Digital marketing
In the first of a two-part series on digital marketing, Catherine Stagg-Macey analyses current research on the use of established and new digital marketing methods by insurers, and gives some advice on how to best get started if you’re considering some of the latest digital marketing tools
First published in ITIJ 119, December 2010
In the first of a two-part series on digital marketing, Catherine Stagg-Macey analyses current research on the use of established and new digital marketing methods by insurers, and gives some advice on how to best get started if you’re considering some of the latest digital marketing tools
The amount of noise and column inches – virtual and print – dedicated to the phenomenon of Twitter and other social network sites has been overwhelming. And this noise is far in excess of the current value to financial services companies. To the insurance professional who is focused on operational challenges today, these new tools seem to raise more questions than answers. But many industry observers believe these new technologies bring with them new opportunities.
Digital marketing encompasses established methods of digital advertising with the customer, such as emails, display ads, and video ads, as well as emerging methods such as blogs and social networks. Insurers have all embraced established methods to their advantage where it makes sense for the brand and the line of business. Many forms of digital marketing have been around for more than a decade, and this, along with the perceived effectiveness of certain methods, is reflected in how insurers allocate their marketing budgets. Celent research shows that emails typically make up almost 40 per cent of the insurer marketing budgets. This is closely followed by paid keywords searches and display ads, with both categories roughly a third of the budget. This is clear proof point that insurers have leveraged traditional digital media to their advantage. What is less clear is the interest and adoption rates in the emerging channels, and how priorities may have to shift from established to emerging in the coming years.
The customer is changing
It’s commonly accepted that customer behaviour is changing. We call it the Amazon or Google effect. Customers have experience of the immediacy and ease of buying books, music, groceries and clothes online. These are positive experiences in the most part, and it’s understandable that consumers transfer this expectation of the shopping experience to their bank and insurer.
the chief barrier to adoption of tools such as social networks was insufficient metrics to measure impact of the tools and insufficient capabilities to handle this internally
In the United Kingdom, the consumer is offered a myriad of choices in how they buy insurance including online, agent, broker, grocery store, post office or aggregator. This complexity is currently unique to the UK but we expect other markets to follow this trend. These multiple ways of interacting underline the preference for the consumer – they want to choose when and where to discuss insurance requirements.
Increasingly, customers will rely heavily on the Internet to search for information to inform their purchase decision. Indeed, our research shows that insurers expect 60 per cent of their customers to use digital tools to search for information before making a purchase in three years time. Although many customers may choose not to make the purchase online, they will be heavily influenced by digital tools when being made aware of new products, comparing prices or making use of other services like claims notifications; and it is in this search for information where digital media plays a key role. Thus, there is certainly an offline impact of online marketing. Even if customers choose not to purchase online because of concerns over data security, it is reasonable to expect every other aspect of the purchase to be strongly influenced by digital media. It would be a mistake to measure success solely by an online purchase.
Here to stay
Established digital media tools have proven themselves, and the industry has strong views on the comparative effectiveness of the various digital media options as shown in the figure below. With one exception, the allocation of digital marketing spending maps to the perceptions of where money can be spent effectively. For example, typically, 37 per cent of an insurer budget is spent on email marketing (the highest allocation), and this is seen by 68 per cent of respondents to be more efficient than traditional media. So, a further proof point of the adoption and success of traditional digital methods.
But the interesting exception to this is social networking. Currently, only 13 per cent of the digital marketing budget is allocated to social networks (sixth in order of priority); however, social networks appear to be third in the list of tools that are more efficient than traditional media. Other emerging media tools such as wikis, podcasts, and blogs have mixed reviews. This could reflect one of two things: these tools are not particularly effective for insurance marketing, or that insurers have yet to determine how to leverage these tools.
This interest in social networks is noteworthy. As a fairly new tool, insurers appear to recognise the value that can be obtained from this channel, even if current marketing budgets are not mapped to this opportunity. In conversations with insurers, the chief barrier to adoption of tools such as social networks was insufficient metrics to measure impact of the tools and insufficient capabilities to handle this internally. This dilemma of wanting to adopt and invest in new digital media channels will continue for some time.
It is also worth noting that the web is more than an additional marketing channel. Applying the traditional mass marketing methods to the digital world will not bring full rewards. Buying ads on Facebook or having a Twitter account misses the point of the communication opportunities with the customer.
But we cannot get away from having specific, traditional measurable goals for the use of the new tools. At the end of the day, being ‘cool’ doesn’t matter, not even to the cool insurance brands. It’s about revenue, efficiency, and loyalty. The measurement of the impact of these emerging digital tools remains a significant hurdle for most insurers.
insurers expect 60 per cent of their customers to use digital tools to search for information before making a purchase in three years' time
Established digital media tools such as email have proven themselves. But in considering emerging digital media, insurers should consider the following:
Experiment in digital media, including emerging tools. The measurement tools have not yet caught up with the digital tools, but there is a good case to be made for trying small experiments with new media.
Capture the feedback. The web is nothing if not a noisy room of chatter. Customers will already be talking about their experience of products and services, and the organisation should at the very minimum have a process of capturing this.
Feedback loop. An experiment was conducted, the customers have spoken, and the next step is to learn from the experience.
Digital media is here to stay, and for some time will coexist with traditional media channels. New tools are changing customer and broker behaviour and should be recognised as having such an impact. Celent believes that the real value to insurers of emerging digital tools will become measurable, and therefore more apparent in the coming years. Ultimately, it will be through engagement of customers through these media that real value will be garnered.
This article is based on a Celent report published in April 2010 titled Digital Marketing in Insurance: A Partnership with Potential