PayPal CMO Shares Marketing Strategy


Internet payment firm PayPal has grown into a Web-bestriding Colossus, thanks in no small part to its $1.5 billion purchase by eBay in 2002. But for the company's first-ever chief marketing officer, Barry Herstein, there's still plenty of work to be done.

Since joining PayPal in October, Herstein -- formerly CMO at American Express and at the Financial Times Group -- has focused his efforts on maintaining PayPal's reputation and expanding its global presence, all the while keeping his focus squarely on the firm's two sets of customers: consumers and merchants.

He recently sat down for a 1to1 on the Run podcast to talk about the state of PayPal, and where it's headed.

Why did PayPal decide to add a CMO to its executive staff?

PayPal is 10 years old this year, the fastest-growing payment system in the world, and I think by many accounts one of the most interesting brands around at this time. That it's grown organically, largely through word of mouth, makes that all the more impressive. The company thought it was an appropriate moment to continue the development of marketing and look more globally, and not just have each country optimizing its own marketing plan.

How do you define your role at PayPal?

Iview my role as helping to lead marketing to contribute to the company's incredible growth. For example, we're embarking on a fairly aggressive program to build out our CRM team and its capabilities that are so essential for an e-direct marketing business. We're also looking for more coordination and sharing across the markets, both in best practices and ultimately talent. Part of my role is developing the global marketing talent base, and to share and compare and get all those great global learnings.

How much do you work with eBay CMO Mike Linton?

Our teams are working very closely together, probably more closely than in recent years. I view eBay as our biggest customer, as a merchant. It's a 'They're Wal-Mart to our P&G' kind of thing. We are growing off of eBay, and signing up new merchants and having our customers use PayPal off of eBay. We need to make sure that our single biggest merchant and our single biggest source of acquisition of customers, eBay, is thriving.

So often we hear of the difficulties in getting separate divisions to work together. How has that transition been with PayPal and eBay?

It has been smooth, and here's my hypothesis as to why: We're 10 years old and eBay is only slightly older than that. Compared to businesses that are literally over a century old, there aren't a lot of bad behaviors that have developed here when it comes to cross-functional cooperation. And there is an incredible spirit, both at PayPal and at eBay, in terms of the folks we attract and their commitment to the business. I look at it more as exposing people to, "Here's another way of looking at things."

How will the focus on global business affect PayPal's customers?

We're continuously upgrading and improving our customer experiences, making things simpler, better, smarter for them. I think consumers are going to increasingly find more and more merchants accepting PayPal.

The heartland for PayPal has always been the small and medium-size business. Many of our merchants who accept PayPal are folks who sell both on eBay and their own sites or stores. That space, of sole proprietorship, small and medium-size merchants, makes for a really interesting merchandising presentation to consumers. Using PayPal, they can navigate the world of e-commerce, and truly the world. Not just if you're an American going to U.S. sites, but looking around the world because PayPal facilitates global e-commerce. Increasingly consumers are going to see that very interesting blend from PayPal, because I believe we serve well that segment of the merchant community that many other folks leave somewhat ignored or do not consider a primary audience.

Listen to more of Barry Herstein's strategy in the 1to1 on the Run podcast, " PayPal Invests in the Customer Experience."