Google has bought UK price comparison site BeatThatQuote.com for £37.7m. The company's managing director John Paleomylites owns 90 per cent of the online property, which was founded in 2005. "We are confident that by combining BeatThatQuote.com's expertise in UK financial products with Google's technology, we'll accelerate …
How do these places make money?
I never understood how these comparison websites make money, unless it's via site advertising. Sure, when I am shopping for insurance I *might* use a site to get a feel for premium prices but I'd never ever in a million years buy the policy through these people. It just doesn't seem the right, proper and safe thing to do.
And £37.7m for a website I've never heard of that has apparently made a loss? A fool and their money ...? Very strange deal imho.
re: make money
They're purely and simply just brokers. Middlemen who take a cut. You and I know this, but many don't, and nobody ever lost money by underestimating the ignorance of the masses.
But you don't buy anything through them, they are just a referrer. You buy through the insurance providers website you chose and they give commission back to the comparison website. (As well as money from advertising and being a preferred companies).
If you want the commission yourself then go through a cashback site.
They will be trying to get their customer base as large as possible so they can sell it. This will probably result in losses due to advertising and staffing. But even if they ran at a lost of $2 million a year for 5 years they are still quids in with the sale.
The downbside of price comparison sites
Of course the downside of all these price comparison sites is that they force companies into financial models involving first year discounts and bonuses for customers. I now find that every year I have to change suppliers for ca insurance, household insurance, contents insurance, instant access saving, credit card acounts, ISAs, miscellaneous bonds, electicity supply, gas supply, mobile phone, broadband, fixed lines. It's a financial treadmill...
BeatThatQuotes technology is nothing special, their service is nothing special... as someone that used to work for both uSwitch and for energyhelpline.com I'm at a loss to understand the purchase by Google, it doesn't make sense to me at all, especially a loss making business, I *know* they could have purchased a profitable company in the same field had they asked around *a bit*.
Coverage so far seems to say BTQ will continue to operate as an independent business, that makes even less sense to me, if Google are not to integrate... what's the point? Why didn't they just buy a loss making car dealership? I mean, as an independent business it's just as random.
Re: Strange deal
If they keep it at arms-length, they can probably give it top billing in search results without fanning the flames of the anti-trust case from foundem with all the major price comparison sites weighing in.
Ok, Google. Not a company entirely devoid of programmers / web designers / db admins etc etc
Surely they could have just written a site a damn sight cheaper than £37m
Existing customer base I hear you cry! Hell we're talking about Google here, they do kinda have a massive existing customer base already
I just don't get it, maybe they're just lazy. I'd love someone to explain why buying this site is better than just writing your own
Perhaps they have money to burn....
And this is just a piss in the ocean to them. They liked the site, they bought it along with everything ready to run, the contracts with the insures signed and all the I's dotted and the T's crossed, they just need to point their search results at it as first preference and wait for the cash to come tumbling in.
Or something like that!
re:Perhaps they have money to burn....
Let's say the payment from the insurer is per deal is £25, and that the cost of sale is £7.50. Lets say the conversion rate is 2%
So for the business to break even they need to drive an extra 115,000 conversions, which equates to 5.7m extra visitors need to be driven the site.
And thats to produce no profit, thats to break even. Now lets say Google illegally fix it so that BTQ dont have to pay for Google Ads and that means the losses of £2m a year fall to zero. Which means with 5.7m extra visitors per year BTQ now makes £2m per year. That means in ~18 years Google will see a return.
Either someone hoodwinked Google here, or there is just something about this deal that no one sees yet.
re: But why?
The only thing of value that I see are supplier relationships and contracts, but even so, just like building their own comparison code, Google could have gone out and signed the suppliers up at a substantially smaller cost than £37m.
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