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The comparison engines sector has enjoyed strong growth in recent years, buoyed by sharp increases in the number of web users and the level of online researching before purchase.
However, to maintain their level of progress, it is clear that shopping comparison sites are facing major challenges to keep both consumers and merchants happy.
The roundtable was attended by representatives from comparison engines, retailers and datafeed optimisation specialists. A write-up of the discussion, along with the full comScore and NetRatings data, is contained within our free briefing (registration required).
The comScore data shows that growth in the number of internet users visiting UK comparison sites has now flattened off at around 50% in October 2006 (compared to 49% in Oct 2005).
Between February 2005 and February 2006, the number of visitors to these sites grew by 30%, according to comScore. But growth in terms of visitors now very suddenly seems to be a thing of the past.
Despite this, there is still a large volume of visitors for comparison engines to keep referring leads to their retail clients. But it means that they will have to work extra hard to keep up their levels of traffic in an increasingly competitive marketplace.
Both the comScore and NetRatings data show that the main players in the UK market are facing increased competition. There is no gorilla in this space in the same way that Google dominates search. If anything the market is becoming even more fragmented.
- Shopping.com, Kelkoo and PriceRunner all lost ground between October 2005 and October 2006 while Ciao, Shopzilla and MSN Shopping registered increases, according to comScore.
- Similarly, according to NetRatings (comparing September 2005 and September 2006), Yahoo! Shopping (including Kelkoo), Shopping.com and PriceRunner have all lost active reach.
These figures tell part of the story but the truth is that merchants will ultimately judge comparison engines by the return on spend they offer rather than by their traffic figures.
However, a fragmented market makes it more difficult for merchants who want to exploit this channel as effectively as possible. Retailers have to weigh up the opportunity cost of investing time in making comparison sites work for them.
For starters, data feeds have to be optimised differently for individual comparison engines and retailer product taxonomies needs to be adapted to an array of different systems of categorisation.
Additionally, different engines can generate very different returns depending on the product and category.
It is a major challenge to measure the success of comparison engines at an overall, category and product level. So, given how complicated this business can be, it is no surprise that data optimisation specialists and agencies with expertise in this area are thriving.
Despite the difficulties involved, a retailer who makes the effort can reap the benefits from this channel and generate incremental sales increases by adding different comparison sites.
But given the challenges that retailers face, it was clear from the roundtable discussion that those comparison sites which survive will be the ones who can help retailers make a success of this area, helping them to understand what is working and not working. If there is no transparency about ROI for retailers at an overall and granular level, then they will be quick to abandon these sites.
At the same time as helping their retail partners, comparison engines face a balancing act because they also need to make sure that they are offering consumers a balanced and impartial view of the marketplace in order to maintain their credibility.
Also, more work is needed by established comparison engines to make inroads into sectors such as fashion / clothing which do not necessarily lend themselves well to traditional price and product comparison where there are clear parameters for comparison (for example, cameras or refrigerators).
The market is likely to become more fragmented in the short to medium term as sites with value-adding Web 2.0 features make more inroads into the market.
It has been argued that there may also be gains for those sites offering CPA (cost per acquisition) pricing rather than the more entrenched CPC model as retailers see obvious advantages if they are carrying reduced risk.
However, the consensus at our roundtable was that the pricing model is not important as long as a comparison site can demonstrate that the returns are good and targets are being met.
- Market valuation
- Market trends
- Key points of roundtable discussion
- Latest statistics
- Useful resources
The aim of these briefings is to provide high-level information to those who want to get up-to-speed with specific areas of internet marketing and e-commerce.
And for those who are new to E-consultancy, it is a chance to get a flavour of our work.
The key discussion points from our Shopping Comparison roundtable were as follows ...
- CPA versus CPC
- Differences in comparison engines' effectiveness
- Product comparison not just price comparison
- Importance of good feeds