From Plastic To Pixels

Why would a lifelong New Yorker and CMO of the marquee credit card brand American Express suddenly head west and into the virtual world of online payments upstart PayPal? After years with Avon, then the Financial Times Group and finally AmEx, Barry Herstein became CMO of the eBay-owned brand, where he will help direct the company's next stage of growth. With revenues of $582 million in Q1 2008, PayPal was up 32% over last year and responsible for approximately 12% of U.S. e-commerce.

Are your old bosses in the credit card world now your competitors?
Herstein: No, I think they are very complementary. We view people like MasterCard and Visa and AmEx as key partners. In fact, we are benched as one of their largest merchants.

Is the marketing task for PayPal very different from the one at AmEx?
Herstein: Given that my previous employer was a merchant acquirer as well as a consumer marketer, it is analogous. The nexus for companies that do both of these is to leverage both the merchant relationship as well as the consumer relationship. We help our merchants grow their business. When we do joint promotions with merchants, they prove to be very successful because it drives a volume of business to that merchant as well as giving our customers opportunities in terms of rewarding them with a special promotion.
What did you learn in the credit card world that you bring to PayPal?
Herstein: Consumers have a lot of choice, and the payment industry is intensely competitive. In my experience, the point of sale is often where a decision is made by a consumer (about) what product they will use to pay. Having strong and positive relationships with merchants is key to success.

About half of PayPal revenues still come from eBay sales. How is PayPal addressing its non-eBay relationships?
Herstein: We are paying close attention to the opinion leaders and the influencers in this space. So, for example, bloggers exert quite a bit of influence with consumers who are highly engaged in online shopping. We will continue to focus there. Often the small businesses rely on the developer community, the folks that actually set up the Web sites for them. That is another community we spend a chunk of marketing resources against to make sure they understand the PayPal opportunity.
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