Market Intelligence Report: Consumer Finance (Exec Summary)

ONLINE CONSUMER FINANCE

INTELLIGENCE REPORT

December 2011 to May 2012

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WHAT WILL YOU GET FROM THIS REPORT?

WHAT QUESTIONS DO WE ANSWER?

KEY FINDINGS OF THE REPORT

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A who’s who in online consumer finance.

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Who are the market leaders?

What’s the size of opportunity within the consumer finance sector?

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In-depth market analysis covering December 2011 to May 2012.

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Which keywords are driving market visibility?

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Over 100 individual pieces of key insights.

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What are brands doing to achieve maximum market share?

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Over 50 individual pieces of statistical interpretation.

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How are brands using social media to acquire customers?

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Analysis of the top 50 brands across the top 100 keywords.

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An interpretation of the top brands search and social media strategies.

TOP INSIGHTS

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A macro analysis of the consumer finance sector tells us that insurance and loans dominate the search impression volume with a collective 69%.

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The dominance of insurance and loans is underpinned by high search impression volume for keyword markets such as car insurance (22%), pay day loans (21%) and loans with 12%. This stands in contrast to the traditional core consumer finance services market i.e. current accounts and savings, which has a much lower collective search impression volume of only 10%.

Who are the leading brands?

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Barclays Bank, HSBC, RBS, NatWest, Lloyds TSB, Halifax Bank and Santander take the lions share covering an impressive 82% of all brand search impression volume.

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Traditional high street banking retailers dominate our brand index with Money Supermarket being the only non-lending operator who feature in the top ten.

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Money Supermarket leads the organic rankings for nine out of ten keyword markets including the high volume sub verticals car insurance, loans and mortgages.

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Price-comparison operators dominate both search marketing and social media.

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Money Supermarket is the only operator that is visible in the top 10 for all the primary keyword product markets.

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Despite the economic downturn following the financial crisis in 2008, recent trend analysis shows a gradual increase in search impression volume for keyword markets such as current accounts, credit cards and loans.

MoneySavingExpert has a strong presence within many keyword verticals including loans, car and travel insurance. Their purchase by Moneysupermarket will give the group a massive search coverage across many verticals.

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The pay day loan market which sits outside of the traditional retail banking arena has seen the most dramatic increase in search impression activity.

As part of an aggressive strategy to challenge the dominance of the aggregators Google has launched their own price comparison service within the online consumer finance market for credit cards, current account and savings accounts segments.

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As aggregators monopolise the organic index, paid search has become a key channel to market for many of the traditional retail banks including HSBC, NatWest Bank and Barclays Bank.

PPC is a key channel to market for many retail banks or direct financial lenders. This is largely down to the fact that price comparison sites dominate the organic index for a large number of keyword verticals.

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Comparethemarket is the most innovative operator within social media, making the channel a key element of their online market strategy.

Supermarket giants Tesco Bank and Sainsbury’s Bank are providing consumers with a cost effective alternative and feature prominently for the keyword markets loans and car insurance.

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Very few of the traditional retail banks are utilising social media to develop a two way dialogue that stimulates social integration and engagement.

Tesco Bank, along with confused.com, has developed a social strategy that has the most robust balance between engagement quality and volume.

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Operators are primarily using price promotions and customer service content techniques on social media to engage with potential and existing customers.

“IN DIRECT RESPONSE TO THE RECENT ECONOMIC CHALLENGES, MANY BRANDS ARE LOOKING TO PROMOTE THEIR PRODUCTS ONLINE IN ORDER TO MAXIMISE THEIR MARKETING SPEND AND HELP REDUCE OVERHEADS.”

EXECUTIVE SUMMARY

“CONSUMER FINANCE REFERS TO THE SEGMENT OF THE FINANCIAL SERVICES INDUSTRY THAT LENDS MONEY AND CREDIT DIRECTLY TO INDIVIDUAL CONSUMERS. THERE ARE A RANGE OF OPERATORS WITHIN THIS MARKET INCLUDING RETAIL BANKS, INSURANCE COMPANIES PAY DAY LOAN SERVICES AS WELL AS AGGREGATORS. WITHIN THIS SECTION WE REVEAL THE MOST VISIBLE BRANDS ACROSS BOTH PAID AND ORGANIC SEARCH.”

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EXECUTIVE SUMMARY

THE GLOBAL FINANCE CRISIS

BUYING CONSUMER FINANCIAL PRODUCTS ONLINE

The global financial crisis of 2008 not only witnessed the collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world, but it also played a significant role in the failure of key businesses, decline in consumer wealth as well as a downturn in economic activity, in which the UK economy was plunged into recession (see Appendix B Reference 2: Quarterly GDP growth).

TV and direct mail have traditionally been the route to market. As a direct response to the recent economic challenges many financial operators have looked to promote their products and services online in order to maximise their marketing spend and help reduce operational overheads and costs. This shift in thinking has been coupled with a growth within mobile banking. According to KPMG, banks with strong internet banking propositions now promote a quarter of their retail product via mobile, and the proportion of sales from this channel is rising steadily year-on-year (source: UK Banks: Performance Benchmarking Report, KPMG, Full Year Results, 2011).

At the centre of the crisis was the credit crunch which saw a dramatic reduction in the general availability of credit as well as a sudden tightening of the conditions required to obtain credit from banks and financial lenders. This forced the UK Government to take to unprecedented action to prevent the collapse in the financial markets as well as supporting the broader economy. The result saw a dramatic change in the landscape of the financial services market and in particular consumer related financial lending and banking (source: The Turner Review, A regulatory response to the global crisis, March 2009).

This trend is supported by a number of research groups: •

Aggregators: 2012 Mintel research has shown that a significant proportion of customers who said they would consider buying via a price comparison site - mortgage 27%, pension 28% and investment product 30% (source: Web Aggregators in Financial Services, Mintel, June 2012).

IMPACT OF THE CRISIS ON CONSUMER FINANCE

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Credit cards: according to a Target Group Index (TGI) survey the numbers of customers searching and applying for credit cards online has seen a 12.5% percentage increase between 2008 and 2011, while all other channels including telephone and in brand have declined sharply (source: Credit and Debit Cards, Mintel, UK July 2011).

The financial crisis impacted every aspect of consumer finance including:

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Insurance: a Global Market Institute (GMI) survey conducted in 2011 reveals that general insurance products such as car (50%) and home insurance (38%) are the most common financial products purchased online (source: Financial Services: Consumers and New Technology, UK, August 2011).

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Loans: according to Nielsen Media Research, internet advertising accounted for 16% of total ad spend in 2011, making it the third largest channel by total ad spend (see Appendix B Reference 4)..

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Deposit and savings accounts: retail savings have grown at a much slower rate since the 2008 financial crisis, reflecting weaker earnings growth and prevailing low interest rates (source: UK Banks: Performance Benchmarking Report, KPMG, Full Year Results, 2011).

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Mortgages: Not only is the fragile economy holding back house prices, but rising levels of unemployment have impacted house purchases at the bottom end of the market resulting in a knock on effect further up the housing ladder (source: Council of Mortgage Lenders, Annual Report, 2011).

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Loans: a difficult and uncertain economic backdrop has reduced consumer appetite for spending and borrowing. However, demand is still outstripping supply, indicated by a relatively high proportion of loan rejections. The supply of credit to consumers continues to be constrained by more stringent lending criteria and a sharp contraction in supply (source: Financial Services, Spring Forecast, Ernst & Young 2012).

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Pay day loans: the decline in tradtional high street lending has been reflected by the growth in prominence of pay day loans. According to the CFA, payday lending accounts for about £1 billion annually, representing 0.6% of total consumer credit advanced in the UK (source: Crisis boosts growth in payday loans sector, Financial Times, December 2011).

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Credit and debit cards: the difficult economic backdrop has made consumers more aware of the consequences of using credit and being in debt. Although consumers continue to use their credit cards when purchasing goods and services, a growing number see their card as a useful payment tool rather than as a way of borrowing (source: Credit and Debit Cards, Mintel, UK July 2011).

OUTLOOK FOR 2012 AND 2013 Since 2008 financial services output has declined. Where previously it averaged over 6% per year, compared with overall UK GDP growth, this has shrunk to 3% per year (see Appendix B Reference 3). Moreover while the UK economy grew by 0.8% in 2011 as a whole it contracted by 0.2% in the final quarter of 2011 and the first quarter of 2012, pushing the economy back into recession. This will only serve to increase pressure on an already strained sector forcing operators to optimise advertising spend and marketing budgets in a bid to gain more customers (source UK Economic Outlook, pwc, March 2012).

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EXECUTIVE SUMMARY

INTRODUCTION TO ONLINE CONSUMER FINANCE

Figure 1 % Split of search impression volume by product area

Consumer finance (often termed retail finance) is the segment of the financial services industry that lends money and credit directly to individual consumers. Although banks are the primary lenders in the consumer finance industry, alternative lenders include insurance companies and pay day loan services specialising in lending to borrowers with poor credit.

As a whole, the broad range of services in consumer finance provides the financing to purchase vehicles, remodel a home or obtain secured and unsecured lines of credit from financial lenders, as well as offering a range of consumer insurance products such as home, life, travel and car insurance (Appendix B Reference 5: Categorisation of Consumer Finance).

Insurance - 36%

Loans - 33%

Consumer finance is defined by a broad product range and can be broken down into a multiplicity of specialist markets. We have focused our analysis on the top product keyword sub-verticals.

Mortgages - 15%

The financial crisis impacted every aspect of consumer finance including: •

Current Accounts

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Savings

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Mortgage

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Credit Cards

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Loans

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Pay Day Loans

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Car Insurance

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Home Insurance

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Travel Insurance

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Life Insurance

A macro analysis of the consumer finance sector tells us that insurance and loans dominate the search impression volume with a collective 69% (see Figure 1). The dominance of insurance and loans is underpinned by high search impression volume for keyword markets such as Car Insurance (22%), Pay Day Loans (21%) and Loans (12%). This stands in contrast to the traditional core retail services market i.e. current accounts and savings, which has a much lower collective search impression volume of only 10% (see figure 2).

Deposit and savings account - 11% Credit and debit cards - 5%

source: Google keyword estimation tool

Figure 2 % Split of search impression volume by keyword market type

This report analyses the leading consumer finance brands between the period December 2011 to May 2012. Our findings will detail tactics and strategies as well as reveal the most visible brands within: •

Organic search

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PPC (Pay Per Click)

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Social media

The following insight analyses the top 100 keyword phrases within each of the primary verticals across the top 50 brands. We have removed all none commercially focused websites from our analysis e.g. Wikipedia.

Car insurance - 21.81%

Savings - 8.21%

Pay day loans - 21.02%

Credit cards - 4.85%

Mortgages - 14.68%

Home insurance - 4.38%

Loans - 12.12%

Current accounts - 2.62%

Travel insurance - 8.31%

Life insurance - 2.0%

source: Google keyword estimation tool

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EXECUTIVE SUMMARY

HOW DO WE MEASURE THE SEARCH MARKET Search impression represents the number of times a website page is displayed within the search results. It is only after the results are displayed that visitors are able to click on either a PPC advert or an organic link. Therefore, “click share” represents the act of a visitor clicking on a PPC advert or an organic link and is calculated as follows:

Figure 3 Brand related search impression volume for the top financial lenders % Split 20

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organic click share is the number of clicks that an individual operator has achieved against a keyword, as a measure of where they rank for that keyword.

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PPC click share is the number of clicks that an individual operator has achieved against a keyword as a percentage of their Share of Voice (SOV). SOV is a measure of how often a brands PPC ads appear and their position.

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See Appendix A Reference 1 for a full break down of our methodology.

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85.13% of all brand search impression volume is taken up by the following high street banks including Barclays Bank, HSBC, RBS, NatWest, Lloyds TSB, Halifax Bank and Santander (see Figure 3).

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Traditional high street banking retailers dominate our brand index with Money Supermarket being the only non-lending operator to feature in the top 10, while MoneySavingExpert, Gocompare and Confused appeared within the top 20.

ROLE OF PRICE COMPARISION WEBSITES

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Of the top price comparison sites Money Supermarket has the largest volume of brand search impression which is reflective of their leading position within the market (see Figure 4).

Figure 4 Brand related search impression volume for the top price comparison sites

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Price comparison sites have positioned themselves as a critical part of the buying cycle providing consumers with an easy and flexible way of viewing comparative products within the market. Moreover these sites also provide financial lenders with the necessary means to advertise their products online. Paradoxically, price comparison sites are also absorbing critical organic real estate. Many financial operators who directly lend to consumers are jostling with these sites for premium position within the Search Engine Results Pages (SERPs) to maximise their exposure.

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Despite the tough economic times and the mixed performance of many of the top financial institutions within the UK (Appendix B Reference 6) brand search impression is still dominated by the traditional high street banking retailers.

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BRAND SEARCH IMPRESSION VOLUME

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EXECUTIVE SUMMARY

MOST VISIBLE CONSUMER FINANCE BRANDS IN SEARCH: KEY HIGHLIGHTS Key findings of the report:

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When we aggregate Money Supermarket’s paid and organic click share for the sub vertical mortgages their dominance is wholesale.

With 36.13%, this is 22.14% ahead of their nearest rival Barclays Bank.

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63% of the organic click share index for the sub vertical savings is dominated by price comparison sites. For the keyword best savings rates the first seven places within the index are occupied by aggregators.

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The most important non-brand keyword markets in online consumer finance are insurance and loans which have a collective 69% of the total search impression volume.

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As a direct challenge to the large aggregators, Google has launched their own price comparison site within the keyword markets for credit cards, current accounts and savings.

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Of this group, car insurance is the most dominant product category with 22% of all search impression volume. High rankings within this market are critical for maximising visibility within consumer finance.

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As part of an aggressive strategy to maximum exposure, Google has positioned their own sponsored listings directly above the organic results and the use of images makes the ads appear more imposing than normal paid search results.

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The pay day loan sub vertical is one of the fastest growing keyword markets and has grown by 218% since the start of the financial crisis in 2008, with the single biggest increase occurring in 2011.

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Gocompare’s aggregated click share of 19.28% is indicative of an aggressive paid and organic search strategy making them a leading brand within the home insurance sub-vertical.

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85.13% of all brand related search impression volume comes from just 8 financial retailers including Barclays Bank, HSBC, RBS, NatWest, Lloyds TSB, Halifax Bank and Santander.

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While InsureandGo struggled to breach into the top echelons of the organic click share index, they have cornered paid search with an impressive 19.26%, dominating 90% of the top 10 keywords.

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Money Supermarket is the leading price comparison site with the largest share of brand search impression volume.

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Price comparison sites such as Money Supermarket and Gocompare are absorbing critical organic real estate. Many traditional retail financial operators are jostling for premium positions within the SERPs to maximise their exposure competition and this is only set to continue.

The only pay day loan operator which has maintained a stable position ranking is Payday UK, while PayDayExpress, Wonga and PayDayPower have all been subjected to dramatic shifts in their organic rankings.

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These high levels of volatility within the organic rankings for pay days loans makes paid search an essential channel for delivering consistent exposure.

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Among the retail banks, social media remains a relatively under developed channel, with many operators not integrating their main site with key social media assets such as Facebook and Twitter.

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Those brands that do leverage social media are using their assets to support their customer relationship management processes.

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Compare The Market’s top position within the social media score card is underpinned by the cross pollination of their “Compare the Meerkat” brand campaign which gives them one of the highest engagement scores.

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Supermarket giant Tesco Bank is the next leading brand, developing a social strategy that has the most robust balance between engagement quality and volume.

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A key challenge for many of the traditional retail banks is that they are competing with a diverse range of brands. At one end of the spectrum are the likes of the price comparison sites like Money Supermarket and Compare The Market while at the other, supermarket giants Tesco and Sainsbury’s offer the same types of products as high street banks, at competitive prices.

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Keywords like ISA, mortgage and travel insurance are heavily driven by fluctuations in seasonality. The real winners are those brands who are able to maintain high consistent organic rankings as well as being able to deploy a cost-effective PPC campaign during peak periods.

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Despite the economic downturn following the financial crisis in 2008, recent trend analysis shows a gradual increase in volume during 2011 for the current account sub vertical.

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first direct has the largest paid click share with 14.73% for the keyword market current accounts. However, with less than five percent between the top five this lead is marginal and is indicative of the strength of competition within the market.

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Competition within the savings market is intense. Although Money Supermarket is leading with a click share of 22.82%, this lead is only small (2.5%) over second place MoneySavingExpert

“WHILE TRADITIONAL SEARCH MARKETING CHANNELS FORM PART OF THE STRATEGIC STAPLE DIET, SOCIAL MEDIA REMAINS UNDERDEVELOPED WITHIN THE CONSUMER FINANCE SECTOR.”

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ABOUT THE AUTHOR Philip McGuin, Head of Insight and Market Research at Stickyeyes has 15 years’ experience in the areas of online marketing, performance based lead generation as well as, data analysis techniques including web metrics, portfolio score carding, attribution, econometrics and statistical modelling.

He has worked both client and agency side for a range of sectors including public bodies such as European Parliament, European Commission promoting the EU’s policy on Information and Communication Technology (ICT ) as well as the Department of Trade and Industry (DTI), marketing policy on e-Government. He has also extensive experience in the private sector as Head of Marketing for an enterprise software provider Atlantic Global as well as the Head of Online Marketing for one of the UK’s first private online higher education training providers - Kaplan. Prior to his career in the private sector Philip worked as a doctoral research fellow in Economics, Politics and History.

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