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Should Paypal be building an ad business?
00:22:10
Next in Media spoke with Dr. Mark Grether SVP & General Manager, PayPal Ads, on why he thinks the company's 'transaction graph' may be even more powerful than some retailers' data for advertising, and why there's nothing to worry about with a company that has so many people's banking information to use that data for ad targeting.
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Transcript45 lines
- [00:00]
Mike Shields
Your brand needs positive attention. And Rembrandt demonstrated through exclusive research with Next to Media that attention can be a leading indicator of performance. Find out more about this innovative approach and how to use AI to generate positive attention with Rembrand. Visit www.rembrand.com next to media to learn more. Dr. Mark Grether was an early practitioner of retail media, helping build up Amazon's ad business before taking Uber ads from essentially zero to billions. Now he's trying to do the same at PayPal where he's betting that having data on what people buy all over the web, not just one site, would be that much more valuable. Brands. That's of course, as long as consumers feel okay with this and regulators don't poke their heads up. So far, so good. Grether actually talks about why it's easier to move faster this time around and why he's not so sure brands will be okay leaning on Meta to create their entire ad campaigns. Let's get started. Hi everybody. Welcome to Next to Media. I'm Mike Shields. I'm here with Dr. Mark Grether. He is the SVP and General Manager of PayPal Ads. Hey Dr. Mark, thanks for being here.
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Dr. Mark Grether
Thanks so much for having me.
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Mike Shields
Excited to talk to you. You're in a very interesting place and time in this industry. You probably get tired of this question, but I'll start just trying to help people frame where to put PayPal advertising. Are you, you know, there's this weird debate about whether you're retail media or commerce media. What are you? And then what is the big opportunity you saw here if you're building Uber ads into a, you know, fast growing business in the last couple of years.
- [01:34]
Dr. Mark Grether
Yeah. Let me show you more about PayPal advertising and what we have to offer to our advertisers. Right. And we can pay whether we are a commerce media platform or even more than just that. So if you think about PayPal advertising, the starting point for us is that we have relationships with about 400 million users globally. We have about 30 million merchants on our platform. So we are two sided network and we see about 25% of all global commerce. And so basically the power of PayPal advertising is what we call a transaction graph that comes from people interacting on this platform with our merchant at global scale. And so similar like to, let's say a Facebook has the social graph and TikTok maybe has an interest graph. We have the transaction graph. The transaction graph and what powers the advertising? And the advertising is on the one hand deployed on our own properties, namely PayPal, Vemno as well as Honey. But we also leverage our transaction graph to show advertisements more broadly. We just launched them offside ads, which means we can also now leverage transaction graphs outside of our own properties on the open web to really make sure we leverage the retail frequency and that advertises a demand as they want to do business with us.
- [02:51]
Mike Shields
So let's maybe try and break that down a little bit when you, because we, when you talk about this, this category is still relatively new. New. And the promise of retail media initially was ad exposure and transaction in the same place, same platform. Closed your attribution. How do you be that? Right. And then you've seen more players come in. If I'm thinking about this, right, is there, you don't necessarily have all the transactions happening in one place, but you've got a graph that will get brands close to that where the attribution will be comparable or not necessarily.
- [03:23]
Dr. Mark Grether
No. Let me, let me share in more detail what we can offer to advertisers and what the challenges are from my perspective. Please. If you think about retail media or commerce media. So let me start with the latter. Right. If you think about retail media, to your point, any retailer has a really deep understanding on the transactions that happens on their own retail media platform. They only know what happens on their own single retail platform, which means they do not know what happens left or right. But consumers actually spend more money than just on one single retailer. Right. And so the big thing about PayPal is that we see now across all merchants, 30 million of them, how consumers actually spend their money.
- [04:02]
Mike Shields
So not just in one category, but a bunch of categories.
- [04:05]
Dr. Mark Grether
Exactly. Not on one retailer. Not in one category, of course, many retailers and across many, many categories. Right. And at the power of what we call a transaction graph, that we have a much broader, much deeper understanding of consumer purchase behavior that we can leverage for transactions. But as we do have transactions, Right. We can still provide closed loop attribution back to the advertisers. The big benefit to advertisers is we cannot only do that for a single retailer. It can do that across all retailers. So if you think about an advertiser who wants to sell, they typically do not just sell on one single outlet. And they want to know how are they doing across retailers. Right. Where is the product more often, maybe less so what is the ROI on one versus the other? And we can provide closed loop attribution back to them across all the merchants where they are. So I do think we are almost kind of sitting Horizontally, Right. Bringing all merchants together with our transaction, which I do think is super helpful.
- [05:07]
Mike Shields
All right, so one question I always, I always wonder about that. And I, I think I asked the same thing of the executives at Chase. You know, given the climate we're in, where everyone's. You've had the signal loss and this intensity around privacy and regulation, I always wonder what financial institutions do they really want to go in advertising. It feels like it's such a, you know, potentially area with a lot of pitfalls. How do you do brands ask you about that? Like, are you sure you want to use people's financial data to target advertising? Is that, what's the risk there? Does that come up?
- [05:39]
Dr. Mark Grether
No, actually it doesn't come up at all. Right. And the reason why I think it doesn't come up at all is if you think about PayPal, right, it's all about trust. The trust that we've built over the last 20 years since inception of the business. Right? And so when you think about PayPal advertising, we must make sure, and we do make sure that we continuously kind of have this trust with our, of our consumers. And so for us, that's why it is so mission critical, right, that we do make sure that whatever we do when it comes to advertising, trust and safety of our data is front and center when it comes to running the advertising business.
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Mike Shields
I'm assuming that you have as good a security system as anybody in this business, given the fact that you're handling millions of dollars.
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Dr. Mark Grether
Exactly. And let me give an example on that. Right? Which is why, for example, I'm saying that the transactions are the new cookie, right? So in the case in typical advertising, right, I surf a net, and whether I surf a net to my go show, it is not so much of a big difference in traditional advertising, you both are in the same audience segment, right? You're both interested for the same products, you live in the same neighborhood, you have very, very many things in common. So typically, you're the same segment and you're quite likely interested in the same product. However, when it comes to payment, I obviously must triple check. And so when it comes to payment.
- [07:11]
Mike Shields
You can't get that wrong.
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Dr. Mark Grether
You can't get it wrong. Exactly right. And therefore, that has a very different element of how we're treating the security, the safety, the accuracy, the trust of the data that we're working with. So very, very different. And again, that is the cornerstone, the backbone for us as we think about running an advertising business. And hence, as I mentioned, trust is really, really paramount.
- [07:36]
Mike Shields
Okay? So given the fact that you're sort of, you're in this position where you've got this transaction data, it's across different categories. You know, you saw that, you've seen this evolution with other companies to get into retail media where it starts with the shopper marketing budgets and then they kind of graduate and the brands are sort of reorganizing in real time. Where do you start? Is your customer the retail media agency, the search agency, the everybody? Like what is that? How do you build out your business? Who's your main customer? If you know that now.
- [08:03]
Dr. Mark Grether
Yeah, yeah, yeah. So name customers, on the one hand, the merchants. Right. That we already have relationship with on the payment side and hence also transaction data. So that's the national startup, I would call them our endemic advertisers. And indeed we have had great success with them as we launched the product about nine months ago. What's also interesting is that we also have seen a lot of CBG advertisers that actually sit behind the merchants that we're working with. Right. And so we have a lot of data from these indirectly as consumers buy CBG products through the merchants that we have a relationship with. So those are, I would say, the categories that we have started with. In the meantime, we've also seen, in addition to cbg, we've seen retail, we've seen fashion, we've seen travel, are leaning in. But also what I really must say here is kudos to the agencies. The agencies really, really have leaned in, into PayPal advertising. They're super excited to work with us and the reason why they are so excited is like they, we are sitting across many, many merchants and so we can help them with this kind of cross media view. Right.
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Mike Shields
We can help them, which they're all looking for and it's challenging.
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Dr. Mark Grether
Exactly. So we can help them optimizing and planning and providing insights across many, many outlets in our ecosystem. And that's why we speak the language of our agencies. And hence they are leaning into what we're doing in, in a really big way, which is really, really exciting.
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Mike Shields
I want to come back to that point. I'm wondering if you, you know, we're, we're all sort of wondering in the last few months what's going on with the ad economy, the consumer mentality, with tariffs, seemingly everything is business as usual. But certain categories are different. You see a lot of both the ad business and financial, real financial data. Like what's going on? Are people spending? Are they over, you know, they rushing to buy things. Is it Weird right now.
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Dr. Mark Grether
Yeah. I mean, we have recently had our earnings call where we spoke about Q1. Right. In which we didn't see any kind of changes in consumer behavior. And also when we do talk to advertisers, at least the ones that I'm speaking with, they're really, really excited about PayPal advertising. And so from my perspective, we have a strong year ahead.
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Mike Shields
Again, like you said, you're new, but it sounds like you're scaling very quickly. You've had that experience at Uber and other places. Is it easier, I wonder if you, everybody in this category eventually starts saying, I want to go off platform like you said, I want to, or I want to do full funnel. Are you going to, are you being pushed to go there already?
- [10:42]
Dr. Mark Grether
Yeah, I mean, of course, to answer your first question, of course it's easier if you have already done it. Right. It's not your first rodeo and you can already anticipate. Right. What will come next. So for me, in my head, I already have four or five steps that will come because I fell in the path. And that helps me to anticipate what I can do next. And it helps me to accelerate launching a business like PayPal advertising. It definitely helps having experience and having it done a few times. Now, when it comes to your question about full funnel and off site. Right. I do think that the key difference between us and the Commerce Media player is that we have data on off site media. Right. We have data what happens on other merchants. And so for us, it's not truly offsite in the sense of that we need to take our Data from our 1P applications and transport that somewhere else where it's going to be disconnected to the core business. Again, we have the data across many, many merchants. We are almost by.
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Mike Shields
You're already kind of, you're not off site, like someone who has no place there at all.
- [11:43]
Dr. Mark Grether
Yeah, exactly. That's why the term, the term offsite maybe doesn't really fit for us compared to other players. Indeed, that's why we are leaning in into off site. And so we launched offside ads in May because again, it's almost a natural thing to do for us given that we have so much data across so many merchants. And to your point, full funnel, that makes perfect sense to us. Right. Because we have the transaction data and so fast. It is really cool to say, okay, you run let's say a CTV campaign and we can then close the loop in terms of whether or not people actually didn't transact and we can use the transaction data to make the CTV campaign much more targeted and much more efficient.
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Mike Shields
Okay, that was going to be my next question. You know, ctv, in terms of making transactions via your television, that's still an intimacy. There's a lot of people trying to push that along, but you're definitely seeing this. You know, obviously Amazon is big in the television business and they've really ramped up their streaming advertising. Walmart bought Vizio. Can you be a player in television right now without owning inventory or device? Do you want to get in that space more?
- [12:50]
Dr. Mark Grether
Yeah, I mean, I do think if you are kind of a player in the, in the TV world, you definitely have to have either your own transaction data to provide the closed loop attribution back to your advertisers and be able to provide full funnel marketing to advertisers. Or at least you have to have a partner, right, who is able to provide that closed loop attribution so that as in a partnership, right, you can provide it back to the advertisers. The avatars are really eager to get closer into what actually is the impact of my TV campaign, of my CTV campaign. And the ones who can provide that measurement, that's above and beyond reach and frequency. Right? And GRPs are definitely having a big advantage. And hence players like us, in combination with our media relationships will be able to help.
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Mike Shields
What did you learn? You were at Uber, built that ad business very quickly. What did you learn there that, you know, going to a place that was inherently not an ad company to begin with, that maybe you can apply here or maybe. What are some differences?
- [13:54]
Dr. Mark Grether
I mean, the big, the big thing is, right? And both at uber and at PayPal, it's important you have a very, very clear vision for what is PayPal advertising. And you need to kind of eventualize that internally and externally. And both is important, right. It's not just about being on stage and talking to advertising agencies. It's also important to show the teams internally what PayPal advertising actually is and why. Actually, it's not just because it's cool, everyone is doing it, but what actually is a benefit to our consumers and to our merchants. Right. Having clarity internally. Why PayPal advertising helps our merchants, helps our consumers, is really key, helps them.
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Mike Shields
With their job and their goals.
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Dr. Mark Grether
If you do run. Exactly. One big topic for us is how can we ensure that more and more consumers are using PayPal and Vemno? And one big way of outdoing it is we are providing amazing offers to our consumers. Right? Which is an advertising program. Right. If you go into the Vemno app, for example, right? You get an offer, you then pay with the Vemno debit card. Similarly, if you go into a PayPal, right, you get offers. And so the offers, which is again a form of advertising, helps the consumer organization, right, to attract more consumers into the PayPal and Venue apps, creates more engagement, creates more stickiness of our financial products. And that helps us to create a flywheel. At the same time as we help our merchants to run advertising campaigns more efficiently, they can sell more, right? And the more they sell, the happier they are. And so again, we are creating this fly.
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Mike Shields
You don't have to evangelize when you're making the money.
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Dr. Mark Grether
Exactly. It's not about the money, it's about how can we help consumers to use more people more often. Vemno, how can we help merchants to sell more? And we do that, provide that flywheel, then there is no internal blocker and one understands why It's a natural kind of evolution that we have now launched the payable advertising business.
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Mike Shields
I want to ask you a little bit of a left turn, but you, you, you're, you're very vocal and active on LinkedIn and recently you posted something really interesting about. You kind of talked about Mark Zuckerberg's take on a AI and advertising. You had a little bit of a different take maybe than where others are going. And then you also just talked about where you see things going with agentic commerce. Can you talk about those two things?
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Dr. Mark Grether
Yeah, sure. So think about what's happening in our industry, which is in e commerce in general. So in the past, right, as a consumer, you might have started your shopping journey on Google. You search for a product and then Google linked you out to a retail media site and then you transacted on the retail media site. So Google search was linked. What's happening in the future is that with the rise of AIs and agentic and chatgpt and perplexity and the changes that you see at Google or what you already see, what Amazon and TikTok and Instagram is doing, you are no longer leaving them to make a transaction, right? You start your shopping journey on Google, on ChatGPT and you finish it over there. Now that means a couple of things. The first one is From a PayPal perspective, we need to make sure that we support our consumers when they make a transaction in an agendic environment. This agenda environment is agent thing is still wild, Wild west is new to them. How does it work? Can I trust the system? So they're looking for Brands that they can trust when they make purchases. And they do trust PayPal. So it's really, really important for us to, to enable consumers to pay with PayPal when they're actually in such an environment. Because again, they have the confidence of PayPal that if something goes wrong, PayPal is here for that. That's the one thing. The other thing from a merchant perspective is as now people are staying within this AI environment, fewer and fewer people will eventually go to a merchant website, which means we need to make sure that we help them to get in front of consumers, meaning that we need to make sure that we enable the merchants to shop wherever the consumer is and not just on the cons on the merchant website. So that's another big topic in our conversations with our merchants. How can we bring them closer to the consumers? Let consumers shop wherever the consumers are, whether it's now on the virtual website, whether it's in an agenda environment, or maybe it's just on the open web. Right. And so that's a big focus point of development. Enabling consumers to shop wherever they are and then leveraging of payable Venmo to provide a secure and trusted environment.
- [18:59]
Mike Shields
Yeah, there's a long way to go, obviously, with both the development of these agentic shopping experiences and then whether consumers are ready for them or the trust they need. All that stuff you mentioned. But it leads me to the, the obvious question is what happens if, and this is goes back to Zuckerberg's point, when does you know media planning is already sort of being absorbed by some of the big platforms. There's worry that they'll, we'll go to a place where you don't need any of these other players anymore, the agency, even part of the brand team. If you just give them your goals and your creative and your concepts and they run with it. Is that a bad thing? Is that something you're wary of?
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Dr. Mark Grether
Wonder whether that's something which is realistically happening in any short period of time. And the reason why I'm wondering is that because if you are a brand, one thing is to have the best creative, to have the best media optimization and so on and so forth. But at the end of the day, you actually would like to compete with other brands. You want to actually be better than you compete, you want to increase your market share, as I mentioned earlier. And so if ever, what if all the brands, right, just go to just.
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Mike Shields
Hand over everything to the same guy.
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Dr. Mark Grether
And Mark Zuckerberg has one black box to the same guy and to the same machine, right? What's the differentiation? There is no differentiation anymore. Right?
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Mike Shields
Where's the strategy? How do you win?
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Dr. Mark Grether
The brand will insist. How do you win? You need to have levers, you need to have a different strategy, you need to have different data inputs. Right, to compete and to win. And that's why I do think there is a place in the future where, yes, AI is supporting what you're doing and helps you to create creatives more efficiently and help you to optimize campaigns more effectively, but there's still a human element in it because you, you, you need to have the differentiation. Yeah, I like that.
- [20:51]
Mike Shields
That's a hopeful answer.
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Dr. Mark Grether
That's also why we've seen in. Yeah, and, and I mean, you've seen that in, in our ecosystem, right? If you think about in the past where, for example, DSPs had a lot of levers to provide to agencies so that again, the agencies could do a job by saying, hey, I help you brand to perform, to outperform the competitor, because I help you to better use the levers you than the other one. Right. If you think about what is happening now in, in, in with Google and Amazon, which have kind of black boxes, they are opening it up again, right? They are opening up levers. They're making more transparent for the same reason you as a brand, you want to differentiate. And that's why I do believe there is a place for us in the ecosystem as humans to pull the levers, use strategy, use data, use our experience to, yeah, compete and to win against other competing brands.
- [21:48]
Mike Shields
All right, so we're not all doomed. I like that. Dr. Mark, thank you so much for your time. Great conversation. Let's chat again down the road.
- [21:54]
Dr. Mark Grether
Thank you so much for having me.
- [21:56]
Mike Shields
A big thanks to my guest this week, PayPal's Mark Grether and my partners at Rembrandt. If you like this week's episode, please take a moment to rate and leave a review. We have lots more to bring you, so please hit that subscribe button. We'll see you next time for more on what's Next in media. Thanks for listening.