As one of Australia’s largest comparison websites, iSelect offers consumers sources to cheaper deals on their household bills.
However, today iSelect [ASX:ISU] shares drastically shot down by 50% after the company announced a downgrade in profit, and revealed to the market that its CEO will be leaving too.
Why the profit downgrade?
iSelect is suffering various market problems with some of its sectors.
Its health business is currently experiencing affordability issues in the private health insurance sector. The energy sector is also being impacted by higher digital customer costs.
As a result, iSelect is spending much more money on advertising in order to gain new customers.
However, their new advertising techniques haven’t sufficiently paid off, as they’re not receiving any new customers.
iSelect has also changed its guidance for FY2018, making it between $8 to $12 million — a drastic drop from its previous $26 to $29 million.
In their ASX announcement, it was also revealed that CEO and Managing Director Scott Wilson has effectively resigned from iSelect.
A report from abc.net on iSelect stated:
‘Both the Health and Energy and Telco verticals have been negatively impacted by market volatility and lower than expected leads due to changes in the marketing mix.’
As such, reduced search engine marketing is one of the factors being blamed for lower leads in its overall marketing mix.
To counter the negative effects, iSelect is currently undergoing a new strategic review for a developed marketing approach.
Its services have been softened on a wider scale due to its lack of funds and overall inability to ensure customer growth.
Therefore, with iSelect’s business model primarily depending on long term brand equity, expenditure on media has to be balanced along with short-term leads.
New technologies are also being invested in, which will help develop machine learning capabilities, and gain greater customer insight and further growth.
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