Around 15 million people use their sites in the UK each year. They are one of the biggest spenders of advertising money in the UK. They claim to offer speed, transparency and convenience. They are price comparison sites and whilst they claim to be for the consumer, are they really in bed with the enemy?
The UK’s love of a good deal has led to the rise and rise of price comparison sites. When compared to any other market in the world it easy to see that UK consumers have become addicted. Whilst comparison sites wallow in relative obscurity abroad it is hard to go a minute without seeing an ad for them on TV. As a result millions of consumers each year visit the likes of MoneySuperMarket.com and GoCompare to find the best deals on insurance, utilities and bank products.
The unique selling proposition of these sites is that they allow consumers to compare products or services across multiple brands at once. They take the hard work and ambiguity out of shopping around for a good offer by distilling all the information into a simple rankings table. In most cases they also calculate the potential savings on offer to a customer by switching providers. They also provide useful advice on how to find the best deal and how now to get stung by fees. Seems pretty good huh?
What is ambiguous however is how they actually make money. As consumers click around and access content little do they realise how much those clicks are driving revenue. In fact, you would expect most consumers to be surprised to know that this drives about $650 million a year in revenue. Revenue that could be passed on in further discounts to the consumer but is in fact taken as commission by comparison sites.
You see comparison websites make their money from sleeping with the enemy. All the products presented on the site are essentially advertising. The sites are not recommending a product because it makes the most sense for you. They are recommending it because they are getting paid the most to do so. Their biggest revenue stream in fact is sponsored listings, whereby brands pay to have their products appear at the top of search results. Doesn’t sound so good now does it?
Most consumers would also be surprised to know just how close these so called ‘transparent’ comparison sites work with big brands. Most banks for example have dedicated teams that liaise with comparison sites on a daily basis. They monitor the performance of sales as they manoeuvre to outbid each other for the top spot. The battle for top of the table has become an advertising arms race and the only winner in this is not the consumer, but the comparison site itself. As it drives up the price of its advertising space in increases its commission and lowers the value available to consumers.
So this aura that price comparison sites scour the whole market to find you the cheapest products is all a scam. It is some ‘hocus pocus’ conjured up in a workshop by team of hipster dressing marketing folk. They aren’t in it for the consumer; they are in it for themselves. To help the façade along, MoneySuperMarket.com even purchased the MoneySavingExpert advice site last year. Once the doyen of skint Britain’s across the country, the site sold out as soon as it could.
They say you should keep your friends close and your enemies even closer; well comparison sites have certainly done a good job of that. Instead of helping consumers they are helping themselves to a gold mine of income. It is time for the government and consumers to make a stand and request total transparency from these sites on what relationships, deals and commissions they have in place. By doing this it will allow consumers to realise who their real friends and enemies are.