Should Wonga be worried about its brand reputation following an attack by the Church?

A brand that comes under attack by the Archbishop is a brand that is worthy of focus in our latest spotlight. Wonga as a payday loans company is always going to leave itself open to scrutiny. However, the latest critic could very well be one of the most difficult for Wonga’s marketing team to manage as they look to protect brand reputation.

http://www.bbc.co.uk/news/business-23433955

The Archbishop of Canterbury Welby is adamant that he sees Wonga as competition to the proposed plans for the Church to become a credit lender and is crystal clear in his strategy. The signal of intent is interesting as it not only highlights a very public attack by an influential member of an religious entity towards a brand but it also highlights a strategic repositioning of the Church to move into the world of investment.  

http://blogs.spectator.co.uk/coffeehouse/2013/07/justin-welby-pleases-both-left-and-right-with-clever-wonga-comments/

Long term Welby is gearing himself up for a fight with payday loan companies who can make a mark up of up to 5000%. Welby certainly won’t have any issues with leveraging overall positive perception or trust that a religious organisation should bring with it. In a dirty, seedy market such as short term loans an entity like the Church should be a breath of fresh air which competitors if leveraged properly will find hard to compete with.

By helping Credit Unions by offering them the use of Church facilities and local community networks in essence Welby is trying to create a competitive advantage through word of mouth and social marketing techniques. This type of influential marketing would not be out of place on a social media site such as Twitter or Facebook however in this instance Welby is going old school and bringing the battle to the streets. But is the tactic a viable strategy for the Church and for Credit Unions in general?

http://www.channel4.com/news/can-credit-unions-really-wallop-wonga

Reports have suggested Credit Union membership would have to increase six fold for them to begin to turn a slight profit; here’s where the Church comes in. It is clear as a businessman with a finance backing Welby understands the plights of some of the small brands that make up the credit union business. He will also understand that the Church as an entity has the power and infrastructure available to support these unions, essentially giving them an ethical stamp of approval. We really shouldn’t underestimate the power that the perception of the Church can have in this instance. Regardless of whether customers are religious or not the Church carries with it positive connotations, that should lead itself to positive perceptions in the minds of consumers. To add real weight to this movement the smartest thing these credit unions could do would be associate themselves as close as possible to the Church. The Church could even look to establish the credit union movement under a brand which could really begin to challenge some of the established short term lenders. Not only could this benefit credit unions but it could also improve the reputation and visibility of an institution which continues to lose influence with the congregation.

But this type of argument is pure fantasy until Welby fully unveils how the credit unions and Churches can work together. As no real branding of the Church currently exists let’s refocus our attention back to Wonga. Although Welby maybe the most recognisable recent critic, Wonga has certainly suffered some other hits to its brand reputation recently.

http://www.guardian.co.uk/football/2013/jul/25/papiss-cisse-newcastle-wonga-row

Football player Papiss Cisse has since reneged on his ambition to not wear Wonga branded sports apparel due to religious beliefs however the original reluctance to advertise the payday loan company brought with it negative PR for Wonga. Add this on top of the Archbishop’s revelations and it would appear that Wonga can’t do much right at the moment. All this would suggest that retaliation in some form was going to come and in this instance Wonga has gone straight after the Church in an effort to address ethical issues surrounding the brand.

http://www.marketingweek.co.uk/news/wonga-bashes-archbishop-with-ten-commitments-ad/4007474.article

Wonga will look to hit multiple media channels in an effort to rebuke some of the negative perception surrounding the brand and the Brand Avenger wonders how successful they will be in riding the storm and coming through to the other end.

This case also highlights a strong argument over ethics. Wonga has many critics from all areas that are quick to point out what they deem as unethical practice by this brand and all others which operate within the market. Is it possible for a company steeped in such controversy to make such a long term viable profit?

http://www.guardian.co.uk/business/2013/jan/05/wonga-bad-debts-rise-profits

Well referencing the above article investors certainly seem to think so, seen in a $1 billion valuation of the brand when it nearly floated on the US stock market last year. Put pure and simple ethics will not stop brands like Wonga making money. This is clear in pre-tax profits and stock market valuations. As long as there is a need for consumer borrowing there is always a chance short term loan providers will prosper. Certainly in the long term the brand will have to be vigilant of credit unions offering small % loans but both they and the Church have a hell of a long way to go before they can begin to leverage the strengths and capabilities needed to compete. Until then short term loan providers will continue to make profit regardless of whether it is right or Wonga.