PayPal just announced its new advertising business venture. This could spell out opportunities and huge potential for financial services marketing.
The realm of financial marketing is spicing up, thanks to digital payments company PayPal’s recent news: it is venturing into the ad business space.
In a press release issued in late May 2024, PayPal appointed Mark Grether as the Senior Vice-President and General Manager of a newly established division, PayPal Ads. This division will develop fresh ad formats, building on PayPal’s first ad product, Advanced Offers.
Grether has previously served as the Vice-President and General Manager of advertising for the ride-sharing app Uber, through which he grew advertising revenue to over $1 billion with more than 500,000 advertisers globally.
He also led the product strategy for Amazon’s advertising business and was the former CEO of Sizmek, one of the largest independent global advertising platforms.
Through Grether’s leadership, the company hopes the advertising business will help merchants make smarter decisions to sell more products and services effectively, as well as enable consumers to discover more of the products they love:
“Commerce and advertising are deeply connected, and we believe that the advertising platform we are building at PayPal will become a must-use marketing channel for merchants big and small.” said Diego Scotti, the EVP and General Manager of PayPal’s Consumer Group and Global Marketing & Communications.
PayPal’s plan for an advertising platform
PayPal is looking to leverage its wealth of user data to launch an ad network aimed at driving growth. The company intends to capitalize on the information it gathers from monitoring user transactions and spending habits to create a robust advertising platform.
In its press release, PayPal states “PayPal’s long-standing relationships with millions of consumers and merchants make the company uniquely positioned to create an advertising platform that is rooted in commerce.”
As mentioned, the new advertising business will include the PayPal Advanced Offers platform which uses artificial intelligence (AI) and the company’s data to help merchants target PayPal users with discounts and personalized promotions. Currently, Advanced Offers only charges advertisers when consumers make a purchase.
However, PayPal is expanding its advertising efforts to include “non-endemic advertisers” – companies that do not sell products or services through PayPal. These companies can utilize PayPal’s data to effectively target consumers with advertisements that can be displayed on various platforms, like other websites or connected TVs.
“If you’re someone who’s buying products on the web, we know who is buying the products where, and we can leverage the data,” Grether said.
Consumers who use the PayPal credit card would also provide the company with data from real-world brick-and-mortar stores, he added.
The company, by default, will include data from all PayPal and Venmo users, but customers can opt-out if they prefer. PayPal has insights across a wide array of merchants, giving it an advantage over a traditional retail media network with more limited data.
Plus, data based on Venmo’s peer-to-peer (P2P) transactions can add more color to a consumer’s spending habits.
What this means for financial marketing and advertising
The recent announcement could spell great news for those looking to step up their financial marketing or financial services advertising game.
A fintech giant like PayPal entering the advertising space could spell out even bigger things and more potential for other players in the finance industry to follow suit.
This means that mobile payment companies (such as Cash App and Zelle), banking institutions, and more financial services firms could follow the trend of introducing advertising technology into their offerings.
With an increasing number of financial institutions entering the retail media space, experts predict they could potentially demand higher advertising rates by leveraging their in-depth consumer insights. For example, being able to target and retarget ads to audiences based on affluence or traveller status.
As a result, financial marketing has something unique and more valuable to offer to advertisers everywhere. The access finance companies possess to a varied set of consumer data and information can provide a more detailed and accurate picture of the people advertisers are targeting.
Thus, it’s possible we see advertisers no longer ruling out the financial space when it comes to marketing and advertising their products and services.
PayPal’s new advertising business also implies the fintech giant sees value in retail media advertising. And it’s not just PayPal.
Firms across various industries are building their own ad networks and venturing into retail media ads. We’ve seen JPMorgan Chase doing the same in early 2024, which revealed plans to let advertisers target their website and banking app users using transactional data.
eMarketer suggests retail media ad spending will total $137.1 billion worldwide in 2024. Retail media has set a successful precedent for such ventures. It’s also a sign that payment companies are leaning more heavily into value-added services (such as advertising).
We’ll see a bigger upward trend in retail media ad spending thanks to the fintech and financial services companies now investing in their own adtech solutions.
Financial marketing will definitely see a lot of growth and will definitely be more at the forefront now that PayPal has announced this move. We will see what happens as we await more updates and information on how PayPal’s advertising business plan will go.
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