germany & Australia and is a multi-channel campaign including TV, Outdoor, Digital, Mobile & Social Display, CRM activity to our existing customers and a customer promotion.”

It’s the first brand update since 2007. The firm says of the new look:

“Our hope is that the new identity looks familiar yet new and that it will reinforce the themes of trust, innovation, simplicity and youthfulness for which PayPal is known. The design brings together PayPal’s online and mobile imagery in a single brand identity that is more flexible for devices from small wearable screens and mobile devices all the way up to 72” flat screen TVs.”

PayPal’s new logo includes two “P”s that are superimposed on each other, with the whole brand identity designed to be more readable on smaller screens such as phones and watches, and in offline retail outlets that accept PayPal transactions.

Offline challenge

That offline accessibility is important. With 143 million active users at the end of 2013, PayPal is the dominant online payment provider, but it is not used widely for in-store payments in the United States, which is something that needs addressing before competition hots up too much

Donahoe alludes to the increased competition PayPal faces when he says:

“We have this window of opportunity where PayPal can extend its lead as the leading digital payments platform.

“We’ve never really invested much in PayPal marketing. This year, we're going to increase our level of investment in marketing in PayPal.

"You'll begin to see us over the coming quarters increase our level of investment in PayPal marketing…using digital marketing channels and selective TV and seeing how the business responds. We think that raising PayPal's unaided awareness as something that marketing can help facilitate.”

See also: PayPal verifies digital wallet ambitions
Sep 10 2013diginomica.com

As for boosting that offline profile, Donahoe positions that as a priority as well, with mobile capability a key factor:

“We're continuing to extend out our merchant coverage into physical store locations in the US and increasingly around the globe because ultimately we think that will be important.

“But we're also focusing on where the action is. The first place where you're seeing mobile technology used in the physical world is around the sharing economy, where it's providing a real consumer benefit and around restaurant and other areas that have lines.

"If you look at what we prioritized in the PayPal digital wallet last year, it was order ahead and skip the line, it was order from table, which were experiences that were significant improvements from simply swiping a card."

Creating powerful customer and merchant experiences is the driving principle, he adds:

"As we roll PayPal out, there is a lot of focus on the consumer experience and how we provide consumer experiences that enhance value for consumers, while also giving merchants or retailers a real relationship with their consumers.

“An example would be Beacon. Beacon is a nascent technology, but we're using it in select locations to allow better consumer experience and have retailers be able to experiment having a direct connection when their consumer walks into their environment.

“We’ll continue that test and learn. We're still very optimistic about the opportunity and we're going to just sequence where we get the most consumer engagement, that's where you'll see us invest the most upfront energy. And over time we think that will extend out into the physical source.”

Mobile first

Donahoe sees both PayPal and eBay as having strong mobile credentials, citing a 70% year on year increase in volumes of mobile commerce in the first quarter of the year as well as adding 6.5 million new customers to its mobile offering. There have also been some strong mobile and local partnerships put in place, adds Donahoe:

“We announced innovative mobile partnerships with industry leaders, Samsung and Deutsche Telekom. PayPal is now the first global payment company to enable finger print authentication for payments on the new Samsung Galaxy S5 smartphone.

“Deutsche Telekom's 144 million customers will soon be able to make purchases directly to their mobile phone account with PayPal.

“On the local front, we're seeing great consumer engagement with our Argos Click & Collect partnership in the U.K. eBay customers can buy from more than 100 sellers and collect their purchases in more than 100 Argos stores across the U.K. We currently have more than 6 million listings enabled with Click & Collect. And in the US, eBay is pursuing a similar buy online pick-up in store local commerce strategy with select retail partners.”

As for the increasingly competitive digital wallet market, Donahoe acknowledges there will be tougher competition ahead, but is confident that his firm’s projected growth numbers have accounted for this:

“We don't see it to be zero sum game. There are going to be multiple people who are trying different wallets and that will play out as it does.

“We feel very good about PayPal's position in the competitive payments industry and we are partnering with banks, the associations and others, not necessarily competing against them.

“PayPal brings almost a 150 million active consumers now globally. A global payments platform that is neutral to whichever funding source you want to use. And we're driving our technology such that our wallet and other platforms can use PayPal as their underlying payments platform. Let's just say, competition is fully incorporated into our numbers.”

Verdict

As a big PayPal user, I'm interested to see how the firm capitalizes on its competitive headstart in the market in the face of incoming competition.

Increasing the marketing spend to improve brand profile is certainly a step in the right direction so long as the emphasis remains firmly on customer and retail-friendly technology that just works.