PayPal Counters Hat Trick Of Communications Threats
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PayPal Counters Hat Trick Of Communications Threats

PayPal Inc., which enables any business or consumer with email to send and receive online payments securely and conveniently, found itself facing a triple threat of communications challenges early in 2001.

Paul Holmes

PayPal Inc., which enables any business or consumer with email to send and receive online payments securely and conveniently, found itself facing a triple threat of communications challenges early in 2001. For starters, the Internet startup boom was in the middle of collapsing, and despite PayPal’s strengths, the company was occasionally tainted by association and it was increasingly attacked by competitors – who were backed by traditional banking and credit giants. Despite these factors, PayPal’s assets were strong enough to prompt the company to prepare for its initial public offering – which would add the SEC-imposed “quiet period” to the set of communications challenges the company faced.

After successfully shaping the online payments marketspace with more than 4 million users in January 2001, PayPal was experiencing growing criticism fueled by banks and credit card associations that the Palo Alto, Calif.-based Internet startup was unknown, unregulated, unsafe and unfriendly. Applied Communications and PayPal decided to counter the threat by positioning the company as a solid, trustworthy business partner for small businesses that traditionally were overlooked or overcharged by 100-year-old banking bureaucracies. To rebuff the claims, PayPal would tout its solid lineup of marquee partnerships and investors, its survivability over competing Internet startups because of the strength of its proprietary security technology and its enabling of e-commerce by offering an innovative service to small businesses and consumers.

From this, Applied Communications and PayPal laid out four objectives for the media outreach:
· Position PayPal as a champion of small- and home-office business e-commerce
· Position PayPal as an innovator and banks as imitators
· Position PayPal as a viable business with key partnerships and investors and the technology that gives users the confidence to shop on-line
· Support PayPal’s planned IPO by raising its media profile and driving users to its service

Applied Communications conducted target identification to determine top reporters and key influencers who not only covered the online payment and small business e-commerce markets but also would be the most receptive to PayPal’s messages. As a result, Applied and PayPal agreed to pursue briefings with high-profile business press, consumer influencers and top banking trade publications.  Applied and PayPal launched a press tour, creating a message platform to support objectives and developed media and analyst presentations. Applied also coached PayPal’s executive spokesmen, CEO Peter Thiel and CTO Max Levchin, prior to the tour to ensure that PayPal’s key messages would come across loud and clear to the audiences PayPal needed to reach.

Applied Communications secured briefings for PayPal executives in Boston, New York City, Washington, D.C., and the Bay Area, where they met with 20 top-tier business press outlets and six analyst firms to defend PayPal’s turf and take on the banks and credit card companies. PayPal garnered substantial, positive coverage in national outlets including Time magazine, Newsweek,, Wall Street Journal (, BusinessWeek, Washington Post and American Banker. PayPal also met with key consumer influencers Walt Mossberg of the Wall Street Journal and Adam Cohen of Time.

The outreach successfully resulted in coverage that “set the record straight” on PayPal’s strengths and dedication to safe and convenient e-commerce – not only for consumers but also for small businesses branching out online. In a feature, PayPal was positioned as playing a “leading role in stopping online fraud.” And, in a full-page Newsweek article on the company’s efforts, Brad Stone wrote: “Last year other payment sites like BankOne’s eMoneyMail, PayMe and PayPlace were vastly curtailed or closed altogether in the face of widespread abuse. PayPal has opted to stay and fight. Its 75-member antifraud team now regularly works with law enforcement, and has designed an internal software program that sniffs the 180,000 transactions made every day, looking for abuse. ‘We came to realize that we would either defeat fraud or fraud would defeat us,’ says chief technology officer Max Levchin.”

In response to’s “Just One Question,” – how is the economic downturn affecting e-commerce? – PayPal CEO Peter Thiel said, “Well, I think that there was a certain kind of e-commerce model that was very fashionable two years ago where it was basically driven by SuperBowl ads and billboards on the freeway and all sorts of very, very expensive high-profile marketing. And the problem was that the marketing costs just overwhelmed all the other economics of the business.

“Where I think e-commerce is headed is toward this much more distributed model where you have lots of small mom-and-pop stores selling things online, which is not a big part of their business. They have an offline business where they’re doing it as well. But they also have this online component. So, that’s what’s happening on eBay to some extent. It’s also happening on  Yahoo!, Amazon, a lot of these sites, you have these large, shopping center-like sites where there are all of these small businesses setting up to do business online.”

The campaign successfully gave PayPal needed media exposure and momentum going into its pre-IPO “quiet period.” The concerted media outreach and resulting coverage clearly separated PayPal from the competitors tracked in its monthly MediaShare KPI; in August PayPal ranked second to eOneGlobal; by December, PayPal outscored its nearest competitor by nearly 200 points.

On a business level, this exposure also spurred growth in PayPal’s user base: In fact, this growth corresponds nearly directly to similar spikes in coverage. For example, PayPal’s September MediaShare score rose 64 percent; its user base hit 10.5 million. In December, PayPal’s MediaShare score rose an additional 56 percent; its user base rose at an average rate of 18,000 daily, hitting 12.5 million in December.

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