Monday, 15 March 2010

G-Force

I read with interest reports from NMA of Google moving into the price comparison space for financial products with Google Comparison Ads. This product has been floating around for a while in the US under the guise of Google Merchant Search but the site of comparison functionality under a search for "secured loans" represents the first sighting in the UK.

The threat of Google increasingly moving into this space must be the cause of many sleepless nights for online comparison websites such as Shopzilla, Kelkoo and Shopping.com. These organisations have built their businesses around a consumer desire for simple online product comparison. The majority of their revenue comes from turning cheap clicks acquired from search engines, into more expensive clicks and sales for advertisers paid on a CPC/CPA rate.

Google have continually denied any desire to move into the price comparison space. A number of years ago, I challenged them on the rumours of a travel price comparison site named Troogle, a new rival to TravelSupermarket and Cheapflights. Although this was categorically denied by Google, the main reason the rumours continue to circulate is that there remains a gap in the market for an all powerful meta comparison engine. I also know some Google staff have made it their life's goal to ensure that purchasing travel online is made so much easier.

In my opinion, one of the main reasons that Google is so reluctant to state any explicit intent to expand into the price comparison space, is the conflict between their desire to innovate and the effect this may have on their cash cow.

Despite continual diversification into new and innovative products and the majority of Google's revenue is still obtained from their original Adwords product. Price comparison sites are traditionally significant spenders in PPC. In the UK, MoneySupermarket is renowned as Google's largest single account. It is also the largest price comparison site.

MoneySupermarket will typically feature and compare the products of many leading brands that also pay to advertise within the Google sponsored listings. Without doubt the competition between direct and indirect advertisers is a major contributor the Google revenue figure (and also one of my personal frustrations).

Whilst Google may see it as desirable for the user experience to combat the additional layer that is the price comparison site and give more value to direct advertisers, there is clearly a risk from the reduced number of advertisers bidding for the top positions.

By creating price comparison functionality within the search engine results pages, Google threatens to bite the very hand that feeds them. They will earn some incremental revenue from the increased clicks from the direct brands that advertise with them directly but I question whether this will compensate for the investment that will lose by marginalising the comparison engines.

I can't help but wonder how this will develop. Comparison Ads infiltrating the UK SERPS, Google Shopping maturing and growing and an increases desire from Google to ensure that they are the first port of call for any activity that takes place online.

No comments: