Using Moneysupermarket.com, this online service group provide consumer advice and information with the help of Patrick Stewart.
Felt cute so wanted to do a write up on Moneysupermarket:
Moneysupermarket was founded in 1993 in Nottingham by Simon Nixon, starting out as a weekly newsletter on mortgage deals (my man was making Ā£10k/month posting lettersā¦!). Moneysupermarket (MONY) has evolved to become whatās known as a price comparison website (PCW). PCWs are effectively insurance (as well as energy, loans, etc) aggregators, i.e. they show you a range of the cheapest deals. Whilst some worry that PCW commision fees are ultimately passed onto consumers, or that insurers buy their way to the top of results, the overwhelming consensus is that PCWs have championed more competitive, and therefore cheaper, pricing for consumers. The magic of their business model lies in its ability to generate repeat business 
The UK PCW market is dominated by a few websites collectively dubbed āthe big fourā: Comparethemarket, MONY, GoCompare and Confused.com - Comparethemarket being the market leader by most metrics. MONY, Gocompare and Confused.com (owned by Admiral Group) are all listed businesses 
Interestingly, Europe has remained immature as a PCW market (perhaps UK PCWs are too preoccupied with their domestic market?) , with Peter Thiel (famed early investor in Facebook and SpaceX) backed CompareEurope primed to dominate the continental market. Hereās a breakdown of market share by revenue 
As success ultimately is derived from traffic (more people = more policies sold = more commission), the PCWs have had to engage in an advertising war, which has led to some of the ukās most memorable TV ad campaigns. For this reason, it is a good idea to keep an eye on PCW marketing spend.
This is a Super Smash Brothers game I would love to play
Fun fact: ComparetheMeerkatās campaign was especially ingenious; driving traffic to their site through Google searches of āmeerkatā rather than āmarketā has made their online advertising cheaper, given the lower cost of the adword āmarketā. Also, Aleksandr Orlov is BAE.
The numbers
MONYās share price performance has been pretty tidy over the past 10 years, roughly multiplying 5 times over. Using 2009 as a starting point is misleading, yes, but I canāt be arsed to dig out that 2007, 2008, data. Anyway, hereās what MONYās money has done over the years 
MONYās Fundamentals are in now small part down to how good they are at spending money to make money; Iām talking about the return on capital employed (ROCE). Itās often said a decent ROCE is anything over 15%ā¦ MONYās is over 50%. They also have equally healthy profit margins (>20%), strong cash flow and sustainable dividend payments (yield sitting @ 3.31%). Itās price to earnings is hovering around a palatable 20. 
Going forward, growth will likely come from MONYās digitised mortgage service (think Habito); 55% of people overpay their mortgage by Ā£294 - a huge market therefore. They have also invested heavily into their B2B proposition (revenue here growing ~30 YOY), which has led to a partnership with YOLT, a leading openbanking/personal finance app. MONY have a seasoned CEO at the helm, with experience from Ebay and John Lewis. The threat of disruption may well rely on managementās execution. 
The Bear Case
Possibly the most prominent long term threat to PCWs is competition. Indeed, Amazon have been rumoured to be gearing up to launch a PCW in the UK and US. This could obviously have catastrophic implications for PCWs, but just know that a small company called Google failed to realise this ambition;
Google launched Google Compare in 2012, offering mortgage, credit and insurance comparison. They closed it down in 2016, struggling to make money despite a lot of web visits 
Google Compare in action for Credit Cards.
Fintechs and Insuretechs are key threats. Brolly is an AI driven insurance aggregator app founded by an Aviva employee and backed by Peter Thiel. The app is effectively an insurance robo-advisor and hopes to become the way many buy their insurance. Other fintechs like Plum propose switching to a cheaper energy provider based on your transaction data. The use of smart energy metering could see data used in a similar way to disrupt PCWās energy services. Autoswitching sites like Flipper (a GoCompare investee), which autoswitches your energy provider, have gained traction - although the incumbents are already responding. 
Marketing Spend is a key risk Iād say; heavy marketing is a must in this hypercompetitive space. A worrying trend is that PCW traffic is increasingly coming from paid search (e.g. Google Ads), which is hella expensive mostly because you often pay per click and visitors donāt necessarily buy a policy (āconversionā). This could chew up profits something fierce. 
Another notable risk in my view is Regulators (OFGEM for energy, OFCOM for mobile/Broadband, CMA for market competition, etc), such as their negative view of MFN clauses - a contract for exclusive low price deals between individual insurers and PCWs, especially in motor and home insurance. This kind of regulatory pressure is good for consumers, but bad for PCWs. Often regulation benefits PCWs too, such as OFCOM recently making switching mobile networks as easy as sending a text. 
Thereās also the standard risk of Brexit blah blah Uncertainty Blah Recession Blah blah Blah etcetera etcetera. 
Thatās all iāve got - thanks for reading. Please let me know what you think; whether itās to tell me how sad it is to spend my saturday morning writing this, how shit it is, or even just your favourite insuretech right now (Psst, mineās Zego and Brolly)
Disclaimer
I have no affiliation with MoneySupermarket. This is not financial advice; search deep down, you know this to be true. This is not an official Freetrade weekend read either, although iām a proud user; researched MONY and wanted to share is all - I love researching companies 
. Capital at risk.
24 Likes
Thanks for post. Iāve not invested in it because I feel it may have had its day and there are lots of competitors. Growth prospects surely limited? Things move quickly online and i wont be surprised if google moved down this route too. That could really kill competition very quickly. The financial clout of Alphabet or Amazon is so huge they can assemble a developing team to come up with anything very fast
1 Like
Excellent writeup, you could go semi-pro.
In the same vein as MONY, Go Compare announced a partnership with personal finance/budgeting platform Money Dashboard, which is a competitor to Yolt, in 2018. GoCompare partners with Money Dashboard to strengthen āMachine Learning for Fintechā ā a community-driven machine learning initiative for fintechs
1 Like
Nice write up, thanks.
Iāve looked at MONY a few times - thereās no disputing the quality of their operating numbers. They are fantastic. Their business needs relatively little capital to start or to maintain, which is one reason the numbers look so good. However, the same applies to the competition.
My main concern is that they donāt seem to have any real competitive advantage - the āmoatā that is often talked aboutā¦Rightmove is a good comparison I think, which does have that competitive advantage through its network effect. If youāre thinking about property - buying, selling, renting - youāre probably going to check out Rightmove.
1 Like
Overall, I feel the same way - I like everything about the business, but, like you, what makes it hard for me to open a position is that I canāt see a sustainable competitive advantage. Even if itās just a rumour, the Amazon price comparison website threat is concerning, although I quite like the fact that Google tried to launch a price comparison website and failed in the past. Interestingly, Google also came under fire from regulators for manipulating their search results to drive traffic. That being said, Amazon are ace at just taking industries as they please.
I completely agree with you about the competition; The PCWs are getting attacked on all sides, mostly by startups as far as I can tell. That being said, I will facepalm myself unconscious if MoneySupermarket end up acquiring the companies iām so worried about.
Itās spooky reading this - we have very similar thought processes! I love Rightmove as a business, I like their duopolistic position with Zoopla. I do believe though, with a disruptive enough proposition, a network effect driven moat can be eroded. My go-to example is Carwowās success taking market share from Autotrader (who I view as āRightmove for Carsā - same network effect driven moat, also a market leader, and have a marketplace-type business model). Carwow are far from dethroning Autotrader, though to be fair, but the disruptive potential of a reverse auction marketplace seemed to really work out.
But yeah, really having a hard time opening a position on MONY given the lack of a moat, Iām on your wavelength exactly there.
Thanks for the kind words, youāre awesome! 
Love the community here and just want to contribute 
But yeah, GoCompare seem to be working really hard. Was interesting to read through MoneyDashboardās pitch deck when they crowdfunded regarding the partnership. Just my personal opinion: In terms of partnerships, I think MoneySupermarket is stronger - my view is they want to be the price comparison plumbing/API for the fintechs that may ultimately disrupt them; Like Drivewealthās relationship with Revolut, or Plaidās relationship with numerous fintechs.
GoCompare are also investing left, right and centre in fintechs - I recall them investing in MortgageGym (which crowdfunded btw!) and also the autoswitching site Flipper I believe. So, in a way, disrupted or not disrupted, theyāre kind of in a win-win situation I suppose?
2 Likes
Great post, thanks for taking the time to write this up 
1 Like
Thanks Phil, much appreciated
Iāve got dozens of notes like these on businesses I either did or didnāt end up investing in, would be interesting to tidy them up, post them, and see what peopleās thoughts are; always on the lookout for tips/critique that sharpens up my research 
3 Likes
Thanks for this and Iād echo some earlier comments that I think you could easily go semi-pro. Iām about to do a video on MoneySuperMarket, would you mind if I referenced this and some specific information within it?
3 Likes
Youāre too kind!
And ofcourse not, fill your boots! I only wish I wasnāt so lazy when it comes to collating my references, iāll try and fish them out and edit the post - came across great information during my deep dive, alot of which I ended up leaving out.
Iām looking forward to the video, feel free to post it on hthis thread - I might miss it otherwise sry ><
2 Likes
Are we talking postal mails?? 
Thanks for the write up. Itās great!
1 Like
Yeah, itās really interesting actually!
He started a fortnightly magazine called ābrokers updateā in ~1987, literally just photocopied sheets stapled together at first. Turned out that 10% were willing to pay, so he charged Ā£11/month for a subscription, so he had 1k subscribers (mostly fellow brokers) when he was making Ā£10k. At its peak, he had 3k subscribers, I.e. Ā£33k monthly, but it was a more professional deal with more overheads.
When the Internet came around, Nixonās subscription numbers started to stagnate. He got a mate to build āmortgage2000ā (the precursor to Moneysupermarket) over the course of a year. This mate received 50% of the business, which he eventually ended up selling for Ā£160m I believe - he had very little involvement after having built the website, so pretty decent return.
I think the story really shows Nixonās entrepreneurial flair - he saw a gap in the market for this product after working only a few months as a mortgage broker, no one else managed to successfully bring such a product to market. His capacity to innovate and/or disrupt in the face of the dotcom boom Is something I also admire!
Appreciate the compliment BTW!
3 Likes
Sure will. Hoping it will be finished this weekend! Thanks so much!
2 Likes
As the poster previously know as NortherWealth (long story), Iāve finally gotten that video done:
Just wanted to say thanks again for letting me reference some of this post. Iāve included a link to the post in the description too.
9 Likes
Epic video, nice one - have liked and subscribed 
Thanks for the flattering credit too
2 Likes
Just a note on this company as so many others are cutting or cancelling dividends (Shellā¦).
Itās worth mentioning that Moneysupermarket maintained its dividend in the 2008-2009 recession even though its profits and cash flow fell.
Looking at the fundamentals, the firm generates a lot of free cash flow, which is the basis of being a reliable dividend payer. Itās also a digital outfit, so might be one of the few companies that wonāt cut dividends.
This company is on my watchlist, but let me know what you think or if you see any reason to be bearish.
1 Like
Anyone have any updated views on MONY considering inflation fears/price increases, energy renewals and purchases of new insurances as things open back up again?
Seems like MONY has bounced a bit in price also.
Seems like a great price to buy in at the moment for this uk dividend aristocrat
Well hopefully you all read the above comment today and not last weekā¦