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A game changing move

Posted on: Monday 4th of June 2012

A few months back we produced a report saying that a consumer decision-making revolution is transforming the way markets work. Moneysupermarket.com’s £87m acquisition of Martin Lewis’ MoneySavingExpert website is confirmation of this trend – and a game changing move.

To rehearse the story so far.

  • One hundred years into the grand marketing project – to influence consumer decisions in favour of particular marketers’ brands and products – the net effect has been to create one, grand elephant-in-the-room unmet consumer need: the need to make better choices and decisions. This is the one need that marketers have consistently and resolutely failed to meet. And it just happens to be the most important consumer need of all, because if I can make a better decision it will lead me to a better product/service as a matter of course.
  • The underlying reason why this need was never addressed was economic: providing individuals with the information they need to make better decisions is complicated and expensive. At least, it was complicated and expensive. But in the information age the costs of providing this service are plummeting, which is why we are seeing an explosion of services designed to help individuals in this task. These include search based services, comparison services, peer review services, peer and expert advice services, and so on.
  • These components of decision support have developed separately, in isolation. Search was separate from comparison, which was separate from advice, and so on. As our (free) Decisions! Decisions! report pointed out, this is just a stage in the evolution of a new market – a new industry of decision support services. The trend is towards increasing integration of all the services the individual needs to make a better decision. In the end, pure comparison without accompanied advice isn’t that helpful. The two need to come together. And that’s what’s happening with this acquisition.

Of course, there are other ways of looking at it. 59 percent of MoneySavingExpert’s income (basically, referral fees) came from Moneysupermarket, so for the comparison site it’s just a logical piece of vertical integration. Plus: considering MoneySavingExpert made £13m profit from £15m income, it is an extraordinarily profitable business.

That says two things to me.

First, the massive demand for, the relatively low cost of providing, and the incredible profitability of independent advice services, means that more and more people will enter this market. It’s going to become incredibly competitive, and therefore innovative.

Second, soon it just won’t be acceptable to offer comparison without advice. Moneysupermarket now has one over its competitors. They are going to have to respond. So expect more integration; more service development.

It’s these two things that make this deal a game-changer.

Just one more thing. For reasons I still can’t really fathom, 95% of marketing departments, marketing consultancies and agencies still seem oblivious to this aspect of the control shift: the primacy of decision-support as a source of consumer value.

Yes, the game has changed – but we’ll see a lot more changes yet.

Alan Mitchell