Payday Loan Commercials Provide Industry Support in Japan
By J.J. CameronPayday Loan Writer
Aliens. Chihuahuas. Office ladies who turn into leotard-sheathed dancers coming to the rescue. All of these unusual entities have been the focus of payday loan commercials in Japan - and the ad campaigns have been working!
According to the Japan Consumer Finance Association, this market has continued to expand - the combined amount of outstanding payday loans at consumer lenders exceeded 11.7 trillion yen in March 2004, 2.5 times the amount reported 10 years before.
"There has always been a strong demand for such loans" that require no collateral or guarantor," said Tomoaki Sakano, a professor at Waseda University's faculty of commerce.
Back in the 1960s, the faxless cash advance loan business was an untapped niche market in Japan, where banks were mainly focused on companies and unsecured payday loans were too risky to match the interest rates they offered. Despite occasionally drawing heat for aggressive collection tactics and the growing number of people ladened with multiple debts, this is where consumer finance companies have come to play a key role, according to Sakano.
The industry's key weapon is its ability to calculate risk. Payday loan companies share their customers' real-time credit information and work together to improve the data network's accuracy. The introduction of automatic screening machines in 1993 triggered another revolution. The machines were quickly embraced by customers, with the number operated by the five major consumer finance companies totaling 7,626 in March 2005.
"The emergence of automatic screening machines allowed consumer lenders to slash personnel costs and the amount of investment per outlet," Sakano said.
Mainstream Japan was first exposed to payday advance advertising in 1978, when the Yomiuri Shimbun started running ads for consumer finance companies. This was followed in 1988 by private broadcasters, which began airing commercials by lenders that kept interest rates below 40 percent.
Centerfold models and actresses alike have graced consumer finance commercials, while Takefuji Corp.'s series of ads featuring a team of dancers became immensely popular. Aliens dropping by Earth to take out cash loans through a screening machine at an Acom Co. unmanned outlet showed how easy and fast taking out payday could be.
But the biggest hit was the series of Aiful Corp.'s ads featuring Ku-chan the Chihuahua. It topped the list of viewers' favorite commercials in both 2004 and 2005, according to the private think tank CM Research Center, with close to 30 percent of 3,000 viewers polled saying they loved the commercials.
But Aiful's recent fall from grace has forced consumer finance companies to pull their commercials for the time being, while broadcasters are currently limiting air time for such ads. Commercials regarding the world of cheap payday loans these days are mostly made in the genre of young women warning potential borrowers to have sensible repayment plans.
"It's ironic that consumer lenders, which aim to advertise their business in their commercials, are now trying not to make people want to borrow more," said an industry official who asked not to be named.
