Digital payment platform PayPal (NASDAQ: PYPL) is launching an advertising sales business leveraging its extensive user data.
The company plans to build this new business using the vast amounts of data generated from tracking purchases and spending behaviors of millions of consumers using its services, including the popular Venmo app.
Gurgavin Chandhoke, CEO at uINVST, highlighted the move on X (formerly Twitter):
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To lead this new venture, PayPal has appointed Mark Grether, former head of Uber’s advertising business, as senior vice president and general manager of the newly-formed PayPal Ads division.
Grether will be responsible for developing new ad formats, overseeing sales, and hiring staff to build out the division. This move is part of PayPal’s strategy to create a robust advertising platform rooted in commerce and to strengthen the company’s consumer value proposition, as announced on May 28.
Central to this approach is its new advanced offers platform, launched in January. Leveraging artificial intelligence (AI), the platform scrutinizes nearly half a trillion dollars in transaction data to deliver personalized consumer insights and deals.
With advanced offers, merchants pay for performance — not impressions or clicks — potentially making PayPal an attractive ad partner in the crowded media network space.
Industry trends and competitive landscape
The move to build an ad network aligns with a broader trend where companies with vast customer data, like PayPal, are entering the advertising space.
In the first quarter, PayPal processed 6.5 billion payments from approximately 400 million customers. This wealth of data positions PayPal to offer highly targeted advertising solutions.
Other financial companies are following suit. Recently, JP Morgan Chase (NYSE: JPM) announced it would allow advertisers to target users of its website and banking app based on their transactional histories, reflecting a growing trend among financial services firms to create new revenue streams through advertising.
Under the leadership of Alex Chriss, PayPal’s CEO, since September, the company is refocusing on its strengths and areas where it has the highest potential for success.
To bolster its efforts, PayPal has also hired John Anderson, formerly of Plaid, to lead its consumer group. Anderson oversees product strategy for both PayPal and Venmo, enhancing the company’s overall market approach.
Impact on stock prices
The announcement of PayPal’s new advertising business has had a positive impact on its stock prices.
Shares of PayPal saw a 1.4% increase in premarket trading on Tuesday following the announcement.
The moves come as PayPal shares are down about 80% from their July 2021 peak.
