eBay reaffirms PayPal’s favorite child status by gifting the unit $5 billion in cash as a spinoff looms


Favorite Child

You’re never supposed to reveal which of your children are your favorite. It an unwritten but unwavering rule of parenting. And yet, that’s ostensibly what eBay’s board of directors and senior executives have been doing for months in the wake of the news that it will spinoff PayPal from its remaining marketplaces business.

The latest entry in eBay Inc.’s favorite-playing game is the news, announced by eBay CFO Bob Swan at the Goldman Sachs private Internet conference yesterday, that the company will send PayPal off with a $ 5 billion cash dowry (you know for pizza and beer with its new friends in the dorm). The Marketplaces unit will be left with what remains between the couch cushions, which today would be the balance of the $ 6.3 billion cash and cash equivalents it held at the end of its 2014 financial year.

The cash stockpile will “more likely than not” be housed offshore, according to Swan, but it will afford PayPal far more flexibility than its soon-to-be less well-capitalized Marketplaces counterpart. With PayPal expected to be the target of acquisition efforts by many of the world’s largest corporations, there is also the possibility that a standalone PayPal could buy back shares in preparation for such an outcome. Alternatively, the company could use the cash make acquisitions, invest in new product development, or, least imaginatively, issue a shareholder dividend.

It’s been no secret that PayPal is the crown jewel among the respective eBay business units, which includes both Marketplaces and Enterprise (the smallest unit, which will also spin off). The division has been the primary growth driver for the overall company for several years. PayPal more than tripled Marketplaces’ growth in 2014, producing 19 percent revenue growth for the year. Furthermore, payments is a more highly valued and strategic position to own in the next era of online and mobile commerce. Swan described the future Marketplaces unit as one that will emerge “smaller” and “more-focused” version of the eBay we know today, and one that will focus on customers looking for “great deals.”

It’s not just the division of cash that demonstrates PayPal’s favored status. Current eBay Chairman and CEO John Donahoe has been making plans to leave the eBay board, post-split. He will be handsomely compensated for stepping aside, thanks to a $ 23 million golden parachute. But Donahoe doesn’t appear eager to go too far. Sources close to the company report that he hopes to join the board of the newly-independent PayPal when all’s said and done. Donahoe has already replaced himself as the chief executive for both the surviving eBay Marketplaces business and PayPal, installing former eBay Marketplaces President Devin Wenig and American Express executive Dan Schulman into the respective roles.

As in most business scenarios, if you want to understand someone’s true motivations and priorities, when it comes to eBay and PayPal you can follow the money. The fact that the senior most executive and board chairman is voting with his feet only strengthens the argument.

PayPal’s own long-departed founders, Peter Thiel, Elon Musk, and Max Levchin, have all publicly criticized eBay’s stewardship of the online payments pioneer, while heralding the tremendous opportunity that lays ahead in the still wide open category. The questions Wall Street and Silicon Valley will be asking come spinoff time is, can a newly-independent PayPal claim its innovative ways? It’s certainly the most interesting of the three eBay businesses, a fact that the company itself has made perfectly clear.



The Rise of the Marketer: The Economist Intelligence Unit and Marketo Survey The Future


Looking To the Future

Author: Sanjay Dholakia

Over the past six weeks, I have shared with you some insights about the future of marketing from some of the smartest minds in marketing today. Now, it’s your turn to tell us your insights. What do you think the future of marketing holds?

We tapped the Economist Intelligence Unit to survey almost 500 high-level marketing executives from around the world to get a real sense of what’s on all of your minds.

The results are insightful, encouraging, and exciting. Why? Because when you step back and look at the overall big picture, it tells me that, more than ever, marketing is in charge and the future is really, really bright for marketers everywhere. We are at the center of business and if we make the right investments we are going to find ourselves setting strategy, driving revenue, and shaping the future of our own organizations. A real “Marketing First” world.

I would strongly recommend you read the report in its entirety. There is a ton of insight in here. But let me give you a few of my highlights:

  • Over 80% of all marketers say that their organizations will need to undergo dramatic changes in order to keep up with increased technical and consumer demands 68% of marketers feel they are viewed as a cost center today; however that is going to shift dramatically. In fact, in three to five years, 80% of marketers say they will be seen as driving revenue for their companies
  • While roughly a third of all marketers say they own the customer relationship and engagement today, that shifts dramatically in three to five years as nearly 75%(!) of marketers say that they will own end-to-end customer engagement
  • Marketers’ #1 investment over the next 12 months is in making a shift to digital marketing and engagement; perhaps not surprisingly, they also say that the top 2 areas of skill development in their organizations are in the areas of Marketing operations/technology and digital engagement.
  • The importance of data and technology to make these shifts can’t be understated with more than 80% of marketers saying they will use data and technology to connect with customers and engage them in a conversation to build advocacy and trust over the next three years.

When I step back and look at the data–what I see are six major trends emerging:

  1. Marketing is shifting from a cost center to a revenue generator
  2. Marketing will become the Chief Customer Advocate in an organization
  3. Marketing is moving from an era of mass marketing and advertising to and era of engagement marketing
  4. Marketing needs to invest in new digital skills and operational expertise – marketing is shifting from an art form to art & science
  5. Marketing must leverage technology to succeed in this world of individual engagement at scale
  6. Key technologies like Internet-of-Things and real-time personalized mobile technologies will shape the future of marketing

So what are we as marketers to do? To me, this says that for marketers to succeed we are going to need to make some major shifts in thinking and investment. We are going to need to invest in new skills to manage digital engagement, data, and technology. We are probably going to need to organize our teams differently. And, we will likely have whole new functions, such as Marketing Operations, emerge to make the rest of the organization more effective in this new world.

Marketers need to embrace technology at a fundamentals level and leverage it to help them scale and talk to their customers with a singular purpose in mind: forming long-term, individualized, durable relationships.

Over the next 15 weeks—I’ll spend time here sharing thoughts, suggestions, and insights around specific items from the research that will hopefully be useful to you as you navigate this transition and rethink your approach to marketing over the next 3-5 years.

After you read the survey results and report, please weigh in below if you agree with the other marketers or have different views – discussion is always great! And, as always, if you’re just visiting this series of posts, you can start at the beginning of this journey here.

I look forward to figuring out this new Marketing First world together!

The Rise of the Marketer: The Economist Intelligence Unit and Marketo Survey The Future was posted at Marketo Marketing Blog – Best Practices and Thought Leadership. | http://blog.marketo.com

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