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Last week Co-Op energy boss Ramsey Dunning made a very public attack on price comparison sites, citing them as misleading and pushing up energy bills. 

Dunning stated that price comparison sites such as uSwitch, Moneysupermarket and Energy Helpline should disclose how much they make in commission from the energy partners.

While I of course advocate a continued development of greater transparency to consumers, I find it difficult to understand exactly what it is that Dunning is hoping such a move will achieve. 

Perhaps Dunning is seeking to highlight to consumers the different elements that are contributing to their rising energy bills, but I wholeheartedly disagree that this issue is in anyway related to price comparison sites.

And why single them out? If marketing is a key expenditure for energy providers, why not disclose how much is spent on other marketing activities such as TV, press ads, social media, display, search etc or the costs in retaining customers? 

I for one would love to see the CPA of a prime time TV ad measured against a price comparison site as I’m almost certain that price comparison would win hands down.  Surely that is all part of the marketing cost and it is not a fair fight to single out one part of the marketing mix without any benchmark comparison?

As the internet has evolved over the years, price comparison sites have become extremely successful and valuable to the consumer. Against a tough economic backdrop in recent years they have allowed consumers, who have faced rising living costs but flat wages, to search for the best deal across a range of different sectors.

Price comparison sites have offered much needed support, help, advice and research into how to save money by switching energy, broadband, etc.

Recognising their responsibility to consumers price comparison sites have invested significantly in technology and internal experts to help advise customers on the best solutions for them. 

For consumers who all too often can find themselves overwhelmed by choice, such sites have empowered them to make more informed decisions based on a real understanding of the available options.

Furthermore, consumers are not naive as to how the commercials of a website work. People recognise that price comparison sites have to make a living too.

The recent IAB Online Performance Marketing study showed that 61% of respondents were aware that the websites they were on, including price comparison sites, were awarded a commission.

The public know how price comparison sites make their living, but they value the service and so continue to use it.

It's important to note that whilst price comparison sites are a valuable resource for individuals, they aren't always the point of purchase.  Studies we have carried out across our network on affiliate only data, show that price comparison sites often get a bad deal on the last click attribution model.

In some cases a price comparison affiliate can deliver 40% more sales than those that are attributed to it, and this data looks only within the affiliate channel, looking at the wider digital mix will likely give back an even higher figure.

Lastly, the cost per new customner switch doesn’t take into account how many customers the price comparison sites help energy suppliers to retain, this can’t be measured but they add huge value in retaining customers aswell.

With customers now heavily reliant on price comparison sites at a time when energy bills are rising fast, I think we would all support the notion that price comparison sites must be fair and agnostic of the supplier.

I'm all for more transparency and I think it’s important that consumers are aware that price comparison sites are funded in commission by suppliers.

However, I don’t think that exposing what the commission rates are (which vary anyway) is useful. I think time would be better spent ensuring that price comparison sites have the correct information, are giving the right advice and most of all offer a good quality, honest service. 

This is already an area heavily regulated by Ofgem and also being covered in the RMR so I’m not sure what additional transparency this request for commission rates really adds. And if that’s the way we want to go then in the spirit of fairness, lets open everything up and show what the real marketing costs are of other channels.

Now that would make good reading I’m sure.

Helen Southgate

Published 31 January, 2014 by Helen Southgate

Helen Southgate is UK Managing Director at affilinet and a guest blogger on Econsultancy.

5 more posts from this author

Comments (11)

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Ryan

I think Ramsey Dunning has a point, Most consumers beleve that price comparison services list all the best deals based on merit - not on how much the providers are willing to pay.

over 2 years ago

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Martin

@Ryan When it comes to Energy providers, price comparison sites do list the services by the cheapest deals available, not by commission rates. This is a highly regulated industry.

over 2 years ago

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Matt Lovell, Head of Group Analytics & Digital Insight at Thomas Cook Group AirlinesEnterprise

Interesting article Helen. I'm with Ryan on this one though - The main thing that most consumers aren't aware of is that numerous price comparison sites will change your position in their listings (or how regularly you show in these) dependent on how much you are willing to pay or the model you are using to make payment.

As such, there may be a better deal out there for the customer but because the brand isn't willing to pay an expensive CPC rate or higher CPA / commission, they find themselves squeezed out and actually the customer is worse off because they are trusting the site to provide the best deal.

While I admit this is a little naive of customers (and is potentially a large part of why people tend to check more than one comparison site these days), I do feel that there should be more regulation on price comparison sites being up front about how they are displaying their results in terms of the fact that it either a) only includes some of the market or b) is influenced by how much companies are billed...

over 2 years ago

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Jon

Matt

i disagree...

when comparison sites get paid, they get paid for the sale, at its simplest comparison sites get paid, when the customer saves money, or finds a better product or service they want, then and proceeds to make a purchase.

Comparisons sites are not a perfect market - they are a better market, a more transparent market.

Granted there maybe better deals out there... but no one forces the customer to make a purchase...the consumer is very much in control.

The consumer today is very savvy, the internet aided by he financial crisis has taught consumers to shop around. They don't just shop comparison sites, they know there maybe something better. They check online direct, they check multiple comparison sites. They ask their broker, they phone and talk face to face with businesses they are interested in

Likewise they don't "trust comparisons sites to get them the best deal" - they trust them as machines, providing information, they trust them as a potential gateway to a final destination, a destination that may begin with the comparison site, but that often doesn't end with the comparison site

That trust starts with the consumer knowing that comparisons sites offer convenience, a gate way to compare 70-90% of the market.

Consequently , making a decision is better than how it was i.e.:

a) insurance - phone 5 insurers, make a lot of notes, get confused by the difference and just buy or renew (we all remember those days)

b) energy, get sold to by a supplier of 1 on the door step or over the phone...

Would you go so far as to make Tesco provide information about the other 57 varieties of beans that they don't stock? No. Would you at Thomas Cook, show your customers that the same holiday is a better price, or better value if TUI had it? No.

over 2 years ago

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Matt Lovell, Head of Group Analytics & Digital Insight at Thomas Cook Group AirlinesEnterprise

@ Jon interesting perspective but I'm afraid I think you're wrong. You're talking about a very small part of the population when you talk about these savvy online consumers and certainly what what I see (both in terms of usage on our own websites and in the outside world) there is a lot more trust paid to price comparison sites than is probably healthy, particularly in markets where things aren't regulated that tightly.

On your other points, I wouldn't expect our Thomas Cook website to show cheaper prices from competitors as they aren't suggesting they are going to compare themselves against the market however with our Flights aggregator, Netflights, that is exactly what I would expect. My concern is that there are a huge number of price comparison sites that are not only misleading the customer but also getting paid to do it under the proviso of providing users with the best possible price / experience.

over 2 years ago

Helen Southgate

Helen Southgate, UK Managing Director at affilinetSmall Business Multi-user

Really interesting and valid comments here. My focus was specifically around price comparison in the energy sector, which is heaviliy regulated although there is always room for improvement. I do agree however that in other sectors away from energy, finance and perhaps utilities this area is less regulated and perhaps everything is not as transparent as it should be. This is something I'll personally raise within my industry peers and look into as I think it's not something that is not just important for the affiliate / digital sector's integrity but also with regard to customer satisfaction.

over 2 years ago

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Matt Lovell, Head of Group Analytics & Digital Insight at Thomas Cook Group AirlinesEnterprise

To your point Helen, interesting that the main slogan (Total Coverage, Totally Unbiased and No Hidden Costs) of the new Skyscanner TV adverts (http://www.skyscanner.net/news/skyscanner-launches-new-tv-advert) seem to be flagging up this imbalance in the world of Travel...

over 2 years ago

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Deri Jones, CEO at SciVisum.co.uk

Matt, I think you succinctly stated the 'elephant in the room' of Helen's article:

> there is a lot more trust paid to price comparison sites than is probably healthy, particularly in markets where things aren't regulated that tightly.

Helen:
> in other sectors away from energy.... is something I'll personally raise within my industry peers ...

Will you post your findings here?

over 2 years ago

Stephen Rumbelow

Stephen Rumbelow, Commercial Director at Online Media Group

When I ran the Moneyfacts.co.uk site similar concerns were raised back in 2008 with regards to how the Finance price comparison sites were being funded, and concerns around the lack of 'whole of market' coverage and how products were being listed. People were calling for the FSA to step in and regulate these sites. In some cases the concerns were raised by Advertisers who wanted to be listed but didn’t want to pay for the traffic and sales generated.

One thing I often think gets forgotten is how much value price comparison sites have given to consumers - basically a free resource to easily compare different products and save money. Price comparison sites are so popular because they embrace two of the most fundamental attributes of the Internet – ease of access to information; and the commercial opportunity afforded by matching buyers with sellers.

Obviously these sites are commercial enterprises and need to make money, they're not charities.

On the Utilities front, most Utilities comparison sites are actually signed up to Ofgem's Confidence Code - requirements of which include independence, impartiality, the fair presentation of tariffs, and the accuracy of information presented.

over 2 years ago

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mayank tanwar, Price Comparisom Online at Whatstheprice.in

In online shopping comparison of Prices is a major issue, every online (http://www.whatstheprice.in) manufacturer sell its products on best Price before buying any products online you must compare price it's more transparent and best deal.

over 2 years ago

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Usman Kokab, Affiliate marketing at Compare Panda UK

Affiliate marketing is one of most popular and easy way to earn online. In marketing, we can earn with different types of websites like cashback websites, discount voucher website, group deals websites and price comparison website. From all of these types of websites, I most like price comparison websites where the affiliate provide the users to compare prices on their required products with different retailers and stores and to find cheapest deals. On referring the use to the merchant website we can earn good commissions depending on the action of the user on Merchant website. One of the biggest examples of the price comparison websites are pricerunner, pricegrabber and compare panda UK(http://www.comparepanda.co.uk/).

over 2 years ago

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