Esure should cut GoCompare and its annoying ads loose
The price comparison website cheered up an otherwise gloomy set of results, but it doesn't sit well to have it owned by an insurer
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Your support makes all the difference.GoCompare was a rare bright spot in the midst of a gloomy set of results from Esure, the general insurer.
Fuelled by a typically annoying marketing campaign, the price comparison web site increased revenues by 22 per cent and profits by 9 per cent. Its parent reported trading profits down by 3 per cent and chopped its dividend by nearly a third.
GoCompare’s outperformance shouldn’t come as any great surprise. The success of price comparison sites is closely linked to the success of their ads. For them, it’s all about securing name recognition.
GoCompare gets that through a tubby opera singer (the actor now wears a padded suit after losing a lot of weight). The ads are extraordinarily irritating. Perhaps even more so than the meerkats favoured by one of its rivals. Campaign magazine described them as “the nation’s most love to hate ads”.
But that’s kind of the point. They get into your head and you are more likely to use the site when they do. The most recent campaign, launched earlier this year, has proven the point yet again.
Annoying though the ads may be, more power to them. Price comparison sites help people to shop around. They encourage switching between providers across a range of products, which fosters competition, cheaper prices, better service.
Consumers would do well to remember that they are businesses, there to make money, and it's always worth taking the time to shop around more than one comparison site if you’re shopping around for insurance.
But if you only use one you should still be better off than using none.
Better for all concerned if that one wasn't itself owned by an insurance company.
Esure would say that the two target different markets. And that’s true. It would also argue that they operate as separate businesses. Also true.
However, it just doesn’t sit well having a business whose raison d’être is to help consumers get cheaper insurance owned by an insurer.
A strategic review is currently under way that is likely to see GoCompare cut loose. That would be better for all concerned.
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