There is such a thing as bad publicity – ask Wonga

I’m not sure who originally claimed that there was no such thing as bad publicity. I seem to recall it was either Lord Leverhulme, Oscar Wilde or perhaps Johnny Rotten. It doesn’t matter much because it turns out that, whoever they were, they were wrong.

Mark Ritson

If you have a clear understanding of brand equity you are entirely comfortable with the idea that not only can publicity be bad, it can often be bad at the exact same time that it is good. Let me explain with a brief sojourn into branding theory and an application of it to payday loan company Wonga.

Brand equity is the precious objective behind every brand strategy and, for all of its value, the concept itself is really rather straightforward. If we look at the consumer-based definition of brand equity as defined by Kevin Keller 20 years ago in his seminal paper in the Journal of Marketing, it comes down to two distinct constructs. First, we have brand awareness. Irrespective of whether you measure it with aided, unaided or top-of-mind metrics, we mean only one thing when we talk of brand awareness – the proportion of the target market who know that your brand exists.

Second, we move to the slightly more slippery concept of brand image. If the target consumer knows I exist, what do they associate with my brand? These associations can be positive or negative, unique or generic, practical or symbolic, numerous or singular – but at their most fundamental they represent what the consumer thinks.

If a brand manager is well-trained (by this I mean they didn’t just “work it out” after a degree in English) all their actions are driven by brand equity. Brand tracking is just the recurrent measurement of awareness and associations. Brand positioning is simply the strategic attempt to influence and amplify the brand associations among the target market. And so on.

After a shaky start in 2007 – in which Wonga suffered defaults on up to half of the initial loans it made to consumers – the company refined its approach and has never looked back. Six years on it has made over 5 million loans at eye-watering interest rates that have made its founders sensationally rich. Wonga’s success can be traced to a number of elements – a savvy approach to technology and credit applications, a sound management team and a good old-fashioned niche in the market. But Wonga has also been successful because its marketing chief, Darryl Bowman, has done a superb job of building brand equity.

Thanks to a crafty PR strategy, sponsorship deals with first Blackpool FC and now Newcastle United, and a heavy investment in TV and radio advertising with Betty, Earl and Joyce the puppet pensioners, the brand is enjoying remarkable levels of awareness. Take a random sample of Wonga’s target segment: tech-savvy, young professionals who are unable to access short-term loans from traditional banks. Then cue them with the category question of which brands come to mind when they think about borrowing money and Wonga, from a tiny proportion only a few years ago, will now be sky-high.

On to brand association. The brand positions itself as fast, flexible and transparent. Crucially, Wonga has also positioned itself away from the social stigma so often associated with payday loans. Its big brand sponsorships and TV campaigns have built and reinforced brand awareness but have also signalled to consumers that Wonga is a legitimate, transparent loan company that consumers should not feel any shame in patronising.

But it’s been an intriguing summer for Wonga. First, there was strong Government criticism of its very high APR, then condemnation from the Church of England and finally the saga involving soccer star Papiss Cissé initially refusing to wear his Wonga-sponsored Newcastle strip because of his Muslim faith. All this has certainly grown Wonga’s brand awareness to stratospheric levels but it has also undermined the brand’s associations of transparency and legitimacy that are equally important to Wonga’s long-term success.

So there is such a thing as bad publicity. Wonga is experiencing it right now, at the same time as enjoying the positive repercussions of precisely the same coverage. 

As is so often the case, that which builds brand awareness can also break brand image.

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