established itself as the leading financial price comparison
website in the UK, with visitor numbers increasing by one-third
last year to 120 million. The firm’s head of banking and credit
cards, Kevin Mountford, tells Douglas Blakey that the market is now
overcrowded and needs consolidating.

UK: bank comparison sites by visits, end-of 2008In terms of market share, remains head and shoulders above its rivals.
For 2008, the UK’s best known price comparison website boasted a
monthly market share almost three times its nearest rival for
retail banking and card products (see chart below).

In the middle of increasingly challenging
market conditions, visitor numbers to Moneysupermarket’s website in
2008 increased by 32 percent to 120.1 million, with transactions
increasing by 23 percent to 71.4 million, helping revenue grow 10
percent to £178.8 million ($262.8 million).

But despite the popularity of the site,
Moneysupermarket plunged into the red, posting pre-tax losses of
£50.4 million after a hefty £70 million goodwill impairment

And the situation is worsening. Ahead of its
AGM on 16 April, Moneysupermarket issued an interim management
statement regarding trading in the first 14 weeks of 2009. It said
business in the quarter was approximately one third below the same
period last year despite a 6 percent increase in visitor numbers.
“Revenues in the Money vertical are slightly in excess of 50
percent lower than the same period last year. Revenues from
credit-related products are markedly down over the same period last
year, while demand for non-credit products, particularly savings
and current accounts, remains strong.”

An increasingly congested UK

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Reflecting the increasingly congested
price comparison landscape in the UK, Moneysupermarket’s revenue
per visitor to its ‘money’ unit fell by 32 percent from £2.82 in
2007 to £1.93 last year, despite the firm’s success in raising
visitor numbers by 27 percent to 35.1 million.

The problem has been two fold: a shrinking UK
banking market; and increasing competition. “There may be room for
up to half a dozen quality aggregators in the UK,” Kevin Mountford,
head of banking and credit cards at Moneysupermarket, tells

“Recovery from this recession will be cash led
and not credit led. Last year, savings rates were artificially
inflated but now we are seeing savings rates fall in line with base
rates,” he added. “It remains to be seen if there will there be as
much volatility and account switching in 2009 as last year but so
far in quarter one, it seems there is still a real appetite [with] people still trying to make sure they are getting a good deal.”

The well-documented flight to safety last year
may now be evolving. “This year we are seeing another shift and
rate seems to be a most significant factor,” he noted.

But Mountford remains concerned consumers’
disillusionment with the banking sector may result in apathy about
choosing the right products. “The banking industry does not really
help in the language it uses and we see more and more product
features coming into play which just adds to the confusion,” he
said. “We have been very good at serving those that are reasonably
savvy and yet they are becoming fewer and far between.”

Further international expansion is not ruled
out – the firm set up shop in Germany in 2006 – nor is an expansion
of the firm’s product range in the UK. “Nothing is ever off the
agenda,” was as far as Mountford would go when asked about the
possibility of his firm expanding into the reverse auction arena
observing that “he quite liked the principle that such sites as the
recently launched offered” (see RBI 606, 608,

In the meantime, the firm is investing in its
web portal, spending on editorial content, video blogs, web charts
and user reviews. It is also looking to cut its advertising bill –
a mammoth £84 million last year.

“There was quite an advertising battleground
last year [and] in this market we have to watch carefully what we
spend on advertising. [But] the message will continue that we are
the number one price comparison site, with a tremendous product,”
he concluded. - by sector, 2008