Amid local’s kinetic start-up scene, Web 1.0 giant eBay has put together a formidable local product through a flurry of acquisitions. Over the past few years, the company has snapped up a range of companies, from a location-based advertising network in Where to an inventory search product in Milo, all while expanding its core payment product, PayPal, into the physical world. Now these assets are starting to fuse, and we’re beginning to see the company’s grander vision bear fruit.
In a sign of what’s to come, the company rebranded Where as PayPal Media Network last year, bringing the mobile ad network under its payments division and moving a step closer toward closing the proverbial purchase loop. Walt Doyle, who was CEO of Where at the time of its acquisition, now serves as general manager of PayPal Media Network and will give a keynote address at next week’s Street Fight Summit in New York.
Street Fight recently caught up with Doyle to talk about “closing the loop,” building a local marketplace, and rethinking advertising’s role in the hyperlocal space.
Help connect the dots for us on eBay’s local M&A strategy?
A few years ago, [eBay’s] top leadership saw the market shift toward “omni-channel” commerce, with mobile creating a fundamental sea change in consumer behavior, changing how you live, shop, and buy. Rather than thinking of the “purchase funnel,” [eBay] started to think of [the consumers’ experience] as a “purchase pretzel.” People might be shopping while sitting on a subway by scanning a QR code, researching online and buying in store, research[ing] in store and buying online, or buying directly through their mobile phones. [EBay] had recently divested Skype and had a big vat of dry powder, so they said, What do we need to do to really help merchants fight this fight?
Where was recently rebranded as PayPal Media Network. Talk a little about how an advertising network fits into a payment brand?
PayPal saw that bringing payments offline, into stores, was a requirement for the company to really embrace this omni-channel strategy. Consumers want the digital wallet. Store, sync, and link in the cloud is great, but it needs to work in stores as well, and when you try to translate that to a merchant, you need more. Why would they take PayPal, when Visa and Mastercard already work very well? Why would I accept another tender type? The answer is that we’re going to give you more buyers, and we’re going to bring them to you online and offline in the same manner that your customers are shopping today.
That’s a big part of why [Where] was acquired. We had built the largest location-based mobile ad network in North America, and we always saw what we were doing was driving shoppers into stores by leveraging relevant shopping offers that we were putting onto their phones. The next step for us is being able to close the loop at the point of sale — and that’s not an easy thing to do. We built up a lot of the assets, we were a profitable company with 120 people, and we had a relevancy team and deep science and algorithms to place a relevant ad [before] a consumer. Subsequently, we were a very good proxy for PayPal as a demand-generation strategy. They said, “We’re going to use the Where platform and ad network to deliver the right buyers into your stores at the right time and add value for merchants.”
EBay is one of a handful of big web companies making substantial investments in local. What makes eBay’s approach unique?
We want to enable two-sided commerce — the creation of a marketplace where you bring together buyers and sellers. That’s very different from others in the market like a Google — or Amazon especially — that want to eliminate one side of the marketplace. They want to become the merchant and, in doing so, provide a very good consumer experience. But [Amazon and Google] are not necessarily interested in the creation or growth of the marketplace itself from a two-sided perspective.
As an advertising guy brought into a commerce company, how has your approach to advertising evolved over the past two years?
If you look at forecasts for mobile advertising, it’s set to be a very large market and one that’s growing to 4 or 5 billion. But compared to payments and commerce, it’s tiny. You’re talking about trillions of dollars versus a couple of billion dollars. We’ve always seen our ad tech as a proxy for effectively delivering a message to a consumer and participating in the conversion of the consumer at the point of checkout because we’ll make a lot more money there. Fundamentally, that’s what’s most important to the consumer and the merchant.
Talk a bit about the “open vs. closed” debate in local and where you see the market heading.
You’ll see both approaches from our perspective. The challenge with tackling the “open” path is how you track [the consumer] all the way from impression to redemption. That requires some form of ubiquity on the payment side. If you look and see what we’ve announced with Discover, the reason we did that deal was [to] effectively to gain ubiquity at the point of sale. When you start bringing that down into the hyperlocal stuff — the bodegas and the smaller convenience and grocery stores — those in the CPG world need to have a payment tender accepted everywhere. We’re not quite there yet; we’re launching with Discover this year and that will help accelerate things. If we were ubiquitous, we could be very open from a payment perspective and that’s a big first step.
The other problem you have is tracking all of this [activity] through redemption. [Where] has its ad tech — we have a RTB platform, and we do a lot of the stuff on the various exchanges both from [the] demand and supply side. But a lot of that stuff doesn’t translate very well into tracking on mobile. Effectively, it’s very hard to create relevant offers for consumers and target that consumer in mobile. We can use location, but it’s very difficult to track, say, previous purchase history online and bring the information into mobile because the steps are too fragmented. But we’re getting there. Using the tools that are available to us today, we’re starting to see some early success.
Okay, so I see how Where and PayPal fit together, but where do RedLaser and even eBay Now, the company’s same-day delivery project, fit into the mix?
Most of this, when you look at it, is about servicing the merchant. We want to help the merchant to be competitive in the world of Amazon. A lot of different service offerings are geared toward how can we help you compete, how can we help you win more consumers, and how do we help you increase basket size.
With RedLaser, we’re actually building a tool for merchants to reach consumers while they’re in store. From an advertising perspective, we’re also doing pretty interesting stuff enabling a consumer experience that’s beneficial to them. For example, one of the things that very frequently scanned, not surprisingly, is wine and alcohol. You’re having a nice dinner and enjoying a bottle of wine and you want to remember it or you want to see what it is. So you scan it and, from there, we can direct you to a local merchant to buy or gift that wine to a friend.
From the eBay Now side of the fence, that’s really about remaining hypercompetitive from a fulfillment perspective. If you think about the marketplace, one of the biggest reasons people like to go to stores — besides the fact that they can touch products — is the immediacy of getting the product. EBay Now provides a different way to leverage that immediacy.
In creating the best local commerce experience for consumers, there’s a lot of places where you could go as a company. What other parts of the local consumer’s experience do you think could potentially be a good fit for eBay’s local product?
EPos players like ShopKeep, Erply, and Leaf are playing at a really interesting intersection of social, local, and commerce. If you think about the cash register, it’s a big expensive box that just sits there and doesn’t do a lot. That should be the most intelligent piece of equipment the merchant has. But instead, you go into a restaurant or bodega, and everyone’s sitting playing with their phones. That fundamental piece of equipment has tremendous potential as a communication vehicle for the merchant to the consumer. It has huge potential for the merchant to enable great opportunities for favored clients for understanding what they like or making recommendations.
A lot of folks are expecting a big year from hyperlocal in 2013. What’s the biggest roadblock to industry growth?
There’s one thing that nobody can predict, and that’s consumer adoption. When are consumers really going to make this mainstream? Merchants and platforms and marketplaces like us can put all the tools out there. But if the consumers don’t use them, then the market never occurs. No one can time a market, and the market is dependent not only the enablers but consumer adoption as well. We see that fundamentally occurring right now.
Steven Jacobs is deputy editor at Street Fight.