Google dealt a blow to Payday lenders and domain investors who have invested in payday loan type domains. A few years back I knew some people getting big parking clicks with Payday loan domain names. From a parking or developed site monetized by AdWords, it is a negative, but since the industry is still in business it could mean owning the very best names in the niche have gone up in value.
The Washington Post published an article on the industry crackdown and how lenders were getting around the backlash.
According to Paydayloaninfo.org:
Payday lending is not specifically authorized and is defacto prohibited by several state small loan rate caps. These states includeArizona, Connecticut, Maryland, Massachusetts, North Carolina, Pennsylvania, Vermont, West Virginia, and the District of Columbia.
In a post on the Google Public Policy blog, they informed the world they will ban payday loans. Loans is certainly a very popular keyword category for Google so this decision will hit their bottom line.
SearchEngineJournal.com took a look in 2012 at Google profits from Payday/Cash Advance Loans,
using Google’s own conservative Traffic Estimator data, Google could be earning $34 million a year from these keywords. Veteran PPC marketers know that Traffic Estimator isn’t totally accurate. SEMRush shows an average CPC of $15.97 for “payday loans,” $12.04 for “cash advance,” and $9.11 for “fast cash,” meaning Google’s earnings are likely significantly higher. Can Google live without this revenue? Certainly, but it’s not going to give it up unless it is forced to do so.
From their blogpost:
In that vein, today we’re sharing an update that will go into effect on July 13, 2016: we’re banning ads for payday loans and some related products from our ads systems. We will no longer allow ads for loans where repayment is due within 60 days of the date of issue. In the U.S., we are also banning ads for loans with an APR of 36% or higher. When reviewing our policies, research has shown that these loans can result in unaffordable payment and high default rates for users so we will be updating our policies globally to reflect that. This change is designed to protect our users from deceptive or harmful financial products and will not affect companies offering loans such as Mortgages, Car Loans, Student Loans, Commercial loans, Revolving Lines of Credit (e.g. Credit Cards). According to Wade Henderson, president and CEO of The Leadership Conference on Civil and Human Rights, “This new policy addresses many of the longstanding concerns shared by the entire civil rights community about predatory payday lending. These companies have long used slick advertising and aggressive marketing to trap consumers into outrageously high interest loans – often those least able to afford it.”
WordStream placed Loans as number 2 in most expensive keywords on Google.
Top 10 Most Expensive Google Keywords
The Top 10 Most Expensive Keywords are:
There have been some five figure sales related to payday loans and I have included the top domain sales. Data courtesy of Namebio. You can see by the dates that activity was stronger years ago, PPC rates were higher years ago as well.
Payday.loans and Payday.loan are both reserved by their respective registries.
Now that’s an article… Well done.
I like the logic you described about the best names rising in value. Parked names will take it up the butt, sales of the best names could go up. Payday.Loans looks beautiful.
Jon Schultz says
In my opinion usury laws are based on a misunderstanding of the situation and are counterproductive in terms of their effect on society. You can’t judge a loan by its APR because the significance of the APR is proportional to the term of the loan (i.e. the APR of a 30-year home loan is 780 times more significant than the APR of a 2-week payday loan). While many people do take out payday loans carelessly and end up with a negative result, others benefit significantly (i.e. by being able to get their vehicle fixed so they can get to work, or by avoiding the disaster of eviction). There have been many surveys taken and the bottom line is that the overwhelming majority of people who have taken out a payday loan want them to remain available. The late Senator and 1972 Democratic presidential candidate George McGovern wrote an op-ed piece a few years before he died, entitled “Freedom Means Responsibility,” in which he argued against APR prohibitions.
Consumer protection should be about prohibiting dishonesty in business, not about telling merchants and service providers how much they can charge for their products or services. The regulation of such is best left to the free market.
Google is free to express its political opinions in choosing which ads they run, and people are free to use a better search engine.
Payday loans are a rip off plain and simple. No usury laws should be in place. #hysterical
Jon Schultz says
They’re not a rip off unless advertised dishonestly, which may be true in some cases but certainly not all. The problem, however, is that people who are desperate for cash generally don’t shop around as much as they should, and many end up taking out a loan at $30/hundred (780% APR) when they could get one for about half that price (which is still a dangerous thing to do but is sometimes a person’s best option). But no maker of short-term loans (the only type of loan some people can quality for) can make a profit charging less than 36% APR. The nonprofit payday loan which was offered as a public service by Goodwill Industries and Prospera Credit Union had a 257% APR. They were at GoodMoneyStore.com, which domain is now being sold by HugeDomains. I imagine they stopped the service due to criticism of the high APR from people like Hillary Clinton and Bernie Sanders, and now their customers are paying a lot more.
Most of my payday loan domains, in the inquiries section we get so many people asking for loans where they should be making domain offers, it is a big industry, and there are many bad operators, but there are also people that provide a service to an obvious willing clientele
If you have a good loan related domains, don’t think it will hurt domainers but only help. Ad’s are banned, therefore good keyword loan/loans domains become more in demand.
This is a great write up. However, I disagree that it means that the good domains in this category will go up in value. Most of the people making many millions per year do this through large scale spending on Google Adwords, not by owning a good domain. If the large and profitable channel of Adwords goes away, that should decrease the value because there isn’t a way to get quality traffic at scale. SEO traffic might still exist in this category but most of the juice comes from paid ads.
Oh my goodness there goes mother Google again. Seriously if there are problems they belong in the realm of gov consumer regulation not cutting the horse off from the feed.
We have credit card companies borrowing at 2% and lending at 30% or car loan companies or banks all doing the same. Why do they walk away scot free if the interest charges are such a problem.
The real problem is gov regulations that were designed for long term loans and insisted on including any processing charges as part of the interest rate. Now with short term products like PD loans these regulations don’t fit that scenario. Standardize a paperwork charge and remove it from the calculation and a whole different picture emerges.
Great article Mike and raises an interesting point. Google is free to define their own policies but with their market position they are effectively exercising regulatory power. That said, I agreement with them in this case, this sort of predatory lending is despicable. The patchwork of state regulations creates confusion and an opportunity for these vultures to exploit vulnerable individuals. Excellent segment on NPR recently highlighting the destructive impact of these loans on families and individuals with marginal incomes. Kudos to Google on this one, perhaps subprime lending practices on car loans is next?
Jon Schultz says
The people who decry all payday lending as “predatory” don’t know what they’re talking about. Yes, there are some bad actors who don’t advertise or administer the loans honestly, but the basic offering of a short-term loan to people who can’t qualify for any other type of loan, albeit at a relatively high APR which the lender needs to charge to make a profit, is valid.
Every loan is a gamble and people can be foolish in taking out a loan, given their particular circumstances, or have bad luck in their ability to pay it back. That is not the lender’s fault. Short-term loans are particularly dangerous, nevertheless many people do benefit from them, in some cases avoiding eviction or losing their job. Any “progressive” activist, journalist or politician looking to build his career by finding someone to criticize can selectively pick out people who didn’t fare well, for one reason or another, but that doesn’t mean that the lender is a “vulture” or did anything which should be illegal.
With the regulations which were put in place after the housing crisis of a few years ago, right now you can’t even borrow against a house which you own free and clear if you’re an investor, as opposed to an employee, and can’t demonstrate what is considered to be an acceptable debt-to-income ratio. This is nanny government run by and for people who want to control everything.
If lenders should be responsible for ensuring that people can pay back their loans, then why shouldn’t every merchant or service provider be responsible for ensuring that their customers can afford what they are purchasing? Do you want to live in a society where you can’t buy anything without the merchant being required to investigate your finances and only approve the sale if you meet certain criteria? The way things are going, that is where we are headed.
You must be a payday lender nobody could be this big of an apologist for a bunch of scumbags.