Nevertheless, I stand my belief regarding the marketing approach the sites should be taking — that is, helping investors understand how and why to incorporate P2P loans into their portfolio and overall investing approach.

there are many different p2p lending sites with different marketing messages and aims.
Regarding “socially rewarding”: In my opinion this is not the main message, but there may be a few exceptions, e.g. Kiva and MyC4.

Fees are rising (e.g. Prosper, Boober) and most platforms are still far away from a loan volume that makes them profitable. For Prosper numbers quoted for break even were about 300 mio. US$ loan volume (that was before the latest fee raise).

When fees were (or still are, e.g. Smava with 1% origination fee, no servicing fee) low, the p2p lending site could rightfully use slogans like “cut out the middleman”. At some height in fees that argument will no longer make sense.

“Prosper is an online community for lending and borrowing money. Bidding on borrowers’ loans, lenders get great returns by offering great rates.”

And the quote used, also mentions financially rewarding.

Clearly this is an investment.

As to socially rewarding, that is in the eyes of the beholder. While a Mr Cranky may not sense that others might.

If we look in context of Big, Imperious Banks that make borrowing/ investing/ saving/ a one sided transaction, with few options, then its hard to argue that knowing where your money is going, that it helps people, and that at the same time provides you an economic incentive, is offerring something that Banks cannot. Whether thats rewarding or not is up to the investor.

Having said all of that, thanks to you for keeping the industry honest. This is a conversation that needs to be encouraged. P2P lending is not charity, nor is it altruistic. It is an investment.

Hopefully there is an honest blend of economic and social characteristics that people will see, whether to varying degrees, and that it offers a genuine financial, believable alternative.

[PS ... see I can be nice ... ]
[Disclosure: I am involved with a P2P lending company]

I agree that most P2P lending is/will be for raw return on investment, and that’s what ultimately what will fuel growth. But there are at least some lenders/investors that consider the “social good” of the loan into their decision process.

And if the exchanges can figure out ways to “certify” the real needs of the end-users (like Kiva.org), I think there will be even more of it. The tens of millions that have gone out through Kiva prove there is a least some “social capital” at play.

Lending directly to somebody with a face and a name is, to me, a lot more “socially rewarding” than investing at a faceless bank. Its all semantics, but the way they state their intentions makes all the difference to me.

Also, I guess the difference between lending and investing is what is the money being used for? If I’m supporting somebody looking to pay off a credit card debt, I’m lending to them. If I’m lending to somebody who is starting a business, I’m investing because I’m counting on the success of that business. These P2P lenders are blurring that line for a lot of people.

Methinks that the P2P emperor may be clothesless. Or if not nude, at least scantily dressed.

Thanks again for being willing to snoop around in the less-explored corners, and for reporting out on what you find there.

Good stuff. We need more folks who are skeptical of conventional wisdom.

Bruce