Price Comparison and the Great Energy Debate

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 any way 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 customer 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

Helen Southgate

Helen Southgate joins affilinet from BSkyB, where she was responsible for the broadcaster’s online marketing planning and strategy. Southgate has eleven years experience in performance marketing and in 2011 was the IAB Affiliate Marketing Council Chair. Her primary focus is to grow business in the UK, but she will also work alongside other country managers to grow the network at a European level.
Helen Southgate

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