• by Aaron Baar , June 9, 2008

A former marketing executive with experience at Avon, Citi and American Express, Barry Herstein says he's excited about the prospect of being PayPal's first chief marketing officer, having watched it grow as a consumer-to-consumer online payment system from the outside.

"We all watched in awe of the phenomenon of PayPal," Herstein tells Marketing Daily. "After it sprang up several years ago, it has developed into a sizable portion of e-commerce."

Despite its prominence as the first consumer-to-consumer e-commerce payment system (used primarily on its parent, eBay), Herstein calls PayPal a "true challenger brand where the consumer has taken control of the brand."

As an example, Herstein references a PayPal user who built a home-based business on eBay using PayPal transactions. The user, who was recently brought to an all-company PayPal meeting on the company's dime, said he couldn't have turned his small business into a multimillion-dollar operation without PayPal, Herstein says.

"It's a brand people are passionate about, which is strange for the marketing space," Herstein continues. "We're still in the early part of the first chapter. Most of our history is yet to be written."

The San Jose, Calif. company began in 1998 as a place where consumers using online auction sites could transact safely and quickly with each other without having to send checks or money orders through the mail. EBay bought the brand in 2002.

Herstein joined the company last December, along with three other top managers: SVP/strategy and new ventures Jack Stephenson; VP/sales Mary Anne Gillespie, and VP/development Robert Mansell.

While Herstein says PayPal will not look to distance itself from eBay, it will look to create its own identity that extends beyond its parent.

"We need our own distinct path going forward," Herstein says. "We are fortunate we got to this place, but we can't be complacent."

The first step will be to develop a better understanding of PayPal customers, through improved customer relationship management programs. "We are going to invest in understanding our customers and their behavior," he says. "We need to be learning what our customers are doing and where they're going. And we need to apply that into more precise marketing."

That includes following people beyond eBay's boundaries. "People who shop on eBay shop and sell off eBay," Herstein says. "We need to follow them."

That may also include developing new products and transaction processes, including the possibility of transacting through mobile phones and other devices, which has become common in countries such as Japan. Herstein admits those possibilities are a ways off, however.

"I think mobile is an interesting space for a digital brand," he says. "As a brand and a business, we're only limited by our own creativity."