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What is a pingtree and how does it work?

What is a pingtree and how does it work?

A Pingtree is an online lead generation process where a customer’s live application is sent to numerous lenders in real-time and the application is sold to the highest bidder. Essentially, it matches a loan application with a lender who is willing to accept the business.
A pingtree is a type of software and added to an affiliate or broker’s website using an API. It is commonly used by the loans industry in the US, UK and Australia, although it can be used by other types of products and industries.
During the payday loans boom, pingtrees were responsible for processing thousands of applications per day and were one of the main ways that lenders could acquire fresh leads and affiliates would generate revenue through their websites.
On a typical pingtree panel, there may be between 10 and 100 lenders and the bids could range from £75 (for good quality customers) and 5p (for poor quality customers).
The initial application allows the customer’s information to be filtered and qualified, taking into account factors such as:

Pingtree Example

John applies for a payday loan on a broker website and fills in his details and requirements on the application form that is connected to a Pingtree.
His application is pinged by 100 companies on the panel and bought by the highest bidder who pays £10 for his lead.
The affiliate earns £10 in commission and John is now redirected to a lender who says that they provisionally accepted his loan and will just need to run further checks before funding.

How do lenders use pingtrees?

Lenders use pingtrees as a way of generating more qualified leads and to scale their business.
With a pingtree, lenders can be specific with their budget and have certain eligibility requirements such as age, residential status, loan amount, income and more.
If a lender has a budget of £5,000 per month, they can anticipate how many leads they will generate for that price and the level of quality. Once their budget runs out, the next lender with the highest bid comes into play.
Lenders can also connect their own websites to pingtrees to sell any declined leads or applications that do not meet their criteria. For lenders, it can be a way to monetise any potential traffic and recover any revenue.

How do affiliates use pingtrees to make money?

Affiliates such as loan brokers and comparison sites can connect pingtrees to their website using an API.
Accordingly, the front-end design of the website will be their own, with their own branding and marketing, but the application will belong to a software or pingtree partner.
For affiliates, this is arguably the best way to monetise a loans website and get paid for every lead that you sell, ranging from 5p to £75.
Other options are to work on a cost-per-click basis or cost-per-funded, and this may be better suited to some products than others.
The only downside is that during periods, there may not be many lenders looking to fund loans and this can mean much lower revenues for affiliates.

Where can I get a pingtree for my website?

Pingtrees are available from different partners that operate in the UK – with around a dozen active and available for partnerships. The pingtree partner will usually take a small percentage such as 20% of every lead’s commission for providing the service.
You can also build your own pingtree and get your own lenders and partners on board – however this may be more time consuming and expensive.

Are pingtrees good for the borrower?

In some respects, pingtrees are good for the borrower because it allows them to find a lender who is willing to proceed with their loan application. This can be a lot more effective that having to apply one-by-one with a dozen lenders before you get approved.
For someone looking for quick funds, this can be a viable and effective way to find the right lender and borrow money when you need it.
However, there are some downsides for the customer. Notably, being ‘pinged’ by multiple companies is not particularly healthy for your credit score, since it can show that you have been checked my multiple lenders in a short space of time. Your credit score may or may not go down, but it will still be a warning sign to future lenders.
In addition, using a pingtree does not guarantee you a loan offer, since those with very poor credit scores may be presented with a debt management or IVA solution – encouraging them to declare bankruptcy rather than offering them a loan. The software is commercially driven by firms, rather than providing the cheapest or most suitable product to the customer. Depending on the borrower’s circumstances, this may or may not be welcomed.
Also, applicants often used pingtrees without realising, believing they were working with direct lenders and many were typically recycled over and over to the same companies and their data became very exposed – often with no loan offer provided.
The industry has benefitted from more regulation in this area and customer data is now a lot safe than before.
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