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Bankrate website grows stronger amid market woes
Bankrate Inc is growing stronger in a volatile market as more and more investors turn to its website for free and reliable information on various financial products.
- Reuters
- Published: 23:32 December 8, 2008
Bangalore: Bankrate Inc is growing stronger in a volatile market as more and more investors turn to its website for free and reliable information on various financial products.
"If you are a consumer who needs mortgage, who needs to refinance, then Bankrate is likely your best option," Friedman Billings Ramsey analyst Heath Terry told Reuters.
The company's primary website, Bankrate.com, provides in-depth information about personal finance, ranging from mortgage rates to credit card comparisons.
The recent spurt in online traffic to the company's website puts into play the golden rule of advertising: more traffic means a better chance to grab more eyeballs for the advertisements. Analysts say the company's "pay for performance" advertising model, in which advertisers pay for the actual hits, is a clincher.
"The advertisers can actually quantify the return on investments. If I am paying Bankrate $100, I know I will be generating $500," JMP Securities analyst Sameet Sinha told Reuters.
The company's graphic advertising and lead generation revenue was up 138 per cent in the last quarter, while online revenue jumped 94 per cent. Bank-rate also posted an 11 per cent rise in online traffic for the quarter. Global advertising spending has shown signs of declining recently as corporations respond to economic growth worries by curtailing their marketing budgets.
As major corporations try to stretch their marketing dollars as far as possible in a deteriorating economy, they have turned to the internet and public relations as alternatives to traditional venues such as television and print.
Analysts attribute the rise in traffic to the website to a variety of content the company has put together for the benefit of its readers.
"Their in-depth access to information, that few other publishers have, is their competitive advantage," Friedman's Terry said.
"They have built these relationships over decades with banks, it's very difficult for a start-up company to compete with it right away."
JMP's Sinha said all the 'top-tier' publishing businesses like Yahoo Finance, CNN.com and even Wall Street Journal use Bankrate data in both their print and online editions and that raises consumer trust on the company and builds loyalty.
Another element that plays out in increasing traffic to the website is its visibility, Sinha noted.
"If you search on Google for mortgages and CDOs, there is a high degree of possibility that Bankrate site will show up in the top five positions," he said.
However, maintaining the traffic and keeping the advertisers interested for a longer time will be a challenge for the company, analysts said.
As markets stabilise after all the volatility, the company could face a drop in traffic and advertisers could look to pull back.
Still, Bankrate has been aggressively acquiring in the past year and has completed about seven acquisitions during the period.
Analysts are now looking at the company's acquisition policy to see how it capitalises on the volatile market. However, as the company had only $41 million of cash in hand at the end of the third quarter, going on an acquisition spree may not be a bright idea, Thomas Wiesel Partners analyst Christa Quarles said.
"I doubt if Bankrate, or anybody, would want to go to a negative cash position in this environment," Quarles said.
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