Venmo reinforces use cases with new campaign (PYPL)

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PayPal-owned peer-to-peer (P2P) payment service Venmo is launching a new “creative campaign,” called Blank Me, according toAdWeek.

The campaign plays on the popularity of the phrase “Venmo me” when millennials want their peers to pay them back, and will focus on entertainment, sports, food and drink, and college subcultures in cities including Chicago, Dallas, Nashville, and Miami, according toPYMNTS.com.

The campaign is designed to play on Venmo’s natural strengths. Venmo posted $8 billion in volume in Q2 2017, marking its 16th consecutive quarter of triple-digit annual growth.

That growth is remarkable in and of itself, but it’s interestingly mostly from referrals and organic network-enabled gains, in which the service grows because of existing users bringing new peers into the network who then begin using the offering for their own purposes, according to PYMTS. This isn’t unusual for P2P apps, which often thrive on network effect, but it’s powerful. For PayPal, placing ads for users to tell friends to “Venmo them” in relevant locations around cities could propel ongoing increases.

Blank Me could be a smart move at a time when Venmo’s dominance could be threatened.

• As P2P rises, competition is intensifying.BI Intelligence expects US mobile P2P volume to hit $336 billion in 2021, up from $19 billion in 2015. As the market heats up, and these services become more popular, new players are entering the market or ramping up their efforts in an attempt to get a piece of the pie. Venmo is reportedly the current market leader among stand-alone services, but it only holds a plurality, not a majority. And there are threats — the banks affiliated with Zelle saw $33.6 billion in combined P2P volume in the first half of 2017, and Square Cash is outpacing the service in average monthly user growth. That puts the heat on Venmo to keep its performance strong.
• Playing on natural growth could limit attrition.For users, it’s easy to switch between P2P apps, especially if their network is switching. So for Venmo, reminding users of its multiple use cases at strategic times, and emphasizing its importance and versatility, could keep the service top-of-mind, and therefore top-of-wallet for users. Launching the campaign at this opportune time could be key for the firm to stave off competition and maintain its positioning.

Peer-to-peer payments, defined as informal payments made from one person to another, have long been a prominent feature of the payments industry. That’s because individuals transfer funds to each other on a regular basis, whether it’s to make a recurring payment, reimburse a friend, or split a dinner bill.

Over the next few years, though overall P2P spend will remain constant, a shift to mobile payments across the board and increased spending power from the digital-savvy younger generation will cause the mobile P2P industry to skyrocket.

That poses a problem for firms providing these services, though. Historically, most of these players have taken on mobile P2P at a loss because it’s a low-friction way to onboard users and won’t catch on unless it’s free, or largely free, to consumers. But as it becomes more popular and starts to eat into these firms’ traditional streams of revenue, finding ways to monetize is increasingly important.

BI Intelligence, Business Insider’s premium research service, has compiled a detailed report on mobile P2P payments that:

• Forecasts the growth of the P2P market, and what portion of that will come from mobile channels, through 2021.
• Explains the factors driving that growth and details why it will come from increased usage, not increased spend per user.
• Evaluates why mobile P2P isn’t profitable for companies, and details several cases of attempts to monetize.
• Assesses which of these strategies could be most successful, and what companies need to leverage to succeed in the space.
• Provides context from other markets to explain shifting trends.

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