Payday Loans

Is Wonga a winner from Google’s new payday loan policy?

Jonathan Beeston PPC

Google announced on Wednesday that they would not accept AdWords listings for payday loan products from July 13th. Google has defined them as loans that are repayable within 60 days of the date of issue. In the US, Google is also prohibiting loans with an APR of 36% or higher.

Google will also insist that providers, lead generators and affiliates clearly state on landing pages: repayment periods, APR, fees and total costs of a loan.

Note that Google isn’t banning ads by companies associated with payday loans, such as Wonga or Quickquid. They can still use AdWords for other products, like credit cards or longer term loans.

Google also isn’t banning advertisers buying keywords like ‘payday loans’. They will just have to advertise a different, but related, product.

It’s not clear whether Google will police this reactively, or if advertisers will need to whitelist in advance.

Payday loans advertisers have already experienced restrictions on their campaigns. Audience targeting, such as customer match and retargeting through the Google Display Network, is already unavailable to them. From that point of view, perhaps this new development isn’t such a surprise.

Searchers will still be able to find payday loans firms through the Organic results. For strong brands listed in a high position, this policy change might be beneficial. Competitors and new entrants won’t be able to buy their way to the top.Wonga

Data from SimilarWeb suggests Wonga.com gets 37.5% of its desktop traffic from search, but 99.1% of that is organic. At worst this change will be neutral for Wonga, and quite possibly they’ll do well out of it.

Other publishers, like comparison sites, may also see this as an opportunity to fill the void. We’ll have to see whether Bing follows Google’s lead.

It seems certain that this will cost Google revenue. The Google keyword planner indicates the top spot for ‘payday loan’ in the UK would cost around £24 a click. Google will still show an ad for that search. It’s likely that the cost per click will be lower. The CPC for a comparable keyword like ‘short term loan’ is around £13 a click for position 1. So it will cost money, but it won’t be material.

Google has had a tricky relationship with finance listings over the years. In 2008, I wrote about ‘Merchant Search Beta‘, one of Google’s first finance comparison products. Since then they’ve tried credit card, mortgage and car insurance comparisons.Comparison

Google Compare was finally closed in March this year. Nothing has beaten vanilla AdWords, despite years of sales and engineering efforts. And that includes Google’s £38 million acquisition of BeatThatQuote in 2011. This suggests Google’s revenue from finance advertisers is in rude health, and can easily take the loss from payday loans.

The other winners from this change maybe Fintech startups. Plenty of companies are trying to disrupt the poor credit lending space, such as Lendup and Lending Club. It’s worth noting Lendup has taken investment from Google Ventures. Lending Club received money from Google itself. I’ll let the conspiracy theorists take it from here.