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Comparison sites feel the chill in Google Compare’s shadow

Online comparison sites will be watching nervously as Google continues its encroachment on to their territory.

These sites that allow consumers to weigh up multiple quotes for anything from car insurance and credit cards to flights and energy bills have been seen as vital online tools in empowering ordinary people and forcing big businesses to offer better deals.

But the previously harmonious relationship comparison sites have enjoyed with Google – relying on the search engine to deliver many of the paid and organic visitors they need to drive their businesses – looks set to change.

Earlier this month, Google announced the introduction of its Google Compare offering to California’s car insurance market, with plans to extend the service to other states and new product areas in the future.

Google Compare Auto Insurance HomepageDespite the plethora of existing car insurance comparison sites that Californian motorists have at their disposal, Google feels there’s still a need that’s not being adequately met.

“When it comes to buying car insurance, 80 per cent of drivers think they’d find a better policy if they could compare more than two providers,” Google said in a post on one of its official blogs. “That’s why today we’re introducing Google Compare for car insurance in California, with more states to follow.”

In the UK, consumers can already use Google to compare car insurance, credit cards, mortgages and travel insurance, presenting a challenge to a whole range of comparison sites, brokers and intermediaries.

On the one hand, Google Compare feels like an odd strategic move that leaves Google competing with customers of its AdWords product.

Google does a lot more than sell ads these days, but advertising still accounts for the lion’s share of its revenues, generating USD $60 billion to support the company’s various activities last year. Some of the businesses losing out to Google Compare will be buying AdWords traffic.

But this is not the first time Google has cut out the middle man and provided users with the information they want rather than just pointing them in the right direction. Knowledge Graph has been doing that within search results for a couple of years now.

And while comparison sites might be unhappy about facing a new rival with the vast resources of Google it’s unlikely that they’ll be taking their AdWords business elsewhere, as the search giant has a virtual monopoly in some markets (almost 93 per cent of Australian desktop and tablet searches during December 2014 used Google, according to StatCounter).

Even the insurance providers that partner with Google Compare will keep bidding for their target keywords. The emergence of comparison sites 15 years ago didn’t stop insurers trying to go direct to customers and neither will Google’s entrance to the market.

A bigger concern for insurers will be how dominant Google Compare eventually becomes. Like regular comparison sites, Google’s revenue comes from the insurers on a cost-per-acquisition (CPA) basis. So, the service is free for users, but insurers pay a fee when they make a sale.

Previously, the comparison site market has had multiple players, some of which are owned by the providers themselves. Google Compare will feel like an entirely different proposition.

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