People everywhere are overpaying. We are targeting the opportunity to help people buy smarter and better, giving consumers confidence in their financial products and ultimately save them money >> making it easy, fast and worry free.
Comparison
For our core GoCompare comparison business, car insurance remains the biggest vertical. Increasing costs of insurance tend to act as a catalyst for people to act and shop around, inevitably leading to more switching as keener pricing is sought by consumers. Conversely if year-on-year premiums start to fall, the differential between the renewal and new insurer price reduces, which can lead to less botheration and hence switching. This is what happened in 2018 with average insurance premiums in the UK falling by 11% from mid-2017 to mid-2018 and by a total of 6.5% for the whole of 2018. This led the overall car insurance switching market to decline by -2% for the total year.
Towards the end of 2018 Year-on-Year insurance premiums increased +3% compared to mid-2018. However, switching rates remained muted declining by -5% in the second half of the year and hence the expectations for both the underlying change in Year-on-Year insurance premiums and expectations for the Price Comparison industry remain to be seen.
Rewards
Through MyVoucherCodes, we offer people savings on a range of necessary and discretionary spending – particularly retail, travel and recreation. The overall voucher and discount market size is closely correlated to underlying online retail spend which continues to show impressive growth rates despite the challenges on the High Street as consumers continue to change their behaviour. In 2018, the online-only retail market grew by c.15% versus in-store sales only growing by 2% (Office for National Statistics). Online retail spending through November and December in 2018 represented over 20% of total spend.
Between August 2017 and July of 2018, overall traffic to voucher code websites grew by circa 13% year on year and coupled with this backdrop of growing online retail sales, we anticipate strong sustainable growth in 2019.
The voucher code market has evolved rapidly over the last 24 months as traditional media publishers look to monetise their content by launching voucher code services. At the time of acquisition, the MailOnline had entered the market and was beginning to gain traction. Recognising this as both a risk and opportunity, we moved quickly to leverage our Group credentials, resulting in exclusive partnerships with The Sun (News UK) and The Express (Reach plc) to provide white-labelled discount sites. The MailOnline remains the current market leader having achieved first-mover advantage. However, the Sun with the most online visitors of publishers in the UK (>30m unique monthly visitors) has the potential to be a key player in this space, albeit it will take time to build organic traffic and grow the business.
Unlocking Exceptional Growth
Consumers have struggled through 2018 finding themselves feeling more uncertain and less confident about the future, having reached the lowest levels since July 2013.
But even against this backdrop they still find themselves spending more than they need to on everyday purchases, from insurance to electricity, holidays to household goods. Our mission to save people everywhere time and money has never been more relevant to consumers.
Traditional price comparison websites typically meet the needs of certain types of customers, ‘savvy savers’, who understand their finance and are willing to proactively compare and switch. Whilst we continue to maximise the core market, the real growth opportunity is in attracting those who never switch or do not switch on a regular basis. As such our focus since we listed in November 2016 has been on solving for ‘botheration’ – addressing people’s inability or unwillingness to shop around and switch to better deals.
We believe there is significant headroom to target non-switchers in energy:
- Ofgem’s State of the Energy Market report for 2018 shows that 54% of Britain’s 28 million households have either never or only once switched energy tariff.
- That indicates 15.1 million households are on standard variable tariffs (SVTs) or default tariffs – the poor-value tariffs that the Government’s price cap applies to.
- The average difference in the annual cost of these SVTs and the cheapest deals in the market was £275 in November 2018.
The Government’s energy price cap came into force in January 2019, but it only impacts the most expensive tariffs and consumers can still make significant savings by switching. Price comparison websites are popular for the engaged minority but that leaves many consumers whose needs are not being met and can make considerable savings.
Fundamentally, people perceive energy switching as a hassle. An Ofgem report found 47% of consumers surveyed agreed with the statement ‘switching is a hassle I’ve not got time for’.
We believe with the right proposition addressing low awareness among consumers, the perception of switching difficulty through other means (comparison websites, via energy suppliers directly), and the large savings that are to be made, there is a big opportunity for market growth.
‘Auto-switching’ propositions have been acknowledged in the media and by industry bodies as a new way of managing the cost of energy bills that addresses the current challenges with the potential to unlock the huge opportunity. 2018 marked the year when automatic switching (auto-switching) started to gain traction in the domestic energy market.
And we were the first of the established companies to recognise this opportunity, launching weflip in 2018. weflip is a revolutionary proposition, where consumers delegate their responsibility in a ‘Subscribe & Save’ model. It has a transformative business model delivering sustainable and predictable recurring revenue improving loyalty and developing a deeper customer relationship with the potential to achieve long-term growth.
