The full impact on the industry of outlawing advertising for payday loan firms has been exposed by new figures which show the top five companies in the sector spent more than £36m on marketing in the past 12 months alone.
Details of the spend, which represents a 26% leap on last year, have been provided by Nielsen, although the company refused to break it down into figures for each advertiser, citing commercial sensitivity.
The companies are thought to be Payday UK, Payday Express, QuickQuid, Pounds to Pocket, and Wonga, which is likely to fuel the controversy further by this week revealing its profits have exceeded £100m for the first time. The figures also explain why the Advertising Association has waded into the row by blasting local authorities for outlawing ads for payday lenders on council-owned poster sites and computers.
In terms of marketing spend for the entire financial sector, Barclays is top on £77m, followed by NatWest on £38m. The payday loan firms are next on £36.2m, with Santander (£33.8m), HSBC (£31m) and Lloyds TSB (£26m).
The figures show that in the three months to June, at the height of the Office of Fair Trading’s industry probe, payday lenders boosted their spend by 24% compared with the same period in 2012.
The clampdown of the £2bn industry during those three months prompted 20 of the biggest payday firms to leave the market, while 50 were given a 12-week deadline to prove their good behaviour or risk losing their licences to trade.
Damon Gibbons at the Centre for Responsible Credit claimed investment in marketing illustrated the firms’ hunger for growth, adding: “This is a statement of faith by the payday lending industry that they expect the market to continue to grow significantly despite action taken by the Office of Fair Trading.”
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