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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.

We asked both comScore and Nielsen // NetRatings to produce some UK web traffic figures to coincide with a Shopping Comparison roundtable we recently held in London.

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.

(For example Channel Intelligence last month announced that it had raised $15m in funding while SingleFeed has recently launched in the United States.)

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.

Roundtable briefing

Like similar recently published briefings on Affiliate Marketing, Email Marketing and Web Analytics, the Shopping Comparison document contains information on the following:

  • 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
Linus Gregoriadis

Published 12 December, 2006 by Linus Gregoriadis

Linus Gregoriadis is Research Director at Econsultancy. Follow him on Twitter or connect via LinkedIn or Google+.

139 more posts from this author

Comments (14)

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Lisa Hancox, PR Executive at ValueClick Europe

It’s true that there are many challenges facing price comparison sites today, but PriceRunner is working hard to increase the relevance and reliability of our price comparison sites in Europe. The market has had some new entrants but if you look at statistics from Hitwise for November 2006, it shows that PriceRunner, Kelkoo and shopping.com are still the three big players, but there will always be comparison sites that will grow more rapidly during certain periods. PriceRunner is the only one of the three major players that has grown its market share over the last 12 months (November 05 to November 06). In this report it was claimed that Ciao, Shopzilla and MSN Shopping were gaining market share but comparing Hitwise visit stats from November 06 with 05, that is only true for Ciao. In addition, whilst some might say that the number of visitors isn’t growing as dramatically as it did, we are seeing those users convert more and often, which means they are repeat, loyal visitors to price comparison sites – certainly a positive!

Of course, providing ROI for the retailers is absolutely vital, but it’s a challenging balance in that PriceRunner also needs to provide a superior, accurate service to consumers that they can trust. Our data is completely impartial in that we display products and prices from as many retailers as we can, regardless of whether they pay us for a listing or not. Sometimes, meeting the needs of those two groups doesn’t always mesh well, but we encourage all our merchants to sign up to our free, third party ROI tracking to identify successful and under-performing products. We constantly work to optimise the traffic to increase conversions across all product feeds.

I think it’s important that, as a group of websites, we focus on other challenges within the space, such as ensuring we become more important to consumers earlier on in the buying process, not just when they are ready to click the buy button. It’s why we’ve invested resource into providing editorial content on our site, such as user and expert reviews, buying guides, forums, seasonal micro-sites etc.

One of the biggest changes in attitudes that we all should try and encourage is the concept that we are not just ‘price comparison’ services anymore. In effect, we compare products and their features, retailers, and price. Price is often the most important factor, but it’s certainly not the only one that people look for when thinking about a purchase. PriceRunner conducted some research recently which asked consumers what factors were most important to them when they wanted to buy an item. Price did come out top, but an incredibly close second was secure payment options, and third was reliability of the information provided with specific product information fourth. All three factors were only a few % points apart, showing how vital it is that we provide more than just prices.

Mattias Berg
UK Country Manager, PriceRunner

almost 10 years ago

Linus Gregoriadis

Linus Gregoriadis, Research Director at Econsultancy, Centaur Marketing

Thanks for these very valid points Mattias.

I should stress that the observed slowdown in traffic growth doesn’t mean that I’m negative about the prospects of comparison engines.

It just means the dynamics are changing. There are greater opportunities than ever for retailers to boost their revenues by using this channel effectively.

As you say, the most successful engines will undoubtedly be the ones which are most transparent and useful to consumers while also working as closely and openly as possible with merchant partners to keep improving results.

Thanks for highlighting the Hitwise data. When traffic figures are concerned, the more stats the better as far as I’m concerned which is why I’ve included both comScore and NetRatings in the roundtable notes. Hitwise, another great resource, use another methodology but that’s a different story. When I've got this data, I'll add it to the roundtable notes.

That said, my key message is not intended to be around traffic figures but more about the need for merchants (and engines) to optimise this channel as effectively as possible.

I don’t think that healthy competition in this sector is in any way a bad thing. It just means that merchants have to work harder to get the most effective approach across different sites. (Etailers can’t put all their eggs in one basket like they can with Google Paid Search).

For those who make the efforts to optimise the comparison engines channel, then the returns can be very much worth the effort.

The point you make about customer loyalty is very important. People researching different comparison engines should look not just at traffic figures but also at other metrics such as how long users are spending on the site.

But ultimately, if you’re a merchant, you are first and foremost interested in the ROI you can make. This comes down to experimentation and working closely with the comparison engine in question. It comes down to how much effort they (the comparison sites) are making on your behalf.

(Those who want more information about PriceRunner and other comparison engines should consult our 2006 Shopping Comparison Engines Buyer’s Guide, available for free to subscribers. http://tinyurl.com/ndtek)

almost 10 years ago

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Nancy Billens, UK Online Market

Mattias,
Some valid points indeed. As Linus mentioned, the market is going to be more and more fragmented, with many new entrants like our own project www.ukonlinemarket.co.uk will enter the arena. You have a point that the era of JUST being a price comparison avenue is over. If a portal does not provide add-on information and other service like secure transaction, buying-guides ect in addition to some really unbiased compaison, the figures Linus quoted are going to be even lower.
I am very optimistic on the trend converging towards superior customer service and experience in the comparison shopping segment. However, as Linus mentioned, at the end of the day ROI is what matters...atleast for the time being. Let's hope that some tools are introduced soon to really measure the efforts of the comparison portals in promoting the retailers.

almost 10 years ago

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LaptopBuyer

I used to be a retailer (InternetCamerasDirect and Nomatica) and I used to get so frustrated with price comparison sites. They used to collect my data once a day at best so 23 hours and 59 minutes later the stock and more often than not the price information data was completely out of date.

With this in mind I have developed the first of what I hope to be many sites - www.laptopbuyer.co.uk which pulls data in real time from retailers - in fact we have in excess of 100,000 updates per day, so retailers aren't receiving irrelevant clicks.

The other big difference in our model is that we have discarded the useless ROI model, instead we are willing to work on a partial CPA (cost per acquisition) basis - this is the real challenge to cost comparison sites for the future. This is all about offering retailers value for money when they list with a price comparison site!

over 9 years ago

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Cheap Laptops

We have found Froogle hard to access, but very useful. We believe the future of price comparisons sites will be linked to search engines.

over 9 years ago

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Chip Arndt

Hi,

You might also want to check out www.MerchantAdvantage.com

We actually help you feed to ANY CSEs or shopping destination site, over 90 to date, and we then have Chanalytics that analyze in real time exactly how your feeds are doing. So you can make decisions to pull non performing products and push performing products to other channels immediately.

Our product is called Channel Management and you can do this all yourself VERY affordably. We have found that working with shopping destination sites can be great if you have the proper tools to optimize, feed, analyze and then refeed data.

Without the proper analytics, which no one else in th marketplace gives you for FREE as part of your low monthly cost, you might as well not use the shopping destination sites. Oh yeah and we focus on small to mid sized business needs.

Thanks,

Chip Arndt
EVP
www.MerchantAdvantage.com

over 9 years ago

Jim Haysom

Jim Haysom, Business Development & Digital Marketing Leader at Jim Haysom Consulting

Working with comparison shopping engines (CSE's) and getting the desired ROI is very much a two-way street. Firstly, merchants must work to optimise their campaigns through product data feed optimisation and also bid management / optimisation in the environment where the model is CPC. Secondly, CSE's must do their part in attracting new and qualified consumers from search and online, but also build on the loyalty base by offering tools to aid the shopping experience, as stressed by Mattias Berg at Pricerunner. This will encourage repeat consumers, save them time and money, and make them much happier.

Price comparison has moved on. Rightfully so, you cannot price compare most items in clothing and accessories, home and garden, toys and games. But the key lies in finding them. If you can't find it, you can't buy it. This is why relevancy has become so important, and why some retailers who do this well are reaping the rewards and success in this industry.

The participation of "shopping search marketing", which has become a popular terminology (focus that is not based purely on price), encompasses much more than a single product feed submitted to sites and expecting it to work. Retailers must adopt a clear strategy, work with it; report, analyse, optimise, and so on. It may be focused on margins and ROI, but some major stores are now seeing this as a branding exercise or a traffic driver, whilst others are more focussed on new customer acquisition. Whatever the strategy is, stores must do what they can to increase consumer confidence and trust. Thankfully all the leading comparison sites offer some sort of ratings or review programme.

At the moment there are some very good "where to buy" websites, and also very good "what to buy" websites. One of the major challenges shopping comparison sites face is actually becoming very good at both.

over 9 years ago

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Richard

Hi there,

Also, please checkout SmartFeed Product Feed Manager at http://www.productfeedmanager.com

Our tool is by far the most intuitive web based tool you can find for the price. We handle channel management for total automation and optimization and have direct import for the prostores, yahoo merchant, oscommerce, volusion and shopsite merchants.

We are currently supporting shopping.com, shopzilla.com, pronto.com, buyersedge.com, pricerunner.com, comission junction, shareasale, mycoupons.com, msn product upload live, google base, become.com, jellyfish, underbid and yahoo shopping.

Thanks,

Rich
http://www.productfeedmanager.com

almost 9 years ago

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Bien

We used to use Shopzilla and Nextag. We had to pull out because the CPC was high and because of merchants who undercuts prices. It's only beneficial for you to list if you have the lowest prices. If you don't, you're just helping the company who has.

almost 9 years ago

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Shopping Search Marketing.com

I have to disagree. It's true that some shopping search engines have variable CPC's, some are fixed fee per category, others will offer an auction marketplace, and some allow for product level bidding. Some shopping sites perform better than others, some drive more traffic in certain categories than others. It's about finding the right balance across the engines in terms of CPC, products in a feed, ROI, sales revenue and volume achieved.

But foremost, there's a responsibility on the merchant to provide an easy, fluid, problem, trusted and barrier free way for a consumer to shop. If it really was only the cheapest stores that should be on price comparison sites, would we only find the likes of Amazon, and drop shipping etailers? Fortunately it isn't, there is choice. There are a choice of stores that have built up a reputation, or a trusted brand, or have a variety of shipping and payment options, or decent customer service. These stores can flourish on comparison sites, irrespective of what the CPC is, because they know that users do not solely buy from the cheapest store, in the same way people don't book a holiday from the 1st search engine result they get.

If you were to look at price comparison sites a year ago, or two, or even three, you will find (if sorted by price), a range of retailers that have now gone bust. It's not sustainable to be dropping your prices and being the cheapest of every product. I'm sure if you look in the appliance, electrical and computing categories, there are plenty of retailers we've never even heard of. Would you really put all your trust in buying from that store with the lowest price, to deliver your xmas presents on time, with no problems?

Did you pull out from Shopzilla and NexTag just because the CPC was high, or because you didn't get the ROI? Tracking is key, and many merchants can afford to pay a high CPC, if they are getting the return. Remember, it's not always about the immediate cost of sale, what's the value of a new customer, or the opportunity to repeat or upsell to them in a months time, etc?

Comparison sites will not disappear overnight, because they provide too much value to the consumer. They are very good at where to buy, but they lack a thorough what to buy guide. These sites will evolve and improve, but they attract millions of consumers every month, which cannot be ignored by retailers.

almost 9 years ago

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Salt Lamps

Good post.

over 7 years ago

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Satya party supplier

We use Shopzilla and Nextag. We had to pull out because the CPC was high and because of merchants who undercuts prices. It's only beneficial for you to list if you have the lowest prices. If you don't, you're just helping the company who has.We find very critically to access, but very useful. We hope the future of price comparisons sites will be added to search engines.

about 7 years ago

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Professional SEO Company

SEO Company India based in Delhi provides Professional seo services to all over the globe also we provide internet marketing and pay per click management services. We SEO Company india India gives best and affordable SEO outsourcing services through our SEO professionals

about 7 years ago

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SEO COMPANY

Economical SEO, specializes in Website Designing and is executing Web Designing Projects for US, UK and world over. We have over 6 years of experience in web designing websites and web based solutions.SEO Services Company Since 1999 offers Organic searchengineoptimization services at affordable prices to rank you better in search engines.

about 7 years ago

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