PayPal (NASDAQ: PYPL) joins mad rush for digital advertising gold

PayPal (NASDAQ: PYPL) collects a vast amount of data each time it helps a user make an online purchase or split a restaurant check with its popular Venmo app, and the global payments firm is now moving to monetize all that digital gold with a new advertising platform it says will delight consumers with compelling offers. The company, which processes nearly half a trillion dollars of branded payment volume each year, is hoping the effort will boost growth, and it says its long-standing relations with millions of customers make it uniquely positioned to do so.  

The digital advertising market is massive, with spending in the sector projected to reach $740 billion this year. Even a fraction of that could have a big impact on PayPal’s earnings, which totaled $5.6 billion last year, and help support stagnant shares. In a show of just how serious PayPal is about the push, it’s bringing on an executive from Uber who built that rideshare company’s $1 billion advertising business. 

“We believe that the advertising platform we are building at PayPal will become a must-use marketing channel for merchants big and small,” PayPal marketing head Diego Scotti said. The company is following other firms with recent moves into advertising including JPMorgan Chase (NYSE: JPM) and Roblox (NYSE: RBLX).

With its vast database of past transactions and business in over 200 markets, PayPal may have the special sauce that could allow advertisers to better target customers and tempt them with tailored deals. While behavioral data abounds on platforms like Google (NASDAQ: GOOGL) and Instagram (NASDAQ: META), PayPal knows who is ready to spend and how much they might have. It’s a fragmented industry, however, with different platforms holding separate pieces of much larger stories, and the biggest winner may be the one who can figure out how to put it all together. With users being bombarded with advertising on all fronts, meanwhile, only time will tell just how much more they are willing to tolerate.