I noticed prominently displayed Microplace ads on Technorati.com today. Not sure if it is really keyword-targeted or rather context targeted. When I did searches on Technorati on Globefunder or Kiva I was shown Microplace ads.
Technorati is an interesting choice for the campaign (if it runs only there – I did not check). Technorati is mainly used by bloggers and journalists. The ads would therefore target not the individual investor but the multiplier who might write about Microplace. I noted that the ad display is NOT using geotargeting meaning it is not only shown to US residents but to viewer worldwide (only US residents can use Microplace at the moment).
(Sample screenshot after search for globefunder)
(Another sample ad, original is larger and flash animated)
After MyC4.com was featured on Danish national TV in a 15 minute feature many new lenders signed up. Within 3 days lender count rose from about 500 to currently 964. At MyC4 lenders (called investors) loan money to African entrepreneurs. The bidding frency of new lenders did lower closing interest rate dramatically. Loans now closed at 2 to 3 percent lender interest rate (previously usually 10 to 12 percent). MyC4 will now have to increase the number of listings, otherwise they might be temporably be sold out like happened to Kiva. Yesterday the first loan listings from Ivory Coast went online.
On most peer to peer lending services (Prosper, Lendingclub, Smava, Boober) the identity of the borrower is hidden to the lender. Only the service itself knows the identity of the borrower. Therefore the lender has no means to check if information given is accurate and has to trust the platform.
The service has to
ensure that it takes adequate measures to verify the identity the borrower has stated at registration is correct
instill trust to the lender that the fraud risk of borrowers impersonating under a false identity is minimal, non-existant or while existant not covered by the lender.
Prosper reserves the right to buy back loans at any time. If Prosper buys back a loan, the outstanding principal balance will be returned to lenders and the loan will be marked as "repurchased".
Prosper typically repurchases loans in accordance with Prosper's 100% Identity Theft Guarantee, under which Prosper has agreed to repurchase loans from lenders if the loan is found to involve identity theft of the named borrower's identity.
Prosper is committed to providing a safe and secure marketplace, and works with law enforcement authorities to prosecute to the fullest extent perpetrators of identity theft.
Rateladder had one of his loans repurchased today. But how often does this occur?
Looking at the Wiseclerk Prosper loan stats by status, the column Repurchased shows a value of 400000 US$. Out of the total loan value of 96 million US$ that is about 0.4%. Not all of the repurchased loans are due to identity fraud.
Prosper checks identity by several measures like checking documentaion supplied by the borrower, calling him, verifying bank adresses, sending postcards to his adress… There have been several discussions on this topic with details on the Prosper forum.
Other services use other measures. German Smava.de uses the PostIdent-process a service that requires the registering service to produce a government id (passport) in person. The Postident process is used by nearly all German online banks and is considered quite safe.
P2p lending services can tolerate only a low level of identity theft cases. The innovative approach of p2p lending requires that lenders trust the concept and the service. Fraud cases endanger that trust.
Duck9.com is positioning itself as a peer to peer lending service for college students. Lenders can invest a maximum of $10000. In the video below Duck9 founder Larry Chiang explains the business model and the benefits for lenders and borrowers.
The video is from October 2006. It might be a bit outdated. While Chiang says in the video that lenders receive a free $100 to lend, the site currently states: "NOTE: there is a SIGNIFICANT waitlist to be a lender. Money isn't accepted while you're on the waitlist".
Currently all referral programs mentioned above have one thing in common. They are open only to existing members of the p2p lending services. Assuming they are successful and the p2p lending serves are seeking opportunities to enable even faster growth then the next step could be to start an affiliate program through networks like Zanox, CJ or Affilinet.
And today German Smava.de has launched an affiliate program through Affilinet. Though probably not a result of my blog post (or is it?), it is nice to see the development headed in the direction I anticipated.
The Smava affiliate program pays 15 Euro for each referred borrower that creates a listing and 10 Euro for each referred lender (who completes process of opening an account).
Since June Prosper.com runs a referral program that allows Prosper members to refer new lenders or borrowers.
How does it work?
Prosper members are encouraged to put up text links, buttons or banners on their websites that advertise for Prosper. If someone clicks on that link, a tracking parameter included in the link format allows Prosper to detect which Prosper member refered the surfer. Should the surfer sign up the member who referred him will earn:
in case of a new borrower: 0.5% of the loan amount (up to $125) when the first monthly payment clears
in case of a new lender: $25 as soon as the first loan bidded on originates
Example: If you click on one of the following buttons and sign up as a new Prosper members I am eligable to earn the referral bonus if you get active:
Up to August 31st there is a huge incentive since new lenders that sign up through the referral program get credited $25 as well to their account.
Does it work?
Although I do not heavily use the Prosper referral links on Wiseclerk.com and considering that most of the Wiseclerk audience are already Prosper users before they discover Wiseclerk, I did have several members sign up through my referral links in the past weeks. Every time somebody signs up through my link, I get an email with the new member's screenname. Most are still in the status 'Registered' meaning after signup they did not take any further steps yet to become a lender or borrower. One became or borrower, but so far failed to receive a loan.
More interesting ways to use referrer links
Wondering how the referral links can be turned from pure ads to a widget that offers additional information and is spread through viral marketing methods. Kevin at Rateladder.com has created a tool that creates code for borrowers to promote their listing on MySpace or other webpages. The tool creates an ad for the borrower listing, showing the title, the photo, the interest rate and the percentage funded. It calls for action through a 'Bid Now' button. Cleary of interest to borrowers. And Kevin profits, since he incorporated his referral links. Therefore should somebody wishing to bid sign up as a lender, he can profit.
The Prosper referral program compared to the referral programs of other p2p lending services
British Zopapays members 30 pounds for refering an active lender or borrower. This scheme exists since summer 2006 and occassionaly the bonus was increased to 50 pounds for a limited time. German Smava.de pays members 25 Euro for referring an active lender or borrower. Dutch Boober.nl awards points for sucessful referral of lenders. These can be exchanged for merchandise, e.g. for 3 referred lenders a member can earn an iPod. As far as I am aware of Lendingclub does not (yet) have an referral program. (Correct me if necessary!). It will be interesting to see if and what new entrants like Communitylend.com and Ireloans.com will offer for referring new users.
The next step for even more growth
Currently all referral programs mentioned above have one thing in common. They are open only to existing members of the p2p lending services. Assuming they are successful and the p2p lending serves are seeking opportunities to enable even faster growth then the next step could be to start an affiliate program through networks like Zanox, CJ or Affilinet.
This would allow (semi-)professional internet marketeers to promote the offers. This step would offer two advantages:
Huge exposure of the ads on many websites. Experienced marketeers promoting the offers (still on pay for performance base – no untargeted advertising spendings)
Simply by beeing listed many people will sign up for themselves instead of marketing the offer to others.
The only downside are the costs which are typically 30 percent of transaction value. In case of Prosper seeking lender referrals this would add up to $32.5 (25 for the marketeer plus $7.5 for the affiliate network).
