Google Cans Mortgage Comparison Website

Google Compare MortgagesAfter less than a year in operation, Google is reportedly abandoning its mortgage comparison business in the U.S. It’s also closing its well-established U.K. mortgage site.

Dow Jones reports that Google sent a letter to advertisers saying the sites would shut down March 23, 2016. A Google spokesperson apparently confirmed the email, which, according to SearchEngineLand.com, said:

“Despite people turning to Google for financial services information, the Google Compare service itself hasn’t driven the success we hoped for. We greatly appreciate your partnership and understand that this decision will be disappointing to some. But after a lot of careful consideration, we’ve decided that focusing more intently on AdWords and future innovations will enable us to provide fresh, comprehensive answers to Google users, and to provide our financial services partners with the best return on investment.”

Translation: Revenue generation was insufficient and selling leads cannibalized Google’s other advertising businesses. After all, there is overlap. Had Compare not existed, many lead buyers would have used Google AdWords to attract mortgage leads.

On that topic, Fox News wrote:

“Analysts at Forrester Research had warned that Google’s offering, by allowing consumers to buy policies and mortgages directly, could anger some insurers and lenders who are big advertising clients of Google.”

The news is still remarkable, especially since this is the second time Google has shuttered a U.S rate comparison site. It launched mortgage rates on Google Advisor in 2010, only to shut that down and relaunch as Google Compare last year.

What Went Wrong

“I’m not that surprised,” says Alyssa Furtado, founder of financial product comparison website RateHub.ca. “Google is in the business of making money from the most automated services possible.”

“AdWords is such a beautiful business. You bid on a keyword, you enter your credit card, and that’s it… For those in the lead gen business, it’s a much deeper relationship [with the advertiser] and it needs a human touch.”

Google Compare never really got out of the pilot stage, at least in the U.S. Among its handicaps:

  • It had limited geographic coverage, with California being its mainstay state.
  • It had a relatively small selection of providers. The website said it had “over 75 different lenders,” but that’s in a country with 7,000+ mortgage lenders and 400,000+ mortgage brokers/originators.
  • It didn’t offer most of the biggest household-name lenders.
  • Google might have been early, as the industry is still not mature. Last year, for example, LendingTree found that 83% of Americans have used a price comparison website like Amazon, Priceline or Expedia, but still only 14% of online shoppers compare mortgages online.
  • Some analysts have suggested the competition police (e.g., the European Union) had a skeptical eye on Google’s favourable positioning of its own web properties, like its rate comparison site. But that is speculation.
  • Google ostensibly had to split revenue with its Google Compare partners, LendingTree and Zillow, potentially making its profits less robust than if it had launched without these companies.

Furtado also questions Google’s overall model. “They’re taking on more conversion risk [with Google Compare, than AdWords],” she says, noting that it’s easier for consumers to click an ad than fill out a contact form. “After selling leads, they may have realized that it’s more profitable to sell cost-per-click campaigns.”

Implications For Competitors

It’s tempting for outsiders to look at Google’s exit and question the viability and growth of the Internet mortgage space. In fact, Google’s exit is no reflection of online mortgage prospects. The search titan is constantly testing new businesses and only a minority of those businesses survive.

“Rate comparison sites are alive and well in Canada and all around the world,” says Yousry Bissada, CEO at Kanetix, which owns RateSupermarket.ca. “We have seen continuous growth year over year, over the last 16 years in business.”

alyssa-furtadoAs far as Google’s competitors are concerned, they couldn’t be happier. Furtado says: “As someone who runs a mortgage rate comparison site, this is…awesome news. It’s great that Google wants to leave [online mortgage comparison] to separate websites.”

Consumer response to Google Compare has been positive and mortgage-related search engine queries continue trending up. “Since we started in this business…every year the market for online [mortgage] searches grows by 30%,” says Furtado.

“I agree with Alyssa’s assessment,” Bissada confirms. “We see similar growth in interest especially when it comes to mortgage rate comparison…We also see shift in how consumers use rate comparison sites with more than 50% of traffic originating from smartphones.”

The Next Rate Site Customers

“Independent mortgage brokers and lenders want to reach consumers directly. They know more and more people are going online and that’s why many see purchasing leads as a key part of their marketing strategy. We’re seeing increased demand from banks and lenders, not less…We’re seeing the rise of the small bank and the credit union [as direct-to-consumer] advertisers.”

As someone who owns a mortgage comparison site, I too see this evolution. Factors like these portend continued growth in online mortgage marketing, which is partly why stock in top U.S. rate site LendingTree.com is up 58% in the last 12 months.

Will Google Ever Re-enter?

Given the company’s search clout, Google Compare had the potential to dominate online mortgage lead generation. Its departure now slashes the odds of Google launching a mortgage comparison website in Canada.

That is music to the ears of many Canadian originators, lenders and rate comparison websites, as it alleviates the potential competitive threats such a move might have created. But don’t completely rule out a comeback. Google has jumped in and out, and back into business lines before—including this one.

*********

Another Key Change

Google recently made another change that will impact online mortgage marketers. It has eliminated ads on the right side of its search results. Instead, it has begun inserting another ad on top of search results, and more ads on the bottom.

Why does this matter to online mortgage sales? Two reasons:

  1. With more competition for the 3-4 top ads, the price of buying mortgage keywords (AdWords) will increase.
  2. Organic search results may generate slightly fewer clicks as they’re pushed down the page one row. Arguably, that makes search engine optimization (SEO) marginally less effective.

 

More Stories
Average home prices rise in March 2021, says CREA
Average Home Price Hits a Record $716,828. Is Another Policy Response Coming?
Copy link