Stock in focus
James Godrich, Research Assistant
52 week high-low£3.58-£2.26
Hist / pros per25.5-20.2
Equity market cap£1.851m
MoneySupermarket.com started life in 1993 as ‘Mortgage 2000,’ an offline business providing mortgage listings. Since then they have developed into the UK’s largest listed price comparison website offering customers 60 different products from over 700 providers.
They now have more than 18.6m customers on their database, 12m subscribers to their MoneySavingExpert.com weekly email and had interactions with nearly 85% of UK adults in 2016.
Price comparison websites (PCWs) work by aggregating legally binding quotes from mainly insurance, utility and financial product providers.
You, as the consumer, enter your data into the PCW, who then use this to instantaneously obtain price quotes from various different providers. When you subsequently use the link provided to sign up to the, usually cheapest, quote the PCW receives a fee, paid for by the provider.
The consumer likes this because it allows them to easily compare prices from multiple providers for what is often a near homogenous product. The regulator likes it because it promotes price competition in historically sticky markets. And the provider likes it because it allows them to easily acquire new customers without costly advertising campaigns.
This model has seen rapid growth in recent years having benefited mainly from the structural tailwind of increased penetration of bills, utilities and insurance management online. In addition, PCWs have been the beneficiaries of a Government drive to increase competition amongst providers, as well as large savings opportunities for the consumer as a result of previously opaque pricing and low customer switching rates.
With 18.6m customers, MoneySupermarket.com is the UK’s largest listed price comparison website
Despite this structural growth, market share gains have been made mainly through expensive and sometimes ineffective advertising spends. It is important, therefore, that MoneySupermarket has recently completed a three year, £50m capital investment programme into technology, data and IT infrastructure. This investment has come ahead of their peers and leaves MoneySupermarket with a well invested first mover advantage in professionalising the industry and improving customer retention.
These investments have been made in-line with management’s vision of moving MoneySupermarket from a ‘search’ to a ‘serve’ model and have come through three main channels; their ‘Fusion’ data platform, MoneySavingExpert, and the GO app for mobile and tablet.
Arguably the most important investment has been that made into their Fusion platform. Fusion has meant the consolidation of data from their more than 18m customers across their various different verticals. Where previously MoneySupermarket was unable to tell whether they had sold you a credit card and insurance or a holiday and an energy tariff, they will now be able to optimise their significant data through their new CRM system enabling significant cross-selling and up-selling opportunities.
Further investment has been made into MoneySavingExpert. Acquired in 2012 and with 12m weekly subscribers, the website is seen as a trusted source of financial advice, driving nearly 10% of MoneySupermarket revenues. Through their website and blog, MoneySavingExpert provides readers with money saving guides, tips, tools and techniques which range from the best available mortgage deals all the way through to the cheapest place to buy your make-up wipes.
Two of the services offered by MoneySavingExpert have been particularly successful in driving revenues through MoneySupermarket; namely their Cheap Energy Club and their Credit Club.
In the Cheap Energy Club, MoneySavingExpert retain your data and use this to monitor your energy tariff on a monthly basis. If they are able to find a better deal MoneySavingExpert alert you of this and reward you, the customer, with half of the £60 payment that they receive from the provider when you switch. They also offer a collective switch service where a provider may choose to offer a particularly attractive deal to a maximum number of ‘club’ members in order to attract new customers; the same payment structure to both the customer and MoneySavingExpert applies.
The Credit Club is a joint venture with Experian, the FTSE 100 credit bureau. Here MoneySavingExpert combine Experian credit data with their own ‘affordability’ software in order to estimate your loan and credit card eligibility and likely acceptance rate.
Lastly, investment has been into the MoneySupermarket GO app. Launched in 2016, this provides a mobile and tablet platform aimed at dealing with a customer shift from desktop to handheld devices, and crucially comes with a built-in wallet.
The ideal life-cycle would see a customer signed up to the Cheap Energy Club through MoneySavingExpert. Once the customer has changed service provider, they would receive £30 cashback into their GO app wallet. This could then be spent on alternative MoneySupermarket products, suggested and promoted by data driven from the Fusion platform.
Structural tailwinds appear to remain for the sector as a whole in the medium term at least. The question for the long term is who will win the market share race; CompareTheMarket’s meerkats, GoCompare’s opera singer or the MoneySupermarket data scientists and bargain hunters behind GO, Fusion and MoneySavingExpert?