PayPal Views TV Ads As Its Next Payment Step

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 Imagine seeing a television ad, pausing the program and buying the advertised product with a remote control, smartphone or electronic tablet.

That’s what PayPal Inc. is proposing.

Jumping into what it dubs “T-commerce,” PayPal, a unit of San Jose, Calif.-based eBay Inc., has signed agreements with Comcast Corp. and TiVo Inc. to begin an interactive purchasing process, Scott Dunlap, PayPal vice president of emerging opportunities, announced recently to attendees at the TV of Tomorrow conference in San Francisco.

PayPal has monitored the potential for T-commerce closely for more than a year, Dunlap revealed in a posting to his PayPal blog.

The company was motivated in part to envision a future on the tube by the results of a survey it conducted in October that found 49% of cable-TV subscribers showed an interest in purchasing goods and services linked to the content they see on TV–either directly from their television through their remote control or through a companion device such as a smartphone or tablet.

Nearly 30% of those same TV subscribers said they would use PayPal to make those purchases, Dunlap noted on his blog.

“In fact, 89% of respondents knew about PayPal as an online payment service, with 61% of them having used it in the last 12 months,” he stated.

PayPal’s optimism about its possibilies on television was bolstered even more when the latest Nielsen research revealed consumers watch traditional television approximately 5.1 hours a day.

That compares with less than an hour a day on average that they spend surfing the Internet.

“Obviously this is a captive audience and one interested in the promise of T-commerce, and it’s something we’re ready to deliver,” Dunlap noted.

A PayPal spokesperson tells ISO&Agent Weekly that the company hasn’t established a timetable for its T-commerce project, but intends to provide a progress update this fall.

Transactions initiated from T-commerce will follow the standard PayPal transaction process with encryption and fraud prevention standards, the spokesperson added.

For now, however, Dunlap was willing to speculate on the roles Comcast and TiVo would play.

With Comcast, PayPal envisions a system that enables consumers to make purchases or donations related to the programming they are watching on TV by using the remote control or a mobile device.

In addition, PayPal plans to explore a process that would enable consumers to accept coupons directly, placinng them in their PayPal online digital wallets during television advertisements, according to Dunlap.

PayPal intends to work with TiVo to develop a system advertisers could use to convert a 30-second commercial into what Dunlap refers to as “interactive T-commerce opportunities.”

Under such a system, a consumer watching a commercial with a TiVo interactive tag indicating the ability to “buy now” using PayPal could pause the live or recorded show to complete a transaction. The consumer could then return to watching the program without missing anything, all with a few clicks of a TiVo remote, he added.

The combination of technological phenomena even suggests a larger issue, in Dulap’s view.

“The online and offline world have merged, and commerce now happens anytime and everywhere,” he said. “We believe the TV is the next natural outlet for commerce, and we’re excited to bring the innovation and security of PayPal’s payment solutions to this new frontier.”

PayPal is an obvious candidate to delve into T-commerce and make it work, Richard Oglesby, senior analyst with Boston-based Aite Group, tells ISO&Agent Weekly.

“I’m a believer [in PayPal’s TV collaborations], with one big reason being that TiVo is Internet-connected and PayPal has a big advantage in that area,” Oglesby says.

The consumer would be able to make a purchase through a TV remote control when using PayPal because PayPal would have all of that consumer’s payment data and shipping address in cloud-based storage, Oglesby says. “You’re not going to punch in your shipping address on a TV remote control,” he adds.

Advertisers should take notice of this development as well, Oglesby contends. “This creates an opportunity where TV becomes a performance-based marketing tool,” Oglesby says. “Currently, there is no way to track sales from a TV ad.”

The card networks will view PayPal’s latest endeavor as a mixed blessing, he suggests.

“The card brands will benefit because they would be looking for more volume for them run through PayPal,” Oglesby says. “But the developers on the mobile-wallet side might say, ‘here’s PayPal getting into T-Commerce before us, and thyis was something we wanted to get into,’” he adds.

ISOs and agents do not appear to have a role in the scheme, oberservers say.

George Peabody, director of emerging technologies with Mercator Advisory Group, tells ISO&Agent Weekly he expects to see consumers make payments while watching TV more often in the future as “TV becomes more intelligent.”

“You can already pay for digital games on the Internet, right in the middle of the game, so why not be able to do the same on TV?” Peabody asks.

Not many payments companies have ventured into T-commerce, but late last year, London-based Mobile Money Network launched SimplyTap software, which enables consumers to purchase products from participating retailers by typing a product code into their smartphones. In doing so and from any location when viewing a retailer’s advertisement, the process had potential to catch on because consumers could type in codes while watching TV ads displaying those codes.

 

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