Recently we’ve written about the power of online aggregators, but it’s not always a plain sailing route to sales. Indeed, many have been met with resistance from a number of players in their space. Let’s look at what the concerns are around aggregators and offer some thoughts on the challenges for both parties in this situation.
Speaking as someone with an affiliate background, I’ve always viewed consolidated purchasing websites, and their clear selling power as a major plus. But looking further at this, there are some concerns and it’s easy to understand the position.
The “ASOS problem”
“Next year we’ll reintroduce affiliate marketing but as it should be, as opposed to affiliates as they were. [There’ll be] no silly commissions being paid to grubby little people in grubby studios growing income at our expense, getting in the way of genuine sales.”
Nick Robertson, CEO, ASOS 2006
ASOS at this stage had long had an issue with affiliates and as a result some retail online aggregators, although this has improved over the years. The logic goes that businesses like ASOS have invested far more deeply — with warehousing, distribution and multiple other real-world costs — than aggregators, who only need to maintain marketing and software. ASOS feel they have real skin in the game and deserve to have customers buying on their site, not on listings elsewhere. They don’t want an aggregator merely re-listing ASOS stock for commission and taking away the upsell and branding opportunities
ASOS aren’t alone in this line of thinking. It’s well known that some insurers continue to avoid financial price comparison websites. This is despite the significant impact that price comparison aggregators have had on many businesses within the sector. Below shows how the impact and continued growth across Europe for aggregators in the space.
It’s worth noting that aggregators in general, but particularly in the financial space have truly invested in marketing their brands, which means that when the time comes for car insurance renewals for example, they’re front of mind for consumers. For example it’s difficult for many insurers to be able to compete against this kind of investment. There is also a depth of product offering which individual insurers simply won’t always be able to compete with. The sheer volume of insurers available means that the user is truly getting a view of the marketplace, which an individual provider can’t easily cover.
Mckinsey’s report highlights this fact when insurers are considering avoiding Aggregators below:
“Some insurers refuse to work with aggregators (for example, HUK-COBURG in Germany). Insurers that successfully take this path need a powerful brand that resonates with customers and usually have either a strong broker network or a high volume of direct sales. They may be able to profit by avoiding direct comparisons with competitors, but they need to invest heavily in their sales channels and brand to lock in and expand their customer base. Because customers increasingly compare prices for services, insurers must refine their marketing to explain why their products are better and highlight additional customer benefits.”
Bearing in mind that all traditional retailers and insurers are under intense pressure sell products and ensure that sales targets are an ever increasing amount, they’re likely to lean towards aggregators in the future unless they have significant funds to address the above. Simply for the convenience if not a particular love of the aggregator model.
The benefits of a good relationship
Despite some of these relationships being less than ideal, if the fine line between aggregators and suppliers is adhered to, there can be benefits for both parties.
For aggregators, the benefits are obvious. They’re able to become a destination of choice for consumers who can offer a wide variety of products and services, providing cost savings and increasing their own sales. As well as in depth content on the verticals they represent.
For suppliers, there are still benefits in terms of increased sales they may otherwise have missed out on. There will always be a branding concern for them and this has a clear knock on effect in regards to the ability to resell to those partners, but working closely with aggregators to understand how this could be implemented will help to navigate this issue.
At UBIO, we’ve seen some signs of optimism however, with suppliers opting to have co-branded checkout pages where sales or bookings are taking place on aggregator websites. This enables consumers to understand exactly who they’re purchasing from which is very much in the interests of all parties in regards to any future support required on the product for the consumer.
What does the future hold?
There will always be a number of suppliers who simply won’t want to fully engage with aggregators and work on them (like Direct line, Ryanair etc). But for every supplier who doesn’t want to appear, there will be a small or medium supplier who gets an opportunity to increase their sales via a large platform with large numbers of consumers.
We’ve seen this for years in the Car and Home insurance space, where a number of challenger insurers have been able to come through, gain a foothold in the market and punch above their weight thanks to their presence on aggregator websites.
If your brand presence and ad spend budget is large enough that you feel you don’t require the aggregator exposure, that can also work for you, but increasingly the pool of suppliers across all verticals who reject the opportunity is reducing and that is likely to continue in the future due to the growing influence of these sites.