‘Driving force’: Inside PayPal’s partnership strategy

PayPal seems to be going full Alipay, scooping up partners to create what looks like a comprehensive ecosystem of financial services.

Last week, the payments processing giant announced customers could use their PayPal accounts as a form of payment in the App Store, Apple Music, iTunes and iBooks. Customers can’t add PayPal to their Apple wallets, but they may be able to one day — that partnership would benefit both companies and PayPal probably doesn’t want to compete with cards because they need them to fund customer accounts. The payments processing giant did partner with Google though, in April, allowing Android Pay users to add their PayPal accounts as a payment form.

In October, PayPal also partnered with Facebook to allow users to send buy things through Facebook Messenger; and earlier this year it was reportedly in talks with Amazon about a payments partnership. And these are just the biggest companies. PayPal has forged several partnerships and acquisitions that allow it to extend its reach to small businesses and the underbanked as well as its core customer base of consumers and merchants.

“We had a lot [of partnerships] in the second half of 2016,” said Joe Gallo, a senior communications manager at PayPal. “In 2017, we’ve seen Google and Apple and I think that’ll continue. This is a driving force for us… we plan to continue to assign deals at that pace.”

PayPal has 16 million merchant accounts and 203 million consumer accounts. This year alone, PayPal has announced that customers will soon be able to buy things at physical shops with their PayPal balances through Android Pay, that it will extend a pay-with-Venmo option to PayPal accepting merchants by the end of the year and closed a huge deal with TIO that will bring 10,000 billers into the PayPal network. Its latest offering is a partnership with e-commerce platform WooCommerce and accounting software company Xero.

“PayPal’s strategy has been to partner, partner, partner promiscuously — and in this space, that’s the right thing to do,” said Brendan Miller, a senior analyst at Forrester. “They’re less concerned about their competition and are more about enabling great experiences for the entire ecosystem, and they know it’s going to bring them business when it comes to enabling PayPal at all these different touch points.”

Customer choice 
The key to customers’ hearts (and business) is choice. The industry is beginning to better understand the idea that there won’t necessarily be a winner in digital payments or that each new product doesn’t need to be a Venmo-killer to provide value and do well. Like credit and debit cards, customers will use multiple services when and where they best suit them.

“Consumers are using a lot of different methods so we want to offer them choice,” Gallo said. “We don’t want to say you have to use tap-and-pay because that becomes a barrier to entry. By offering to a series of others and partnering with credit card companies and issuers, we’re able to provide to Citi or Chase or Wells Fargo cardholders and have that breadth of portfolio that we can integrate.”

While most companies focus on either the consumer or the merchant side, PayPal’s customer spectrum includes them both. Apple Pay, for example, is very much a consumer proposition, meant to bring convenience to the Apple device owner. Until now, Apple has only supported credit or debit cards as a payment form. By implementing alternatives like PayPal would give Apple customers even more choice and freedom to pay how they like.

Until then, Apple will remain a significant merchant customer to PayPal.

“If a consumer can’t use a PayPal account in Android Pay and that’s their choice of in store payment, that’s a missed opportunity for us,” Gallo said of the Google agreement.

Building products with empathy
For a long time PayPal took a combative stance toward Visa and MasterCard, said Zilvinas Bareisis, a senior analyst at Celent. It tried to use bank accounts as funding sources as the card networks threatened to apply special charges and fees to services like PayPal.

“Six to nine months ago they buried the hatchet and said, let’s start working together,” Bareisis said.

Now PayPal is of the mindset that it needs to be ubiquitous, wherever the customer is. That’s very close to banks’ mantra these days. Also like banks, it’s also playing to the reality that money is an emotional topic for many people and when they need their financial institution, PayPal will give them the support they need.

“[Choice] is part of the strategy, but it’s also about helping consumers better manage their money over the long term and how that drive emotional loyalty,” Miller said. “If they can help consumers better spend, save and manage their money, which is emotional…Everyone is realizing now it’s not just the banks that’ll do that, try to drive that emotional connection with the consumer.”

Inside T. Rowe Price’s Facebook Live strategy

While Facebook Live has been a boon for brands that emphasize customer experiences such as Dunkin’ Donuts, Benefit Cosmetics and the Metropolitan Museum of Art in New York City, finance companies are just beginning to explore its capacity as a marketing tool. Four weeks ago, asset management company T. Rowe Price launched an inaugural Facebook Live video with one of its financial planners. To the company, it’s a way to forge a stronger connection with customers.

“The goal is to create meaningful interactions with clients,” said Meara Ranadive, head of social media at T. Rowe Price, which also happens to be an investor in Facebook. “For T. Rowe Price to succeed in social, we need to be ready to meet the expectations of followers — and that means executing live video.”

The 25-minute live event was a how-to guide on retirement featuring in-house senior financial planner Judith Ward. The video was shot at the premises of IMRE, the marketing agency that led the company’s Facebook Live outreach. Ward took customer questions that were sent through the company’s Facebook page in advance, moderated by Tara Coates, avp and senior editor of retirement and financial education at T. Rowe Price. The discussion focused on how to devise a savings and investment strategy to achieve financial self-sufficiency in retirement. Twenty-eight thousand people tuned in and there were 23 comments.

T. Rowe Price isn’t unique among finance companies dabbling in Facebook Live, with firms using it for a variety of purposes to enhance customer interest and build brand image. For instance, just last month, Charles Schwab live streamed a talk on technology in finance on its Facebook page, and Bank of America hosted a live interview with author and television personality Henry Louis Gates, Jr.

Using live video involves additional steps for finance companies, including meeting legal requirements, said Ranadive.

“The considerations are the same as for other brands — we have to be authentic and share meaningful information, but we have some unique challenges in financial services industry, because we have to involve more partners like the legal team.” Ranadive said the effort involved about 10 T. Rowe Price staff members, while the production was handled by IMRE.

Despite the obstacles to delivering live content, analysts in the space expect use of Facebook Live by banks and finance companies to continue, especially since Facebook is no longer a platform used exclusively by young people. And the ability of Facebook Live to keep customers engaged sets it apart from other platforms, with users spending three times more time watching live videos than traditional ones.

Marketers have been drawn to the format since the start, with 50 percent saying that they planned on using live video in 2016, according to Social Media Examiner’s 2016 Social Media Marketing Industry Report.

“The demographic breakdown of Facebook is everything from 13 years of age to over 65,” said Ryan Barr, managing director of Cognito, a marketing firm that specializes in banks and financial services companies. “There’s a savings crisis in the U.S. now and financial services companies have realized that they can help educate different demographics.” 

Barr noted that interactions with a finance company on Facebook Live offer the customer the convenience of not having to leave their home while continuing to feel connected to a bigger community that shares similar concerns about money.

Financial institutions are going to continue to reach customers where they need to be — the best ones are focusing on financial literacy and education, helping customers realize that there’s a path forward for savings and that the individual customer is not alone in the journey.”

Fed launches Facebook page, Hawaiian shirt insanity ensues

When the Federal Reserve decided to start a Facebook page, I’m sure the thinking went something like: “Hey, we should be on social media, everyone else is. What’s the worst that could happen?”

And then the worst happened.

The Fed obviously isn’t familiar with the internet, and the golden rule that comes with it: If you try to own the internet, the internet owns (or pwns) you. Just like Josh Lyman of the West Wing discovering what happens when you try and take control of internet message boards, the Fed has seen its posts bombarded with trolling comments mocking its policies and outright questioning of the existence of the Federal Reserve.

It’s tough to get in touch with the Fed (is there an 800 number to call?), so users on Facebook have decided to vent their frustrations in the comment section of the Facebook page. Some of the comments are a little out there, and some even call for bringing down capitalism. But in between it all, we found some genuinely funny and spot on comments.

For the record, I’m not a Facebook commentator; I’m just here to report on the craziness of the Federal Reserves Facebook page.

So here are 9 of the funniest comments on the Fed’s Facebook page.

The Fed’s schedule

A few posts on the page give people an idea of what’s on schedule this week for the Fed. Making up a troll-y comment to that is like shooting fish in a barrel. People came up with all sorts of weekly events, like manipulating markets and Pinky and the Brain references. But our two favorites had to do with Hawaiian shirts, George Soros, and getting back onto the gold standard.

fed_schedule remarks_bt_fischer

The Fed’s customer service

Like I said before, it’s pretty tough to get in touch with the Fed. It’s not like you can walk into the Federal Reserve and ask for a customer service representative. So users have taken to Facebook to ask questions of the Fed, like “Why does this FB page even exist?” and “When will you be releasing the audit of Ft. Knox?” Here are some of our other favorites:

_35__board_of_governors_of_the_federal_reserve_system     frb__current_faqs_landing did_you_know_the_board_of_governors_loacted_in_dc

Janet Yellen

Running the Fed can’t be easy, and as Chair of the Board of Governors of the Federal Reserve, Janet Yellen has taken the brunt of the satirical comments. Yellen is the figurehead of the Fed, and has been singled out by the comments section, dinging her with comparisons to a groundhog to referring to her as “the high priestess.”

_13__board_of_governors_of_the_federal_reserve_system inflation

Bitcoin

Ahh, it all comes full circle back to cryptocurrencies. Many Facebook commentators are happy with the Fed messing up, since that could lead to cryptocurrencies taking over, since obviously, there is no middle ground between where we are with the Fed and basing our economy on a digital asset that may or may not be controlled by China. But that discussion isn’t for the Facebook comments section, so on with the bitcoin!

blockchain_bonus

Following RBS, should your firm sign up for Facebook at Work?

FB@Work signs RBS as client

Facebook has made it clear for years that it wasn’t just satisfied attracting attracting over 1 billion individual users to the social network. Beginning in 2014, rumors coming out of Facebook showed that the company was working on a business product. Facebook wants to reach business users — the same users that spend more time on Linkedin while in the office. Users who turn to social networks not to post their most recent selfie, but to network in their industries, stay on top of impactful trends, and identify and connect with prospective clients.

[email protected], as the product is now called, was just unveiled recently and the company just reported that it signed on RBS (Royal Bank of Scotland) as its largest customer to date.

What is [email protected]

The early version of [email protected] is very similar to the consumer version familiar to over 1.5 billion registered users of the social network. The difference is that the enterprise version will be a much more secure, walled garden. So, to start, RBS employees will be able to connect with their peers at the firm and congregate into user groups based on pre-defined permissions.

This functionality is similar to the types of internal corporate social networks popularized by Yammer (now owned by Microsoft) and Jive Software. The social enterprise market is already pretty saturated with tools that function like collaborative intranets and take communication and collective work to a whole new level for the enterprise. Time will tell whether [email protected] will take its social network and enable users to connect and communicate with workers outside their firms. Financial service firms have their own unique archival requirements when communicating with clients, so Facebook will have to work with outside technologies to ensure compliance standards are met. [email protected] doesn’t currently function as a technology platform that other 3rd party apps could integrate into but all signs and messaging out of FB’s management points to such a future roadmap for the product.

As purely a messaging tool, Facebook will have to compete with massive incumbent, Bloomberg for its share in the financial services arena. Symphony, a communications tool developed and owned by a consortium of financial service firms, is making waves in fintech circles as it raises a war chest of capital to compete against Bloomberg’s dominance in messaging.

RBS was on an early trial conducted by Facebook and employee usage dictated the firm’s decision to rollout [email protected] more broadly:

“The pilot we’ve been running demonstrated we were ready for more,” said Simon McNamara, Chief Administrative Officer at the Royal Bank of Scotland, who oversees the bank’s rollout of the service. “The adoption rate was a phenomenal 90%.”

It will take more marketing to convince large IT departments that [email protected] is worth the hassle. Financial services firms normally take the wait-and-see approach towards new consumer-facing technology, so it’s interesting to see a bank become one of [email protected]’s most-prized early customers. Some CIOs have already communicated a certain level of skepticism around adopting these new social tools from a player with no real experience in selling into and servicing the needs of the enterprise.

“Social interactions within the enterprise largely support structured communication, collaborative work, finding and sharing experts and expertise,” John Baptista, an associate professor of information systems at the U.K.’s Warwick Business School says. Facebook may try to emulate that, but it will “struggle because its nature is instead to support user-centered, unstructured postings and to follow emergent activity streams.”

Like any popular new consumer tech, large enterprises have to contend with unregulated and uncontrolled employee usage. Financial services firms have approached the meteoric adoption of smartphones with in-house and bought solutions to enable employees to use their own phones to access corporate files and data. [email protected] will have to allay fears that Facebook’s own solution will be enterprise-grade in terms of security, safety, and compliance.

RBS plans to have 30,000 workers on its [email protected] network by March of next year, and its entire workforce of 100,000 using the platform by the end of 2016.

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How to beat Wall Street by using Facebook, reading tabloids and shopping – with Chris Camillo

Chris Camillo isn’t a professional investor but he know how to invest.

book by Chris CamilloHe turned $20,000 into over $2,000,000 by shopping at the mall, connecting on Facebook, and reading tabloids. Without even looking at a balance sheet or income statement, Chris takes big bets on trends he believes others aren’t aware of.

Then he heads to Facebook to validate his ideas with his social network.

He tells all in a new book, Laughing at Wall Street:  How I Beat the Pros at Investing (by Reading Tabloids, Shopping at the Mall, and Connecting on Facebook) and How You Can, Too

Join Chris and me as we discuss his investment philosophy, how it works, and why he believes it’s a better way to invest.

Continue reading “How to beat Wall Street by using Facebook, reading tabloids and shopping – with Chris Camillo”

Investing in the next mashup

Technology continues to run riot over a variety of industries.  Nowhere has that been felt as acutely as in the music industry.  Apple’s ($AAPL) iTunes may have changed the distribution model (selling over $1B in the last financial quarter alone), basically unbundling CDs and selling individual songs a la carte.

Music, it is a changin’

But the migration from analog to digital has been accompanied by a much more profound change — the revenue model of the music industry is undergoing a transformation.  Where the model was previously selling musical media (artists generally made lots of loot by selling records/tapes/CDs), the model is changing to charging for music experiences (see my recent piece on the business of Broadway and concerts).

Artists embracing this change have shifted their model to almost giving away music (or charging fans whatever they want to pay) in order to capture some funds at the next concert.

Fast Company has a very interesting rundown on Girl Talk, a biomedical-engineer-turned-DJ who makes music by mashing up others’ tunes.  Simply, he takes hundreds of samples of music and weaves them together, creating cool sounds but even more enjoyable live shows.  He’s putting butts in the seats because he’s providing great live value.

IPOs, Social Media and the Era of the Mashup

We’ve all read how Facebook, Twitter, and LinkedIn are gearing up to go public sometime soon.  While these services seem novel, in essence, they’re all just mashups of technologies and platforms that existed before Zuck entered his first frat party (not to sound snobby, but there aren’t frats at Harvard).

Startups and traditional companies are making lots of money just copying Groupon’s model of group discount buying.  Travelzoo , a decidedly Internet 1.0 company, has a Groupon-like clone that offers expiring travel deals to its email list of over 20m and that 4-month old business is rumored to be valued at $400M.  Abe’s Market, an Etsy-like green marketplace founded by my friend, Richard Demb, is experimenting with live selling online with its Abe’s Live, combining the breadth of vendor-driven supply and the entertainment value of a QVC.

The future of business is the mashup.  Those companies who can climb to the top of the value pyramid — by leveraging and riffing on the work done on by those along the way — will win and that’s where investors should be looking to place their bets, IPO or not.

More Resources

How Girl Talk Mashes Up the Music Biz (Fast Company)

Download Girl Talk music

Top business books to read this summer

Here is a short compilation of top business books taken from the New York Times best seller list (if you purchase off these links, my Amazon account gets credited a minute sum).  Hopefully, this is useful.  Some, if not all, of these titles should be on your nightstand.

*************
The Blind Side (Movie Tie-in Edition) (Movie Tie-in Editions): As always, Lewis is a great story teller in the world of business and sports (think previous hit, Moneyball — a great read) and this tale of rags to fame was supported by a recent movie with the same title.  My kids even enjoyed it.

Shop Class as Soulcraft: An Inquiry into the Value of Work: Like this one a lot.  As a fan of Zen and the Art of Motorcycle Maintenance, this book eschews the cubicle life for something more valuable, real — and it’s found by using one’s hands and body.

The Accidental Billionaires: The Founding of Facebook: A Tale of Sex, Money, Genius and Betrayal: As a Harvard grad myself, I always find these sordid tales of great minds acting like lunatics while pursuing their fortunes.  Facebook, the company and its founders, are totally complicit.  Mezrich is a great writer (The movie, 21, was a takeoff of his Bringing Down the House)

Switch: How to Change Things When Change Is Hard: Heath Brothers (of Made to Stick fame) are at it again with a gameplan to help readers face hard changes in life and make them a little bit easier.

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Part 2: What is Tradestreaming

This is part two of a series that takes a birds-eye view into the concepts I develop in my book, Tradestreaming.  Readers should also subscribe to my newsletter to stay on top of all news, posts and share in some of the ideas I’ll be developing.  Subscribe here.

A Sucker’s Game

Tradestreaming is a new way to invest, made possible by Facebook and Twitter. Today’s Internet provides a level of transparency that’s never been experienced by investors. Fully taking advantage of social media from an investment perspective requires an understanding of what’s behind this change. Tradestream Your Way to Profits provides a methodology, a new way to look at investing, by using the Internet and social media to better research and mimic successful investing strategies. In this sense, the book occupies the meaty space somewhere in between a classic how-to investment book and a typical business book.

Tradestreaming = Better Way

I write a lot about the financial content and investment research industries and how the Internet is changing the rules of the game. But this analysis is done with an eye on providing actual investment strategies that best leverage this transformation. Investors themselves can decide how to proceed given the theories I develop. While investors will learn proven techniques that have been shown to make money, there are no specific formulas associated with tradestreaming. Rather, investors should finish this book smarter and more knowledgeable about what really works for profitable investors and how to use the Internet to tap into it. Tradestreaming is about identifying successful investors, strategies, and powerful computer programs and following their every move.

For investors, imitation really is the most profitable form of flattery.

Trying to beat the market may be enjoyable, but it’s a sucker’s game and not one that I want to play anymore. Social media has made it possible to easily re-create battlefield-proven investment strategies of all sorts. This book describes the strategies, how they work, and how investors can begin using them to become better investors. Investing is an ongoing learning process. Reading this book should be the start of that process, not the end.

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