Maybe the Venmo Ads Are Working (aka Why Lucas Works)
New Yorkers have recently seen a new face around town: Lucas, an every-day guy with a funny mustache who does any number of not-so-exciting things, like doing yoga, riding the subway, or paying rent.
These ads from Venmo, a New-York based 'startup' (quotes because it was acquired by Braintree, which was then acquired by eBay), have drawn a lot of strong opinions, mostly negative. Who the heck is Lucas? Why do I care about what he does? Why is his stare so creepy? Why is he EVERYWHERE in the subway??
In relation to Lucas, a coworker noted that it's a shame how "bad" marketing campaigns are as good at generating buzz as great ones. This particular campaign is certainly starting a lot of conversations in New York and getting Venmo's name out there, even if there is negative affect attached to it.
But let me play devil's advocate a bit: could this advertising strategy actually be a clever and successful one for Venmo?
I am an avid user of Venmo, and love its simplicity in both function and design. It's one of those apps where you learn about it and think "Well, duh, this should obviously exist". Today, in most situations now when I need to pay a friend, I can just transfer the money to them via Venmo on my cell phone. And I only say "most" situations because not all my friends have an account yet.
But outside of avid users like me, let's think about some difficulties Venmo might have in acquiring new users:
- It's not a terribly sexy product. With Uber, you can summon a shiny black car. With Facebook or Foursquare, you can show off what you're currently doing to hundreds of friends. With Yelp, you become a pseudo-expert in where the best places to eat are. With Venmo, you can somewhat-discreetly transfer money to a friend and...yea, that's it.
- It's a product whose quality is judged by how little time you spend on it. Venmo makes transferring money easy, which means the less time you spend making it work, the better. You don't see people sitting on the bus or subway avidly scrolling through their Venmo social feed.
- You're likely to hear about Venmo when you immediately need it...but it's difficult to set up via phone. I imagine that one of the most common examples of when a non-user feels a push to get the app is in a bill-splitting situation (e.g. at a restaurant). First, let's consider the case of a non-user needing to pay a user. That non-user has to take time to download the app, then create an account, then figure out how the payment system works, and then connect some form of payment, which seems like a huge hassle on a phone. In short, it's not easy. On the flip side, in a situation where a user wants to transfer money to a non-user...
- Transferring money to a non-user via email feels a bit iffy. What if the Venmo user sends the money to a wrong email account? What if the non-user never claims the money? What if your non-user friend actually just doesn't want to use Venmo? Introducing an email invite into the equation adds a whole new set of psychological obstacles to signing up.
- Using a credit card for Venmo will incur fees...but linking a bank account is harder and feels scarier. People are probably used to filling in their credit card number everywhere online now - but people hate fees, and Venmo charges fees for using credit cards. On the other hand, bank accounts are still a rare thing for apps to try to access, and potential users might understandably have reservations about supplying their bank information.
All of these challenges make virality a bit harder for Venmo. Search engine optimization (trying to rank highly on key Google search terms, a common startup user acquisition strategy) is difficult as well: few people are Googling "transferring money by cell phone", and in fact, Venmo doesn't even show up in the first page of results for that query.
How does Venmo's Lucas campaign help with acquiring new users? I can think of at least two big advantages.
First, the ads don't try to explain what Venmo is. Audience members who have never heard of Venmo are left wondering why they're seeing this random guy on the subway, and from the ads themselves, Venmo could be almost anything (marketing agency making fun of other agencies? health insurance for Lucas as he engages in all these daily activities?). Lucas's activities are funny, amusing, and/or annoying in their banality (which actually reflects well the every-day nature of the problem that Venmo is trying to solve - the need to conveniently transfer money to friends). Because the ads are so conspicuous and mysterious to non-users, they are more likely to spark conversations, which would either be great ways to learn about Venmo from a current user (i.e. an endorsement from a friend) or increase the mystery around what the heck this "Venmo" is.
Imagine if Venmo had instead made a visual ad that tried to explain what it did. This goes back to the "sexiness" problem - Venmo offers a service that is clearly useful, but is hard to make immediately appealing enough to want to download right away. Moreover, Venmo wouldn't want to put these hypothetical ads in the subway: even though they have a captive audience in the form of riders, few members of that audience would be able to download the app in the station or a subway car. Venmo would have to hope that people remember the name of the app later, when they have the ability to sign up on their computer or phone, or find another marketing channel.
This leads to the second advantage, the more clever one: the ad campaign delays a potential new user's engagement with Venmo, which is probably better for Venmo. The first engagement is now more likely to be in a less time-pressured environment (e.g. paying a restaurant bill), when a new user is more willing to go through the sign-up process. For example, a conversation might come up over lunch about "those Lucas ads", which might finally tip a non-user over the edge to check out www.venmo.com when she returns to her desk. Given the need to collect new users' card numbers and/or bank account info, I imagine that Venmo actually wants users to sign up on a computer, even though mobile use will be more common for existing users. These Lucas ads help to strengthen the memory of "this thing called Venmo" for later investigation, which makes non-users more likely to begin and complete the sign-up process with the ideal no-fee linked bank account, which potentially makes them more active users in the future.
Whether or not the ad campaign pays off is something that remains to be seen. Such an extensive marketing campaign in the New York subway system definitely does not come cheap (this article from Fast Company suggests it cost $200-350K), and it's unclear if Venmo is making money off its users yet - it only charges fees to cover its own fees charged by the credit and debit card companies.
Venmo is definitely making a long-term play: its dream would be for its users to be able to use Venmo to pay at any kind of store (real-world and online, probably), which would allow it to charge the businesses for transactions (compare this to the credit card business model). But in order to fulfill that dream, Venmo needs a lot more users to bring to the table when negotiating with those businesses. In the grand scheme of user acquisition, a quirky ad campaign featuring an actual engineer on its own team is actually not too shabby of an idea - Lucas probably just signed up a lot of users.
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