Credit Crunch-"everyone will need an IVA"-really?

[Peter1_G]

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Hi Guys

Thought anyone contributing to the IVA market may be interested in the latest insolvency figures.


index

2nd Quarter 2008, IVA's down 4% on last Quater, 12% down on same period 2007

Interesting figures my personal opinion was they would start to rise a little this time as this is traditionally the busiest quarter of the year, but they went down!!

Why? in this current credit crunch? good question and it would be good to know anyone's thoughts

As a merchant and who used to buy hundreds of IVA leads from affiliates my current feelings are that the procurement cost of leads and consequently IVA's is too high and needs to adjust for this market to grow again.

Major points,

This year 4 of the main players have stopped activity in this market due to the current new IP fee structures introduced, which have made IVA's an unviable business at current aquistion costs.(Cost of Lead to case ratio)

The cost of Lead to case ratio is still the same as when the IP fees were circa £2500 for the nominee's fee. The current average fee is now £1000- 1200

supervisors fees which used to be circa £80 per month (this is to administer the case for 5years) is now 15% of relaisations on a monthly basis average £40

These are the current fees in relation to IVA's which also have about a 35% faliure rate (quoted by TIX)

I believe this market has been good for affiliates and also believe affiliates provided good leads, but i fear that you have priced yourself out of the marketing budgets for IVA providers. Therefore IVA's will not be a well marketed product for the forseeable future. Until aquistion costs fall in line with the new fees the market will not grow!!!

Credit Crunch "everyone probably does need and IVA but how to we tell everyone"

your thoughts and comments may make interesting reading

Regards

Peter G

[Flex-Finance]

Interesting post Peter

When a financial product is launched that proves to be lucrative the rush for market share is usually desperate and haphazard. Marketing depts are given free reign to get as many customers as possible as, in the beginning, no matter the cost of aquisition the company can still make a tidy margin per customer. More players enter the market and margins are slowly eroded by competition and/or legislation. When margins are squeezed business always looks for efficiencies.

I don't think its a case of affiliates pricing themselves out as there isnt that much control over what an affiliate is paid by the merchant. Unless they are large.

A period of consolidation and people dropping out of the market (both merchants and affiliates) is painful but healthy. The people who come through the other side will have a more stable business.

Lets face it its not hard to throw up a website to get applications or leads. Getting the (quality) traffic is the difficult or expensive part. Being relatively new to the "online stuff" it appears to me the only organisation that is making out like bandits day-in-day out are Google.

[Peter1_G]

Flex

I think your right in what you say, the IVA net was thrown wide and quickly at the beginning as it needs to be and can be acheived when you make good margins. This Net was made bigger by affiliates and online marketing which at the beginning was cheap.

Then as you say competition to grab and sell on those IVA customers by affiliates became fierce and google has done rather well from that. Now the margins on the product have been cut in half, the affiliates and the IVA providers have to look at the bottom line aquisition costs or as we have seen they don't survive.

saying affiliates have priced themselves out is probably wrong but as the Call centre's hot keys and every dog with a phone has jumped on the price's have gone through the roof and need to come back down.

The market has not moved beacuse the net is very small these days the godplated nets of the past are gone. Most of the companies who are coming through and still in the game pay on approved cases backend through refferal's from brokers and loan companies. and are now missing the online opportunties that still exist.

google has profited!! but who is to blame, the rewards advertised from networks (who charge their %) of £100 for 8 lines of info and paid by people like me in the 1000's

I am to blame not google! but I used to have a margin which now does not exist the affiliates have a margin but looking for 100% plus ROI is not the way forward. I don't know many business's with overheads and staff that make more than 25% ROI, with no staff and overheads apart from Google I think looking for 100% plus ROI is a little Greedy don't you think.

I want internet marketing to be a first shout for advertising depts, not to be avoided, and the only reason Google has done so well is that affiliates have been competing with merchants because they have been given the opportunity by the rewards on offer.

I don't see many other medium were a man/women in his bedroom can compete with a major PLC head to head.

Well this has happened here in this market and something needs to change

don't know what!!! don't Know when!! sounds like the beginning of a song

regards
Peter