The looming fear of recession has raised many concerns regarding what the UK economy holds and the effects it shall have on many businesses. 

We recently held a panel discussion with a number of industry experts from the Financial Services industry. 

Ian Wood, CMO of Capify, and Keith Mowbray who is head of digital at Towergate insurance joined us as we discussed how these changes are affecting the Financial services market. 

We talked about the key trends that we’re seeing at a micro level looking at Cpcs and search volumes and also took a step back to look at the top-level macro trends such as the rising interest rates and tighter lending criteria are affecting the sector.

At a micro level, CPCs have risen 22% YoY 

On a micro level, we have seen a lot of fluctuation in CPCs over the last couple of years as we have come out of the pandemic

Looking at our panel of financial services brands we saw a year-on-year increase in CPCs by 22% for the first quarter of the year, which aligns with an increase in Google’s revenue.

Additionally, looking at January to March this year we have witnessed a 23% uplift in CPC however this follows after very low CPCs in the backend of 2022. 

At the end of 2022, we saw CPCs down 34% in comparison to previous quarterly periods in 2022 but are now returning back to more normal levels but still higher year on year.

This is something that Keith said they had seen within the sub-sectors of the insurance sector that they operate in. 

Expressing a relative swing back to normality after the insurance industry was hit during the lockdown period which saw search and purchasing behaviors change. 

Leading to higher CPC which is still heavily reflected in this current climate.  

The FCA’s Price Walking regulation changes will make it harder for insurance brands to acquire new customers

He also highlighted new regulatory changes by the FCA, specifically the impacts of price walking regulation which removed discounting capabilities to attract new businesses over existing customers whilst also preventing incremental increases in price during renewals. 

This ultimately reduced what could be done on affiliate spaces like cashback sites and voucher sites. Showcasing the externalities that are driving CPCs up in the current financial market. 

Platforms requiring FCA registration to serve ads will reduce competition 

Ian Wood CMO at Capify discussed how Facebook, Google, and Bing have insisted on companies be FCA registered to be able to bid on financial terms. 

This has seen a hindrance on many lending companies that are not FCA compliant and leaves a level of fear of how new regulations can quickly throw the market off. 

Looking further into macro issues, he discusses digital transformation in the marketplace. 

Showing how crucial the customer experience is, as consumer expectations and demand have increased with customers seeking speed, accessibility, and ease. 

Not only is the consumer’s experience important but the supply side must ensure that the cost of service is scalable. 

Failing to implement ways to maintain and improve the customer experience and journey would ultimately lead consumers to look elsewhere. 

The insurance industry has seen user behavior changes and fluctuations in search volumes dependent on the product or topic. 

Search term trends show increasing interest rates and the rising cost of living is driving users to compare more

Will Nye Technical Director at Builtvisible examined data and highlighted ongoing trends. 

Will expresses seeing year-on-year cash ISAs up 61% across 380 keywords showing big increases due to growing demand.

In comparison, head terms for stocks and shares ISAs were down 18%. Demonstrating the impacts of rising interest rates and possible reflection of the recent market performance.

 Looking at landlord insurance we see that it remained relatively flat year on year with only 1% increase across 114 keywords whilst home insurance was up 18% across 342 keywords. 

He noted that “comparing keywords” were up as much as 82% reflecting people’s willingness to shop and browse more to get the best deals, especially in an uncertain market as they’re more likely to watch their money and willing to switch. 

Conclusions

Through the discussions above we can see that the uncertainty in the economy is causing concern in many areas within the financial sector including increasing costs and changes in consumer behavior. 

Adding to the uncertainty are the aftereffects of Covid and the lockdown which drove CPCs up significantly and have since remained at those levels despite changes in demand. Navigating through an uncertain economy will pose a difficult challenge for many.

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