Experian Buys a Shopper

The parent company of Experian went shopping for a comparison shopping engine this holiday season and apparently found a bargain. British retail and business services provider GUS announced last week that its Experian division has bought PriceGrabber.com for $485 million.

Experian, an information and customer relationship management company, will add the privately-held PriceGrabber to a clutch of other consumer-facing Internet marketing businesses run under the Experian Interactive group umbrella. All these businesses draw consumers looking mostly for financial answers or shopping rewards and provide lead-generation services for Experian’s merchant clients.

Retail and catalog shopping is the second-largest vertical market for Experian; excluding Experian Interactive, the category accounts for about 17% of Experian Americas’ sales. Acquiring PriceGrabber will add another marketing channel for those clients, said Peg Smith, an executive vice president with Experian Group.

“We already provide a wide range of direct-marketing services to retailers and other clients today,” Smith said. “This is another way for us to help them connect with potential customers in order to sell merchandise. It’s also the fastest-growing marketing channel that I’ve ever seen.”

From PriceGrabber’s perspective, the company will gain the consumer and marketing insight that Experian’s data aggregation services and analytics can provide, Smith said. These could involve both consumer data, where permission was given, and product decisions based on anonymous behavioral profiles. “If you’re on the Internet looking for Harley-Davidson merchandise, we could suggest other items that PriceGrabber could show you that previous Harley shoppers had enjoyed,” Smith said.

Experian Interactive, launched in May 2005 with the purchase of mortgage-deal site LowerMyBills.com, is the company’s bid to become a trusted resource for consumers and in the process to generate leads for Experian’s retail clients. PriceGrabber.com will join this division alongside consumer-rewards site MetaRewards, Experian Consumer Direct (consumer credit monitoring over the Internet) and Affiliate Fuel (pay-for-performance Internet marketing).

According to the purchase announcement from Experian, PriceGrabber had 17 million unique visitors in November 2005 and expects to post a $25 million profit on sales of $60 million for the year. Smith said the engine controls a 10% to 15% share of the U.S. comparison-shopping market.

The PriceGrabber buy comes about half a year after the two largest comparison shopping engines were acquired. In June, eBay bought Shopping.com, the leading comparison engine, and its consumer-review site Epinions.com for about $620 million. That same week, E.W. Scripps bought Shopzilla, another top-rated engine with partnerships with America Online and Lycos, for $525 million; that price included consumer review site Bizrate.com. Both engines have so far been run as stand-alone businesses by their acquirers.

Both Shopping.com and Shopzilla post larger revenues, Smith says, but PriceGrabber’s margins are better than theirs. “That means it’s probably more profitable than the other two,” she said.

So far this holiday retailing season, comparison shopping engines have seen big traffic gains over their performance in 2004. Last week research from Internet traffic monitor Hitwise found that the leading comparison shopping sites logged about 0.3% of all Internet traffic during the first week of December, up 24% from their volume a year ago.

In an earlier study of the week that ended October 30, 2005, Nielsen//NetRatings determined that comparison shopping sites saw a 61% jump in traffic over the same week in 2004—almost twice the 35% increase in traffic to online retailer sites in general.

While comparison shopping has been on the rise, the sector has not been dominated by Google, Yahoo! and MSN the way general search has been. Another Hitwise study of the week ending November 19 found that while Yahoo! Shopping ranked third in market share behind Shopping.com and BizRate, Google’s Froogle shopping engine could only manage fifth position and an 8.5% share.

Because of the sector’s relative openness, the PriceGrabber purchase could re-ignite acquisition fever for some of the other free-standing comparison shopping engines, notably NextTag.com and Become.com.

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