Wonga plots multi-brand strategy as it nixes brand name drop
The Wonga brand could become part of a P&G-style multi-brand strategy its owners are considering as a way to bounce back from sharp losses in 2014 rather than axe the controversial pay day lender’s name despite reports to the contrary.
The Drum has learnt from a source close to the business that the cash loaner could become part of a family of brands for different services serving different consumer needs. It is one of a number of alternatives being considered, according to the source, alongside the termination of the Wonga brand.
Despite mulling the future of the controversial brand, it is understood that there no plans to ditch it anytime soon. Reports of the Wonga name being axed first surfaced yesterday (21 April) when the company revealed a review of the brand was underway after a series of scandals and tougher lending rules sparked a £37m losses in 2014.
The plans to create a viable business have been masterminded by CEO Andy Haste, former boss of the insurer RSA, who was brought in last year to repair Wonga's damaged reputation.
Last year, Wonga it was revealed to have sent letters to customers in arrears from non-existent law firms, threatening legal action. The failings, which took place between October 2008 and November 2010, saw Wonga forced by the Financial Conduct Authority (FCA) to pay compensation of over £2.6m, which severely knocked the company’s profits.
The extent of which was brought to light yesterday when Wonga revealed it suffered a pretax loss of £37.3m last year, against a profit of £39.7m in 2013.
Revenues fell 31 per cent to £217.2m, as lending to UK consumers declined 36 per cent to £732m, from £1.1bn in 2013.
The firm lost 1 million UK customers and now has just under 600,000 borrowers.
Wonga’s ad agency Albion cut ties with the business last year following the FCA scandal.
Haste also axed Wonga's puppet advertising as one of the first steps of brand reparation following his arrival last July.