GoCompare. It's one of those companies that you can’t separate from its advertising. A mere mention of the business immediately conjures up images of that Welsh bloke singing that tune.
Now the company that brought us luxuriously 'tached fictional tenor Gio Compario is buying MyVoucherCodes in a £36.5m deal. Here's why.
What is MyVoucherCodes?
The clue is in the name. With 8 million subscribers, 45 million annual visits and more than 9,000 brands, MyVoucherCodes is one of the UK's largest online voucher code sites. The company was founded in 2006 by digital entrepreneur and former Claridges chef Mark Pearson, who was brought up by his mother on a poor council estate in Liverpool. He ran the business from his bedroom until 2009. Five years later, he sold the parent company – Markco Media – to Monitise in a deal valued at £55m.
MyVoucherCodes is forecast to generate revenues of £11.8m and pre-tax profits of £4m this year.
What's in it for GoCompare?
In two words: page views. GoCompare’s business model is similar to MyVoucherCodes. It provides a price-comparison website for everything from pet insurance to broadband, generating revenues by charging providers a fee when a product is purchased through the site. It was the first to offer insurance in this way, and is now looking outfield to become the first all-purpose comparison hub.
‘This acquisition [...] will complement the services offered by GoCompare,’ says GoCompare CEO Matthew Crummack. ‘We are making strong progress towards our ambition to become the "go-to" place for savvy savers to find great deals, and for service providers to reach and acquire customers.’
GoCompare has a stated ambition to reach 100 million page views through its combined businesses, and MyVoucherCodes makes this an achievable goal, bringing in a retail segment to its service-based offering. Page views are crucial not only to attract potential advertisers but because they provide data. GoCompare claims to have gathered data from over 20 million customers from its 11 years in business. And it's hungry for more.
GoCompare says the acquisition will enable it to introduce offers to incentivise conversion on both GoCompare and MyVoucherCodes, and provide a new channel for its existing partners.
How will this affect the price comparison market?
GoCompare sits alongside confused.com, uSwitch, Moneysupermarket.com and Compare the Market in the competitive world of price comparison. It's a sector characterised by its flamboyant and often bizarre advertising – mainly because they all offer a very similar service. ‘It is very difficult to create differentiation except through marketing,’ Admiral CEO David Stevens told the FT last year. Firms have also attempted to diversify. Meerkat Movies, anyone?
Compare the Market is Go Compare's main competitor, as its parent company, BGL, prepares for an IPO next year in a rumoured £2bn listing. While GoCompare is unlikely to knock the meerkats off their throne, the deal with MyVoucherCodes strengthens its position in a market faced with slower growth and tougher competition.
Image Credit: Go Compare/Vimeo