Monday, August 1, 2005
Interview with Martin Andersen, General Manager of PriceRunner US
Last year, ValueClick purchased PriceRunner AB, a leading comparison shopping service in Europe of approximately $29M. Last week, the ValueClick launched the U.S. version of the service, looking to gain the same level of success the PriceRunner site has had in Europe here. I spoke with Martin Andersen, the General Manager of PriceRunner US, on the launch of the US-based site and how it fits into the overall comparison shopping market.
BK: Thanks for the interview. I see you launched the U.S. version of PriceRunner this week -- how is PriceRunner different than the many other comparison shopping sites here?
MA: You're welcome. PriceRunner is unique in many ways but we have some things that really set us apart from the competition.
First, other comparison shopping engines generally only list advertisers who pay them to be listed. We list every advertiser we can find, regardless if there's a payment arrangement.
Second, we take that comprehensiveness even further by listing offline retailers as well as online retailers. We actually employ a team of Price Runners who fan out in the major metropolitan areas and shop each week to find the lowest prices available on the most popular products. We often find that offline store prices are higher than some of the online prices.
Third, PriceRunner always lists the lowest price first. While other sites allow consumers to sort on price, we believe in doing that work for them right up front. We do, though, realize that it's not always only about the lowest price, because trust is a big part of consumer consideration. To address that, PriceRunner will warn the consumers about merchants who have been responsible for bad consumer experiences so the consumer can then make their own decision. We end up being a bit like Consumer Reports and the Better Business Bureau all rolled into one!
In the end it's really about trust: trust in the information, prices, expert reviews, consumer reviews and comprehensive selection of merchants. The PriceRunner team has built a website that makes it very easy for the consumer to truly compare products and prices - and ultimately make a more informed purchasing decision.
BK: What's the business model behind PriceRunner, and how do you make money?
MA: We make our money the same way as other comparison shopping sites, via a CPC model. But our business model is based on providing the consumers with the best possible information they need before a purchase. Because of that we are able to deliver to consumers who know what they want. This approach has been very successful in Europe, where we have seen ROI rates well above market average.
BK: What has been the most difficult part of moving the PriceRunner platform to the U.S. market?
MA: The PriceRunner platform has been built to be able to adapt to different market situations, so we did not have to make many adjustments. The biggest challenge we had was to expand our product database to cover all the different U.S. based products. But the team has done a fantastic job and has built a comprehensive product database in very short time.
Generally the U.S. market is not that different from the European market. It's the same metrics and functionalities that apply. As a site you just need to have the ability to scale your model and we have done that very well.
BK: Your service uses people to physically check on pricing at local stores. I imagine this could take quite a staff to accomplish--how do you do this efficiently, and how do you keep pricing updated?
MA: Stats show that over 80% of shoppers research their products online and then buy them offline. To provide the users with what's truly the best picture of the market, you really need to show them both online and offline prices. If you only focus on online prices, the consumer can't make a true comparison.
It's a difficult task for our "Price Runners" that go out into the stores. In this price and rebate jungle it's a challenge to find the true prices and they always face the risk of being shown the door. But the runners are very dedicated and it's our duty to collect these prices.
The price collection is done once or twice every week. It's a lot of work, but we have been doing this since late 1999 and have developed a streamlined process so we know what we are doing.
BK: How does PriceRunner fit into ValueClick's other web properties-are you run independently?
MA: We view being part of ValueClick as another strategic advantage we have over competitors. While PriceRunner is run independently, we are very closely connected to the rest of the ValueClick properties. Our sister companies like ValueClick Media, ValueClick Search, Hi-Speed Media and Commission Junction are perfect partners, and we benefit from both their expertise in all of the online marketing channels, as well as just from their sheer reach. The ValueClick Media network in the U.S. has reaches close to 70 million unique U.S. users per month. Commission Junction alone serves billions of impression monthly. On their own, each of the ValueClick proprieties are very strong, but as a unit we have an even stronger and tremendous reach. Plus, it's a great way to reach consumers.
BK: There's been a lot of movement into this market lately (i.e. Shopzilla, Shopping.com, MSN and Pricegrabber). How do you think the market is going to shake out, and do you see Pricerunner teaming up with one of the portals or others to compete?
MA: One of PriceRunner's ways to get traffic is to provide co-branded shopping solutions for other websites. But it's important to say that we are here to brand the PriceRunner name. PriceRunner is strong enough to stand on its own feet.
We are still in the early stages of comparison shopping and I think that we will see many interesting developments and changes the next 1-2 years.
BK: Finally, where do you think the next innovation in price comparison services is going to be?
MA: I think that all of the comparison shopping sites think about how they can tap into the softer categories like clothing and jewelry. To compare a pair of pants on the Internet is difficult. Also how can you index and categorize these areas. Everybody does it...but nobody really masters it yet.
BK: Thanks for the interview!