Advertising Account Planning MC 4317-005Texas State University

Secondary Research Project for VenmoSeptember 19, 2016

Group Members:Allyson Massoud

Alex CannonSavannah Howard

Michael ClarkeAlexis Nichole

Brigeda HernandezBrianna Hurliman

“Most Reliable”(google.com)

HistoryVenmo was started by Andrew Kortina and Iqram Magdon-Ismail. The two met as freshmen attending the University of Pennsylvania. Being roommates, they started something which is now slowly growing amongst many millennials for many uses. Iqram forgot his wallet while going on a trip to visit Andrew, and it was this that sparked the idea of Venmo. Andrew was having to pay for both of them during their trip, and this got them thinking, “What if we could transfer money to each other instantly from our phones?” According to The Hustle website, Andrew and Iqram spent the following years working for different companies. For example, they worked for iminlikewithyou.com, which soon after became OMGPOP, the gaming company behind Draw Something. They also worked for Ticketleap and Bit.ly. In early 2009, they started brainstorming ideas and created software that could turn a laptop into a cash register. Their first idea came when a friend wanted help with opening her own yogurt shop. Andrew and Iqram started the process of getting her set up and realized how terrible the traditional “point of sales software was.” All that was required was a less-than-$50 USB magtek swiper. Over their course of business adventures and practice with technology and sales, they created a social and fun app that enabled people to transfer money instantly. “Venmo enables anyone with a mobile device to send and receive payments via text message, creating a dialogue between buyers and sellers. (“The Story of How Venmo was Started”, 2016)”

Citations:

"Venmo Home." RSS. N.p., n.d. Web. 18 Sept. 2016.

Https://www.facebook.com/kendall.baker.7. "The Story of How Venmo Was Started." The Hustle. Kendall Baker, 01 Mar. 2016. Web. 18 Sept. 2016.

ProductsVenmo offers a mobile app for its users to exchange money amongst each other by linking the app with the user’s bank account and mobile contacts which recognizes who else has the app, similar to snapchat. This makes it very simple for people to exchange funds when cash is not readily available on hand at the time. The app is mostly used by millennials to split tabs amongst friends or to share roommate expenses. No more IOUs, free to use.

(Venmo, 2016)

Viewing your balance! Memories, Fun, Friends!

PlaceVenmo is strictly an online entity. It’s most popular medium I through the mobile application available on any smart phone, but venom can also be accessed using

desktops/laptops as well. All that is needed to access the website is to have an account with Venmo.

PromotionVenmo is launching its first ever ad campaign. 15-30 second video ads will begin to run nationwide on cable networks such as Comedy Central and MTV, and will also appear on online streaming sites like Hulu and YouTube. Their ad campaign will also include poster ads, billboard ads, drink coasters and pizza boxes. This is a giant step for Venmo because its promotion has largely been word-of-mouth to acquire new users since its launch in 2009. This move was a response to a new competing mobile app called Zelle, which is set to launch in 2017. Venmo’s ads will feature young people at social venues using to app and will also feature their new slogan- “Pony up with Venmo.” The new ad campaign is set to run for 2 months.

Price“In comparison, Venmo's parent company, PayPal charges a 2.9% fee for all debit and credit card transactions. While Venmo presently reports zero revenue, its current operations help extend the reach of PayPal, which generated $9.24 billion in revenue in 2015” (investopedia.com). Because it is free to use, Venmo is actually losing money because

it is eating the cost of staff and systems while they build their network. However, this year will be the transition to revenues, if not profit. Venmo is now allowing merchants to take payments. Paypal owns Venmo and probably unsurprisingly, they are going to follow the exact same pricing model, charging merchants 3%. However, under these payments, if you use a credit card to fund your Venmo, you won’t get charged, only the seller. Venmo is starting to work with a number of businesses that will allow customers to pay using Venmo. Venmo will then charge the businesses to do this thus creating revenue (fortune.com).

Citations: Reuters. "This Payment App Urges Its Young Users to ‘Pony Up’ in New Ad

Campaign." Fortune This Payment App Urges Its Young Users to Pony Up in New Ad Campaign Comments. Reuters, 11 Sept. 2016. Web. 19 Sept. 2016.

Seth, Shobhit. "A Look at Venmo's Business Model and Competition."Investopedia. N.p., 15 Mar. 2016. Web. 19 Sept. 2016.

The Consumer of the BrandApps such as Venmo are targeted at a new generation of bankers. According to an article from Connecticut Banking, Venmo appeals to younger generations because of the social networking aspect it provides. Consumers view it as a more convenient and reliable way to repay others. It allows the users to transfer money between their personal bank accounts, regardless of the bank. This is something that most mobile banking apps can’t do. Mobile money transfer apps have become a threat to traditional banks, since they can reach a larger network of people.

When it comes to banking, there is a big difference in what certain generations value. Generation Y (born in the 1980s and 1990s) and millennials (born between the 1990s and early 2000s) value convenience and speed over relationships, while the older generations may value the personal touch that a more traditional banking experience gives.

According to Paypal’s research, millennials (roughly between ages 18-34) are twice as likely to shop online than the general population. Fortune.com says Venmo was the third most popular app downloaded last year.

What does the millennial consumer look like? According to marketingcharts.com, the median income for younger millennials is $25k, while it’s almost double that ($48k) for older millenials. Only 21% of millennials are married, while 42% of baby boomers were married at the same age. Almost 1 in 4 millennials have a Bachelor’s degree or higher, making them the most educated generation. millennials are the most ethnically and racially diverse generation, with 19% being Hispanic, 14% African-American, and 5% Asian.

Millennials are much more likely to be found in urban environments than in suburban areas, breaking away from the “white picket fence” ideology. The markets with the highest concentration of millennials are primarily in the western side of the country. Fun fact:

Austin has one of the highest concentrations of millennials, making it a good market for Venmo!

The Venmo consumer shares and spends money with friends. They share cabs, buy each other drinks, cover tabs when someone's short, and go out to dinner in large groups. According to Business Insider, this is what makes the app so appealing. It understands the spending habits of young people, and can make divvying up the tab far less awkward. If someone doesn’t bring the cash to pay up front, which is common as millennials seldom carry large amounts of cash, this person can still pay their friend back right away. And instead of bothering someone to pay you back, which can be awkward, Venmo makes it easy to send a friendly reminder without being too abrasive.

According to CNN Money, older millennials such as young parents are actually looking to save more money than previous generations. Since millennials have acquired so much student debt, nearly half of parents in their early thirties say they want to pay for their children’s college. That’s up from 16% in 2007. Hence the popularity of the sharing economy and splitting the tab.

Millennials are a thrifty generation. According to a report from CNBC, they spend about a quarter less than Gen Xers and Baby Boomers, even though they make more frequent purchases and go out more often. Most of their money goes towards retail and dining, and their knowledge of the web makes it a lot easier to find deals and discounts. Their income is actually lower than what Gen Xers were making at the same age. There is one thing millennials outspend older generations on: coffee, which is a reflection of their “on-the-go” culture. Venmo is perfect from someone running from place to place.

It’s fun, easy, and has an impact amongst millennials

(google.com)

Citations:

Dallett, Lydia. "Here's Why Mobile Payments App Venmo Is Crushing The Competition Among College-Age Users." Business Insider. Business Insider, Inc, 23 Jan. 2014. Web. 18 Sept. 2016.

February 24, 2014 - by MarketingCharts Staff. "Demographic Stats About US Millennials." MarketingCharts. Watershed Publishing, 24 Feb. 2014. Web. 18 Sept. 2016.

Lobosco, Katie. "Millennials Are Saving for College for Their Own Kids."CNNMoney. Cable News Network, 24 Sept. 2015. Web. 18 Sept. 2016.

MATTHEW, GALGANI. "PayPal Finding Its Mobile Mojo With Millennials Via Venmo App." Investors Business Daily19 Feb. 2016: 1. Regional Business News. Web. 10 Sept. 2016.

Rao, Leena. "Paypal Is Okay If Millennials Don't Know It Owns Venmo." Fortune.Com (2016): 1. Business Source Complete. Web. 10 Sept. 2016

Rovi, Nicole, and Ryan Whalen. "Technology Companies Are Encroaching Upon Mobile Banking." Connecticut Banking (2016): 10-11. Business Source Complete. Web. 10 Sept. 2016.

Weiss, Josh. "Millennials Outspend Older People on This One Item." CNBC. CNBC LLC, 16 May 2016. Web. 18 Sept. 2016.

The CategoryDigital wallets, also referred to as mobile payment, are a sub-system of electronic money, which allows an individual to make electronic commerce transactions using a smartphone. Bitcoin, the first decentralized digital currency, was introduced as an idea in 2008. Bitcoin’s worldwide system was released in January of 2009 and was based on peer-to-peer transactions that are directly between its users. Bitcoin was an early digital wallet that had no transaction fees and was accepted by merchants, which allowed users to buy physical goods, not just online. The same year, Venmo launched their text message-based mobile payment system, which was later upgraded into a social app. Google Wallet was released in 2011, followed by the launch of Apple Pay in 2014.

Although the adoption rate of mobile payment apps has been slow due to security concerns from users and retailers being unequipped with the right technology, the market is expected to continually grow. By 2017, mobile payment apps are expected to receive 50%

of revenue of all digital commerce in the United States. According to Forbes, mobile commerce is expected to grow 42% between 2013 and 2016, while electronic commerce is only predicted to grow 13%. Millennials became the early adopters of mobile payment apps because they have grown up with mobile technology. According to AdWeek, 55% of mobile payment users were within the age of 18 to 34 in 2014. The industry was worth $3.5 billion in 2013 and is predicted to be worth $27.5 billion by 2016. Worldwide, the industry revenue for mobile payment in 2015 was $450 billion and is expected to reach $1 trillion by 2019.

The traditional competitors of Venmo include Android Pay, Apple Pay, and Popmoney. Snapcash, Square Cash, and Facebook Messenger are among the non-traditional competitors in the electronic payment landscape. The largest competitors, Android Pay and Apple Pay, face limitations, as they are only available on their corresponding smartphones. While comparable to Venmo, Popmoney charges the user money to make transactions and only works with a small number of banks. Snapcash, a non-traditional competitor, allows the user to instantly make P2P transactions through the Snapchat text feature. Square Cash promotes only debit card money transactions through the app or email. Facebook Messenger launched its own money transfer service allowing money transfer with debit cards.

The 4 P’s for 3 Competitors:Android Pay is a mobile payment app created by Google that stores credit card and debit card information. The app allows for fast and easy payment in stores or in an app. The app is only available on android smartphones, but is accepted by numerous companies in stores or in a specific brand’s mobile app. Android Pay is not worldwide yet. The U.K. was the first country outside of the United States to adopt this payment system, and was shortly followed by other countries. Google has released one commercial to promote Android Pay with the slogan “Pay Your Way.” Google’s app is free and does not charge transaction fees, which is identical to Apple Pay.

Similar to Android Pay, Apple Pay is a mobile payment system created by Apple that creates an easier way to pay in stores, in apps, or on the web. Apple Pay stores the credit and debit card information but never shares the information when making a transaction for a more secure way to pay. Apple Pay is only available on iOS devices and is available in ten countries including the United States, with more to be added in the future. Brands that support the Apple Pay feature have been advertising their support in their own ads. Digital advertising of the app resulted in a 26% increase in overall transactions according to USA Technologies. Apple released an ad highlighting the app in the “If it’s not an iPhone” campaign. Apple Pay is free to download and does not charge transaction fees for the merchants or users.

Popmoney is a peer-to-peer payment service that was created by CashEdge and is now owned by Fiserv. Unlike Apple Pay or Android Pay, Popmoney charges transaction fees and is not instantaneous as transactions can take one to three days. Money transactions are taken directly from the sender’s bank account and sent to the receiver’s bank account. The

service provided by Popmoney is only available in the United States and can be downloaded on any smartphone. Popmoney has run TV ads as well as running an ad campaign during the holidays, where the company donated to a nonprofit organization every time money was sent using the app according to Fiserv. Popmoney is free to download but each transaction costs $0.95, unlike the competition Apple and Google, which have no transaction fees.

Citations: Blair, Ian. "Mobile Commerce Trends For The Second Half Of 2016." Forbes. Forbes

Magazine, 27 May 2016. Web. 18 Sept. 2016.

Rampton, John. "The Evolution of the Mobile payment." TechCrunch. N.p., 17 June 2016. Web. 18 Sept. 2016

Campbell, Jason. "Millennials Abandon Cash for Mobile Payment Apps." AdWeek. AdWeek, 18 Aug. 2014. Web. 18 Sept. 2016.

Johnson, Lauren. "Here's Everything You Need to Know About Mobile Payments." AdWeek. AdWeek, 5 Mar. 2015. Web. 18 Sept. 2016.

Seth, Shobhit. "A Look at Venmo's Business Model and Competition." Investopedia. N.p., 15 Mar. 2016. Web. 18 Sept. 2016.

Boden, Rian. "Apple Pay Advertising Increases Contactless Payments at Self-service Machines • NFC World." NFC World. N.p., 16 June 2016. Web. 18 Sept. 2016.

Roberts, Tom. "Popmoney Sparks Donations This Holiday Season." Blog. Fiserv, 3 Dec. 2014. Web. 18 Sept. 2016.

Competitive Creative AnalysisPopmoney: Ad #1https://www.youtube.com/watch?v=kYKBYSGiUYQ

The ad primarily targets parents and college-aged people. The goal is to convince the audience their app is an easy way to repay someone. It tries to simplify the process. The strategy is to communicate that their brand has the ability to simplify a process, that many people find tedious, through an app. The primary type of persuasive strategy used is 'demonstration.' The whole ad is centered around demonstrating the different times you would use the app.

Ad #2https://www.youtube.com/watch?v=97JdRYi6HRo

This ad targets consumers that think dealing with cash and going to ATM is a hassle. Popmoney wants to convince consumers that handling money will be easier when they use their app. The ad attempts to communicate that with this app, dealing with money transfers and tracking bank account(s) will be faster and easier. The types of persuasive strategy used are ‘testimonial’ and ‘slice-of-life’. In the ad, a woman is telling two gentlemen about all of the ways this app can help them in their day-to-day routine and simplify some of their money issues. The ad portrays these men as consumers who have trouble keeping up with debts and expenses, which most consumers can relate to.

Android Pay: Ad #1https://www.youtube.com/watch?v=OueObu2aA_M

This ad is talking to technologically savvy college-aged kids. The goal of the ad is to show what all the app can do and how many different ways you can use the app. It tries to make the process look seamless as well. The strategy is to communicate that this is the future of paying. The ad shows many different people in many different stores using different cards to pay for things, showing that everyone is using it for everything. The two main types of strategies used are 'slice-of-life' and 'demonstration'. The ad conveys its message by demonstrating in real word scenarios.

Ad #2https://www.youtube.com/watch?v=Idy9Y7DwRmo

This ad is talking to busy consumers who are always on the go; the consumers that live a fast-paced life. The goal of this ad is to show consumers how quickly they can use this app and save a lot of time. The ad also conveys how easily this app is integrated into consumers’ purchasing habits. The communication strategy of this ad is to show that anyone from any avenue of life can use this app. This app is for everyone, no matter what they spend their money on. The types of persuasive strategy used in the advertisement are ‘USP’ and ‘demonstration’. This advertisement shows what the app is best at: speed. The main character is in a rush, and the ad demonstrates how to use the app and how fast it can be used as he makes his purchases.

Apple Pay:Ad #1https://www.youtube.com/watch?v=C9w4mG0TdUU

This ad is talking to musicians and friends. The goal of the ad is to build on the Apple Pay brand with an inspiring commercial. The ad is used to communicate to music lovers and groups of friends watching, not necessarily trying to grow the market but to solidify the brand. The ad is unique in that it doesn't really show too much of what it's advertising except for a bit at the end. The creative strategy used here is 'slice-of-life' and it tries to stir up emotions as it shows the friends and the music.

Ad #2http://blogs-images.forbes.com/roberthof/files/2014/10/applepay.png

This ad is trying to appeal to consumers who think carrying multiple cards and cash with them is a hassle; also consumers that are forgetful. The goal of this ad is to show consumers the easy future of mobile banking: no hassle with wallets, cash, or multiple credit/debit cards. The communications strategy for this ad is to convey that mobile banking does not have to be stressful; it can be fast and easy. The persuasive creative strategy used in this ad is ‘symbolize the benefit’. This ad is straightforward and directly states this app’s benefits and how it can help consumers.

Competitive Creative Analysis SummaryThe ads that we chose to analyze came from different companies but they all have the same goal in mind: to get consumers to use their product. In this case, the product is their money managing app. All of these companies used similar strategies even though they are in competition with each other. This is a result of the fact that they have the same target consumers: money spenders. Popmoney’s advertising consisted of demonstrations and relatable testimonials. They wanted to show people that this was an easier way to bank by using relatable examples that the average person has experienced. Android Pay targeted spenders that are always on the go and want results fast, like college students, businessmen, and tech savvy individuals. Apple Pay portrayed their app as the perfect solution for consumers who make a lot of purchases daily and do not have the patience for multiple credit cards and/or cash. The repeating factors that are emphasized in all of these ads is how easy they are to use and how these apps make money transfers and payments on the go much faster.

SWOT AnalysisStrengths

Allows customers to pay from their phone, rather than cash and cards.

Free to use

One of the newest forms of technology used for exchanging money in the U.S.

Peer-to-peer technologies that make life easier for quick payments to trusted friends and businesses.

Largely recognized by millennials

With next-day transfers, it’s faster to get cash out compared to other competitors.

Weaknesses

Only in the United States

Security remains an issue with users who are skeptical of paying by phone.

Payments can be made to those who don’t have Venmo, but in order to accept money, they must sign up.

Venmo’s reputation has been an issue with business professionals since majority of users have it for miscellaneous items.

Users should not transfer money while connected it a public Wi-Fi network. –Hackers can easily obtain your bank information.

Requires internet connection.

Opportunities

Venmo is able to reach a larger audience since the app can be used with IOS and Androids unlike several competitors.

Because Venmo is used with a social network of people, it allows users to see what their friends are doing.

Banks have been slow to add P2P payments, allowing Venmo grow in popularity with millennials and young professionals.

Transaction fees allow Venmo to generate a revenue, unlike most platforms using advertisements to make money.

Small market and network untapped to the majority of people.

Threats

Issues of security have come into light with the Federal Trade Commission.

Competitors that have been around longer, have the bigger audience.

When using the app, features allow you to send money to people near by, but this can also result in sending cash to the wrong person.

This app allows users to remained signed in at all times, giving hackers and strangers access to your account information.

Traditional cash, checks, and banks still pose a threat.