The money lending industry has seen major changes in the post-Great Recession years with the rise of online lending sites that enable borrowers to avoid traditional banks.
In the first of a two-part series on online lenders, AdGooroo has examined paid search advertising for personal loans, a staple of the online lending industry, which are taken out by consumers to pay off credit cards, consolidate debt and make home improvements, among other purposes.
Specifically, AdGooroo examined U.S. Google desktop text ad activity on 106 personal loan-related keywords, including ‘personal loan’, ‘unsecured personal loan’ and ‘personal loans online’, and found that spending on the keyword group has more than doubled from $14.3 million in 2014 to $28.7 million 2016. At the same time, the number of advertisers sponsoring the keyword group decreased by 44% during this period, dropping from a total of 2,789 in 2014 to 1,551 in 2016.
One likely explanation for the decrease in advertisers on the personal loan keyword group is the fact that Google stopped showing text ads on the right rail of its results pages in February 2016, which significantly cut down the number of ads and advertisers appearing on the page. Within online lending, as well as most industries, that scenario has likely meant that small and medium players have been squeezed out, since they may not have the resources to compete with larger companies for limited ad space on the page.
However, the number of competitors on the personal loan keyword group also decreased by 28% from 2014 to 2015, while right rail text ads were still appearing, suggesting as well that the relatively young online loan industry may be narrowing as less successful players drop out.
As for the increase in advertising spend during this time, the number of consumer clicks on the keyword group jumped by 55%, from around 2.3 million in 2014 to 3.5 million in 2016, while the average cost per click increased 32%, from $6.27 in 2014 to $8.30 in 2016.
Top Advertisers for Personal Loans
To assess current leadership in paid search advertising for personal loans, we shifted our focus to a more recent time period, January 1 through February 15, 2017.
Start-up and Super Bowl advertiser SoFi (Social Finance, Inc.), led the field during the first month and a half of the year, garnering 17.7% of all clicks on the personal loans keyword group, followed by the nearly two decade-old LendingTree (14.8% click share), which allows consumers to compare and apply for loans from various lenders, and the similar Top10PersonalLoans.com (13% click share). From the traditional financial services sector, Discover Financial Services’ Discover.com produced an 11.7% click share while ConsumersAdvocate.org, another compare-and-apply site, rounded out the top five with a 9.2% click share.
In addition to SoFi, three other online lenders figured in the ranking. Launched in October 2016, Goldman Sachs’ Marcus.com gained a 4.75% click share on the personal loan keyword group, while Upstart.com and online lending pioneer Lending Club, experienced a 3.1% and 2.9% click share, respectively, during the period.
Note: The results of this study are limited to U.S. Google desktop text ad activity on the 106 personal loan keywords mentioned. Advertisers may be sponsoring additional keywords that, if measured, would alter the findings of this report.