Prepared by Tug ltd.
Author: Dave Tinneny, Affiliate Manager

The pay day loan industry in the UK has exploded in recent years and was estimated to be worth approximately £2.2 billion in 2011/2012. The largest lender, Wonga, generated pre-tax profits of £62.4 million in 2011. They also have 264,000 people who ‘like’ them on Facebook, a staggering figure which highlights how mainstream this type of lending has become. While much has been written about the business model in general, the methods of promotion are quite unique and worth exploring, especially for anyone interested in performance marketing.
It’s an incredibly competitive space. The profit margins are colossal and there are a large number of companies trying to secure their position in the market. PPC is generally the starting point for most marketing campaigns, but with some payday related keywords costing upwards of £20 per click, it’s quite prohibitive to stockpile enough cash reserves for a successful campaign. Taking into account typical PPC conversion rates should give you a rough idea of the poor ROI from this activity.

Compare Google’s natural search results for these same terms over the period of a week and likely every website listed on the front page will have changed. While Google gets better at identifying ‘black hat’ techniques, there’s still no substitute for plugging into a dubious link network and ranking highly for a few days before getting penalised. A few days alone could be highly profitable and once penalised it’s not too difficult to start again using a different site. It’s very difficult to achieve any meaningful positions using white hat SEO and in reality, that’s not likely to change any time soon.

Lead generation is the backbone of this industry and leads are used a number of ways. It’s testament to how valuable customers are in this space that some ingenious systems have been developed to take advantage of the high CPL payouts.
Ping trees allow a group of lenders (usually 30 or so) to bid on a lead in real time as it’s generated on an affiliate site. As I’ve said many times in the past, the best performance marketing ideas are usually so devastatingly simple that it seems obvious once explained.
A large number of affiliates embed an identical inquiry form (usually within an iframe) on their sites. The style of this form can be customised so that it fits with the aesthetic and branding of the affiliate site. This seamless integration allows the enquiry form to become just another part of the site and helps the affiliate to build trust in the customer.
The customer completes one of these inquiry forms, entering all of the relevant details. This information, along with all of the other leads generated on all of the other affiliate sites, goes to a single central hub.
Here, in real time, up to 30 lenders can bid for the lead. The lenders set the parameters of what they are looking for in a potential customer eg. Over 21, paid once per month, no more than two existing loans etc.
The lenders can also set the level for how much they are willing to pay per lead and cap their spending. Spend restrictions can be based on the cost per lead, or the amount of leads generated in one day. It can even be restricted based on the total loan amount paid out that day.

This is all automated and happens in real time without the customer knowing anything about it. The highest bidders get first preference. Any leads they decline are passed down to the next highest bidder and so on. Bids can range from £50 to £5 depending on the lender and the information they require.
Once a lender has accepted the lead, the customer is redirected to the lenders website to continue the application, none the wiser that their information has been offered to several companies. While this initially sounds incredibly suspect, it’s actually in the customer’s best interests also. The customer will most likely be picked up by a lender who is actively looking for people in a similar demographic and is able to finance them.
The affiliate who generated the initial lead gets commission and the ping tree takes a cut for facilitating the whole process (usually an 80/20 split in favour of the affiliate). The lender gets a highly qualified lead without the massive costs associated with a large marketing campaign and generating the initial enquiry, as it’s up to the affiliate to drive traffic towards the inquiry page.

Most lenders work with as many ping trees as possible to maximise their chances of securing new customers. Affiliates prefer working with ping trees as there is a much better chance of earning commission when 30 lenders are competing for the same lead, compared to one lender who might decline it for various reasons.
One of the other interesting sides to ping trees is that some lenders use them for declined applications. The lender could take the leads that they were unable to service and send those back into the ping tree where they will be picked up by a lender with lower barriers to financing.

The system isn’t perfect, as there will always be a drop off at the point where the customer is redirected to the lenders site. However, compared to other traditional marketing channels, this is one space where performance based lead gen dominates.

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Tug is an award-winning, search marketing agency, and the Lighthouse is our new knowledge sharing hub. The purpose of The Lighthouse is to guide and enlighten our fellow Search, PPC, Social Media, Display and Affiliate marketing professionals. As the online marketing field evolves, we aim not only to keep up, but stay ahead in our thinking, and share knowledge with one another. Our collection of white papers provides up-to-date insights in an easy-to-digest format. Founded in 2006, Tug is an original silicon roundabout company that breaks the mould by taking a left-brain-right-brain approach digital marketing. Our bespoke programme builds brand awareness, new media opportunities, strong ROI and business growth for clients like Aon, Wonderbra and Dairy Crest. Tug’s combination of robust planning and execution with creativity has earned us seats on the IAB and DMA search councils.

For more information please contact Hannah Melbourn ( or 0207 033 6933)

Published on: 12:33PM on 11th July 2013