Credit where Credit’s due: Google enter Credit Card Comparison Market

February 24, 2010
by Stephen Murphy

So… Google is going after the credit card market. Tests are currently underway, with an evolution of Merchant Search, a previous bid by Google to enter the UK comparison market for secured loans in 2008.

The service will be based on a CPL model (cost per lead) where it is free for advertisers to appear – but a charge will be incurred each time a customer clicks to apply for a specific credit card.

Ian Morgan, industry head at Google, said, “We hope this new ad unit will help users easily find and compare credit card offers without the need to reveal personal information, while providing advertisers with a sophisticated and flexible cost-per-lead model.”

To me, this move seems to make sense - with current market conditions lending themselves to ‘someone’ taking advantage of a market that has softened in terms of PPC costs during the past 18 months or so.

But if advertisers don’t want to spend on the product – how can Google monetise what has always been one of their more lucrative PPC sectors? By offering comparisons service of their own!

Google has during the past year or so delivered numerous presentation decks in which they are discussing the “missed opportunity” available to providers of credit cards. Their bait?
• No competitors spending heavily
• Use this to take a bigger share of traffic and therefore the market
• Capture some low cost, efficient volume

Providers aren’t biting! They know their products and the customers out there at the moment. A short term view may show conversions, but the market and LTV of a customer has more of an impact on planning ad spend for this product.

The Market

Competition within the credit card marketplace has clearly declined – which has naturally led to lower CPCs on the core generic keywords. Fewer advertisers spending big on the top generic keywords is intrinsically linked to a number of factors:
• Customer quality is in decline
• Higher delinquency (customers missing consecutive payments)
• Lending/Acceptance criteria is tightening
• Customers becoming increasingly savvy about comparison services
• “Rate Tarts” on the up

The last point here about so called “rate tarts” is related to customers who continually move from one provider to another – with the sole motivation of avoiding charges on balance transfers and purchases for a set period of time. This is evident when we look at the trends for one of the top terms “0 balance transfer” – highlighted below:

The problem that providers and therefore advertisers have is that in many cases the profitable customers for them have been increasingly out of reach in 2009/10.

Customer search behaviour is also something which highlights the type of customers out there within the Credit Card advertising space – with “bad credit” queries on the increase. Ironically, this is actually being fuelled by the Google Suggest function – which presents bad credit searches as 2 of the first five search options when users start to type in credit card. The trend for search on these keywords is highlighted below:

The introduction of this service for Google may well be a sign of things to come – as similar listings and services could also be introduced to some of the other core financial services products, such as Mortgages and Savings accounts. Indeed, mortgages were used when this was tested in the US back in 2009.

Did merchant search really work? Feedback suggests that customer information is key in this market. The main obstacle I foresee for this is the quality of leads being delivered by the scheme. If users aren’t required to input personal information – then perhaps this will lead to potentially “unqualified” customers being shown a particular credit card product, ultimately lowering conversion from lead to accepted customer.

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