Gocompare profit drops 28% amid competition and costs

Price comparison site Gocompare’s 2012 profit fell 28% as turnover dropped and the company spent more on marketing to compete with its rivals.

The company also made several investments in the business during the year, which inflated costs and ate into the profit.

‘Maturing’ price comparison market

Gocompare’s profit after tax for 2012 was £18.4m, down 28% on the £25.6m it made in 2011.

Turnover dropped by 3.5% to £105.1m (2011: £108.9m), which Gocompare attributed to “the maturing nature of the car insurance price comparison market”.

Administrative expenses jumped 8.7% to £81.2m (2011: £74.7m) as the company spent more on marketing.

The company’s directors’ report said: “Acquisition costs of customers have risen significantly as both competitors and insurers continue to invest heavily, particularly in media, in order to attract customers to their sites.

“Marketing spend continues to comprise a significant proportion of total expenditure, with a new TV creative campaign launched in July 2012 supported by various online and offline media channels.

“The company continued to seek opportunities to develop the Gocompare.com brand in 2012 and beyond, while maintaining control of marketing channel cost efficiency.”

Year of consolidation

The company also made investments during the year. This included the move to its new headquarters in Newport and investment in technology and systems.

The company also increased its average headcount by 29% to 125 in 2012 from 97 in 2011.

A company spokesman told Insurance Times: “After five years of rapid and substantial growth following the launch of the business in 2006, the year to December 2012 was one of consolidation for Gocompare.com as we made significant investments in the business as part of our longer term growth strategy.”