1. Online Advertising
Technology
Part 1 in a 2-Part Series
Net
Worth
Online advertising is becoming an important by Jaimie Pickles and Candace Thornton
marketing tool for property/casualty insurers.
T he Internet has proven to be a
wonderful marketing tool for
personal lines property/casu-
alty insurers and agents. Geico, Progres-
sive, Esurance, State Farm and Allstate
agree a consumer must see something
eight times to recall the brand. Oth-
er media—television, radio, print, out-
door—all contribute to the effective-
ness of an online piece. ▼
▼
The News: Some 78% of Americans
now have access to the Internet.
The Significance: Property/casualty
insurers are buying display and paid-
search online advertising.
dominate online. They have mastered Advertisers who placed display ads
▼
the techniques for attracting prospec- with online media, as well as in the Watch For: P/C insurers to begin
utilizing online video ads.
tive consumers who crawl through the 210 designated offline marketing areas
Web in search of insurance. nationwide, allocated 6% of their total watch. There were 2.3 trillion display
However, when it comes to online estimated media expenditure in 2007 ad impressions across all industries in
advertising, many insurance marketers to online display ads, according to 2008, an overall 20% decline in impres-
are still asking questions such as: “How Nielsen Online. They reported similar sions from the prior year. Yet among
much is being spent?” and “How do I results for 2008. the list of insurance advertisers, there
justify a strategy?” Narrowing the group to only the were 13% more. In 2008, for personal
personal lines P/C insurers that adver- lines P/C, the online display ad impres-
How Much is Being Spent? tised both offline and online, the allo- sions volume reached 26 billion.
cation of their estimated advertising To benchmark further, personal
Display Advertising expenditure for online display ads lines P/C was subsegmented by distri-
Display advertising involves the was 4%. bution—direct, agency or a mixture of
banner ads that drape the tops, sides Expanding the source data to both. From 2007 to 2008, direct carri-
and bottoms of Web pages. Even if include all online advertisers, regard- ers spent an estimated $2.72 per 1,000
consumers mostly ignore them, online less of offline activity, the estimated online display ad impressions, while
banner ads are still powerful brand- dollar expenditure figures for online agency carriers spent $5.52—twice
ing contributors. Advertisers generally display ads are impressive. As a group, as much. Overall, when compared to
advertisers are estimated to have spent the other two groups, the direct car-
Contributors: Jaimie Pickles is approximately $9 billion for each of riers, remarkably, spent less for more
president of Canal Partner, based in the past two years. The personal lines impressions. (Please see Exhibit 2 on
Wilmington, Del. He can be reached P/C group previously mentioned spent the bottom of page 70.)
at jpickles@canalpartner.com. an estimated $90 million for 2007 Naturally, display ad buy strategies
Candace Thornton is a consultant and $102 million for 2008. (Please see will differ. More expensive sites might
and Society of Insurance Research Exhibit 1 on top of page 70.) be worth it because of their known traf-
Board Member. She can be reached at Beyond the estimated expendi- fic. But as a young channel, not every
thornton.candace@yahoo.com. ture, impressions are also a metric to site knows its own value…yet. It’s a
BEST’S REVIEW • APRIL 2009 69

2. Online Advertising
Technology
Exhibit 1
2007 2008
Online Display Advertisers Estimated Impressions Estimated Impressions % Change in % Change
Spending Spending $ Spent in Impressions
All $9,147,219,500 2,893,885,130,000 $8,561,481,000 2,325,978,583,000 -6% -20%
Personal Lines P/C* $89,746,600 23,222,735,000 $101,960,400 26,263,929,000 14% 13%
*Custom list of Personal Lines P/C advertisers based on Nielsen Online.
great time to get ahead of the research share of all search activity last year— important to optimize online adver-
curve. It’s safe to predict that as sites depending on the data source—while tising programs to get top placement
use more third-party data to under- Yahoo and MSN/Windows Live fin- at competitive bids.”
stand their non-registered traffic, costs ished 2008 in a distant second and Competition has increased due to
to buy display ad space on their sites third place, respectively. the ability for more insurance provid-
will go up. U.S.-paid search advertising spend- ers of all sizes (even individual agents)
So the rule of thumb online is the ing increased just over 21% in 2008 to use paid search. Better search tools
same as offline: Match ad placement to $10.7 billion, according to eMar- are available to advertisers, allowing for
with the desired targets. keter, a supplier of online marketing a push toward localization.
statistics and analysis. The company According to Penny Hart, presi-
Paid Search also expects an increase in spending dent of New York metro-area focused
Paid search is to the Internet what next year of 15%. insurer TSC Direct,“Since fewer people
television is to a typical company’s For personal lines P/C insurers, paid are reading newspapers, we have redi-
overall media mix. It is where personal search spending increased by approxi- rected some print ad money to online
lines P/C insurers spend the most for mately 25% in 2008 to $235 million, media. Search is now regional, allowing
online exposure. based on an analysis of data from Inter- us to focus in on our geographic mar-
In this form of online advertising, net information provider comScore. ket, making it more cost effective.”
an insurer bids on search terms that The data also indicate that personal Jon Kaplan, Google’s director of
consumers use. The bid is based on the lines P/C insurance search volume, 90% financial services advertising, said his
cost per click that the insurer is willing of which belonged to the auto cate- company has made paid search more
to pay, in the event a consumer clicks gory based on Google AdWords data, useful for advertisers.
on its “sponsored link” ad. The highest- increased by almost 10% last year. “Our search platform tools have
bidding companies get their ad—and Increased competition for search increased the control and flexibility
link to their site—placed in one of sev- consumers among insurers leads to for advertisers,” he said. “For example,
eral spots at the top or the side of the advertisers paying higher cost-per- because of the platform flexibility,
search results page. Insurers bid for click amounts, a trend reported by the virtually every advertiser has a local
placement on popular search engines search-engine marketing solutions pro- bidding strategy for search. Now, Joe
such as Google and Yahoo. vider Efficient Frontier. This, in turn, Smith in Des Moines can set up a geo-
Overall Internet user search activity contributed heavily to paid search graphic radius around his office and
increased in 2008 by almost 10% year spending growth in 2008. advertise only to search consumers
over year. In 2008, according to Nielsen Confirming the intense level of who reside within that territory. We
Online, U.S. Internet users conducted competition, Karlyn Carnahan, prin- also provide data on the front end,
an average of nearly 8 billion searches cipal of insurance at consulting firm such as Google Insights for Search, to
each month, and ended the year with a Novarica, said, “When using the key- help understand the popularity of a
record 8.6 billion searches in December. word ‘auto insurance quote,’ over 450 given search term, and analytical tools
Google is the primary search engine sponsored links come up along with on the back end to help measure paid
of choice with a 63% to 70% market 35 million organic results. So it is search effectiveness.”
Exhibit 2
2007 2008 2007 vs. 2008
Est’d Online Est’d Online Display Cost per Est’d Online Ad Est’d Online Ad Cost per 1,000 % Change in CPM
Display Ad $ Ad Impressions 1,000 Spending Impressions
Direct $28,219,600 11,498,396,000 $2.45 $18,383,700 6,752,543,000 $2.72 11%
Agent $33,049,100 5,646,364,000 $5.85 $29,783,300 5,399,302,000 $5.52 -6%
Mix $28,477,900 6,077,975,000 $4.69 $53,793,400 14,112,084,000 $3.81 -19%
Total $89,746,600 23,222,735,000 $3.86 $101,960,400 26,263,929,000 $3.88 0%
Source: Nielsen Online
70 BEST’S REVIEW • APRIL 2009

3. Online Advertising
Technology
Online Leads Based on a survey conducted by
Personal lines P/C insurers and Did You Know? online-video advertising solutions pro-
agents began buying online leads many • 78% of households have access to the vider LiveRail, the average cost per
years ago. Online companies—often Internet. thousand in-stream impressions in the
referred to as aggregators or market- • 75% of households access the Internet for fourth quarter of last year was $16.40.
places—such as InsWeb, NetQuote and at least one hour from home per week. According to eMarketer, total online-
InsureMe, attract consumers looking • 73% of households do online research for video advertisers spent $587 million
for multiple quotes. For these three items they want to buy. in 2008, with that number expected
sites combined, 2008 Nielsen Online • 67% of households use the Internet to to reach $4.6 billion in 2013.
data indicate there were on average shop. With so many Web users spending a
approximately 4.7 million unique visi- • 48% of households watched streaming vast amount of time viewing billions of
tors monthly. video last year. videos online every month, why are so
Nielsen Online 2008 cross-visita- • 24% of households watched streaming few advertising dollars currently being
tion data indicate the vast majority of video last week (at time of survey). allocated to this genre?
unique consumers to an aggregator’s • 38% of households visited and/or pub- Two important hurdles stand in the
site did not visit another insurance car- lished to online communities last year. way, and both pertain to a lack of stan-
rier or aggregator’s shopping site. In Source: Nielsen Claritas dards. Unlike TV advertising where con-
contrast, consumers visiting an insur- tent, time, size and pricing standards
ance carrier’s site were more likely to also reported a 44% increase in the have been in place for years, none exist
also pay a visit to another insurer’s site. number of agents on its AgentInsider for online video. This drives inefficien-
This suggests that consumers seeking lead platform. cies and higher production costs.
insurance quotes on an aggregator are So what is fueling this growth? Further, performance measurement
typically one-stop shoppers. Hussein Enan, chairman and CEO of standards haven’t been established,
Consequently, in order to quote InsWeb, said, “Marketplaces such as making it difficult to understand the
these consumers, carrier and agents InsWeb put agents on a level playing return on investment. To establish stan-
spend millions of advertising dollars field with direct carriers spending hun- dards, media firm Starcom MediaVest
each year for online leads. In 2008, dreds of millions of dollars on Internet has launched a study with its advertis-
the estimated total market for online advertising.” ing clients to test ad formats. Accord-
leads was approximately $200 million. He added,“While direct writers cast ing to company spokesperson Lena
Roughly one-quarter of that total, or a wide net and are ready to deal with Petersen, the only insurance company
$50 million, came either directly or any consumer they attract, individual involved is Allstate.
indirectly from the carriers. agents are only interested in a very Until quantifiable results can be
Many agents pay for leads. However, small subset of shoppers. Marketplaces obtained and measured, the major
most direct companies do participate in perform this pinpoint target marketing insurance companies will hesitate to
varying degrees and an increasing num- on their behalf.” advertise via online video.
ber of agency carriers are subsidizing InsureMe, the third-largest online
agents for their online-lead spending. lead company, was acquired in early Digital Dominance
Last year, Allstate and Farmers 2008 by Bankrate based upon its attrac- Insurers can push information
joined online-lead purchasing veter- tive growth potential. And NetQuote toward online consumers in many ways:
ans, such as American Family, MetLife indicates that its 2008 revenues nearly display ads, paid and organic search,
Auto & Home, Liberty Mutual and reached $100 million—up nearly three- online leads and soon, online video.
Nationwide, by adding online leads fold since 2005. Even though online advertising may
to the advertising programs in which feel new to some insurers, the visibility
agents are reimbursed. Online Video Ads is already huge for consumers. Remem-
Steve Haran, director of sales oper- More than 120 million unique ber, 78% are online. And these consum-
ations at MetLife Auto and Home, Internet users are watching billions ers aren’t sitting there eating popcorn.
said,“Many of our career and inde- of online videos every month. Accord- They are engaged in shopping, buy-
pendent agents purchase online leads. ing to Nielsen Online, 9.6 billion video ing, researching, blogging, comment-
We often subsidize the agent’s invest- views were logged in December 2008. ing and playing. The aim is to advertise
ment in leads through reimbursement While online video advertising is where your targets are.
programs, which helps the agent and small today—very likely only a drop With so many now online and with
MetLife acquire new customers.” in the bucket of online spending by information now available to tell us
Indications are that the online-lead insurers—online video is the fastest where, insurers must take advantage of
market has been growing in recent growing area of online ad spending. this important marketing medium. BR
years. InsWeb, a public company, saw Compared to display ads, the cost per
its revenues grow 13% from 2007 to thousand for this form of advertising is Look for Part 2 of this article in
2008. During that time, the company much higher. the May issue of Best’s Review.
72 BEST’S REVIEW • APRIL 2009