Price comparison, voucher, cashback, loyalty and product review websites accounted for £14bn in sales in 2013, according to the second annual Online Performance Marketing study conducted by PwC for the Internet Advertising Bureau UK (IAB). The figure is 15 per cent more, on a like-for-like basis, than in 2012.
52 per cent of British adults online report having visited a price comparison website in the last six months, according to GfK NOP’s online panel of UK internet users aged 16 and over. Nine in 10 say they cash-in vouchers or redeem points, half of whom do so every month. One in eight has redeemed a voucher or deal using an app on their mobile phone.
PwC’s figures are based on detailed submissions from 27 companies. This was supplemented by a modelling methodology for companies not participating, as well as a further 26 in-depth interviews with industry participants.
comScore MMX Multi-Platform data from November 2013 shows that in that month, 39 per cent of the UK internet population (18.7m people) visited a price comparison site; 35 per cent (16.6m) visited a voucher/coupon site while 21 per cent (9.9m) visited a loyalty or cashback site.
These types of sites – such as Comparethemarket, TripAdvisor, Vouchercodes, Nectar and Quidco – are the best-known examples of Online Performance Marketing (OPM). In OPM, advertisers don’t pay publishers to show the ad, they only pay if the ad causes someone to complete a defined action, such as making a purchase (affiliate marketing) or submitting contact details (lead generation).
In 2013, UK consumers made 150 million purchases via affiliate websites – three for every British adult – totalling £13 billion. £1 billion in sales was generated from Britons submitting contact forms. This means OPM now drives about 10 per cent of all UK e-commerce retail sales.
Advertisers spent £1bn on OPM activities in the UK in 2013, 15 per cent more (on a like-for-like basis) than in 2012. The £14bn in sales generated by the £1bn spent represents a return of £14 for every £1 invested by advertisers.
“The proliferation of online services offering deals, incentives and product reviews has ushered in a new era of savvy and careful consumerism,” said Tim Elkington, director of research & strategy at the IAB “However, the industry is growing quickly because it’s an ‘everyone wins’ situation. Consumers can save money in a variety of convenient ways and get access to content online free of charge. Advertisers get new customers – nearly six in 10 people become repeat customers of a company they only discovered through a deal or incentive site – and, at a return of 14:1, it’s extremely cost-effective. It also generates extra revenue for the publishers in the middle, large or small, via referral fees.”
The Finance sector, driven by insurance and credit card advertisers’ use of price comparison sites, is the biggest spender – accounting for 35 per cent of OPM expenditure in 2013 – followed by Retail (21 per cent). The top five are completed by Travel & Leisure (17 per cent), Telecoms & Media (9 per cent) and Gaming (7 per cent).
Dan Bunyan, Manager at PwC, says: “OPM generated around 4bn clicks in 2013, the equivalent of 10m per day or 120 per second, about 5 per cent of which resulted in a transaction. This high conversion rate and the high return on investment explains the significant increase in advertisers (to 4,000) and publishers (to 12,000) now using OPM.
“It isn’t just the big publishers, or ‘super-affiliates’, who generate revenue through OPM. It’s opened up a new and growing industry among the ‘long tail’ where Individuals and small publishers with specialist knowledge of a particular area can produce websites and then automatically generate advertising revenue.”