Few people would argue that Internet functionality has improved over the past few years. But some may argue whether consumers are shopping more on the Web. The fact is, organizations from many industries are using the Web in a variety of ways to drive potential customers to their Web sites. Recent estimates place the online advertising market at more than $28 billion. Boston-based Celent LLC cites the recent acquisitions of online advertising marketplaces by major online players such as Yahoo!, Google and Microsoft as a clear indication that a battle is on to get to the customer through online advertising. Insurance companies need to factor in the costs of marketing online and decide on a targeted strategy.The rate of online marketing growth varies among lines of business. But the constant throughout: Online marketing is growing. The insurance industry may look to other industries as the reason for the growth, says Lisa Phillips, senior analyst at New York-based eMarketer Inc. "In general, most businesses are moving at least part of their marketing budgets online. They're following consumers who are online shopping and comparing prices, etc. People have come to depend on the Internet for any kind of research," she says.

Insurers see the need for increasing their online spending and are adjusting budgets accordingly. "The growth rate of online marketing and advertising has well-exceeded the growth rate of more traditional advertising and marketing spending," says Beth Hirschhorn, chief marketing officer at New York-based Metropolitan Life Insurance Co. (MetLife). She estimates the percentage of MetLife's budget for online marketing has grown from the low-single digits to the mid-single digits in one year. "With the investments we've made so far, we're very pleased with the results, which is why we're moving up the spend as a percentage of our overall advertising mix."

Oakland, Calif.-based health insurer Kaiser Permanente also sees online marketing as the biggest growth area in Kaiser Permanente's marketing efforts as a whole, says Hilary Weber, director, Internet Marketing Services and Brand Marketing at Kaiser. In fact, 15% of its marketing budget is allocated to online. "That's up from last year, and it's growing."

One insurer hasn't seen growth in online marketing, but that's only because it doesn't have numbers from last year with which to compare. But, that's not stopping them from taking an aggressive approach to online marketing, says Peter Michaelson, chief marketing officer of Precedent Insurance Co., which launched its business in August 2007 and is a subsidiary of Livonia, Mich.-based American Community Mutual Insurance Co. "We have a pretty aggressive budget of about $2.5 million that we're spending between August 27 and the end of November. We're not going to be spending our advertising money, except for online, in the month of December, because of a lot of the clutter of holiday advertising," he says.

In fact, Michaelson says the online portion of Precedent's marketing budget was determined first-before other line items. "We had a budget of $2.5 million and the first thing we did was figure out what it takes for us to do an effective job online, and then the rest of it we allocated to other media," he says, comparing this method to that used years ago. "When the Internet came along, people were layering Internet on top of the marketing budget as an afterthought, but we did it as our first planning piece."

Deciding where to place online marketing dollars is the next step-a step that varies among companies. "It's all about the marketing mix-what's the optimal amount of each type of marketing activity you want to do," says MetLife's Hirschhorn.


Marketers taking advantage of search engines, such as Google or Yahoo!, is growing in popularity. A consumer who types in "auto insurance" or other keywords into these search engines will be presented with two types of results-organic results, presented on the main body of the results page and sponsored links, or pay-per-click, presented across the top of the page in a designated box and down the side of the page.

Search engine optimization (SEO), which is a practice that improves a Web site's ranking among those organic results, has become part of Kaiser Permanente's ingrained best practices, Weber says. "It is something that absolutely has to be part of all of our Web presence," she says.

Showing up in those first few lines of the organic results is important, says Hirschhorn. "The typical consumer is going to look at the unpaid search, or natural search, first," she says. "It's a complex algorithm, the quantity of content is important, as is the number of links and the number of times you use key phrases."

Celent suggests this method for most insurers as a low-cost option, but there is a trick to it: If you lack the budget to compete with the national brands on the vanilla products, focus on your niche products. For example, Zurich will show up as a paid result on Google for "Builders Risk" but not for "Small Business Insurance."

Another trick to search engine optimization, says Precedent's Michaelson, is to start early. SEO is a key part of Precedent's marketing strategy. The company began its SEO efforts in February 2007 and launched in August 2007. "I've been working in Internet marketing for a number of years, and I know SEO is probably the most important component of the Internet marketing effort, and it takes quite a while to build it," he says. "If you're launching your advertising campaign on August 27th, you can't be launching your SEO campaign on August 27th. You have to have done that months before in order to have your rankings where you want them to be."

Paid search also works for some insurers. "For about three-and-a-half years we've been active on paid search, and that's been working very well," says Kaiser Permanente's Weber. "That is one of the most cost-effective and user-friendly aspects for the end user. We've really taken that on-not just for health terms, but for various business lines-Medicare and individual plan and small business."


Once a prospect has made it to an insurer's Web site, the insurer needs to take the next step-keeping them there by giving them the information they want.

Kaiser Permanente kept that in mind as it redesigned the information architecture of its Web site, providing more content right from the home page and developing a pre-site where prospects will start. "It will help people in the very beginning stages of thinking about a health plan versus the ones that are already ready to hit the trigger," Weber says.

Precedent also provides customized tools for prospects, because it doesn't want to be viewed as just another health insurer, says Michaelson. "In order to get a sense of how the plans might play out for them personally, we thought the simulation tools might be more effective than diagrams," he says.

MetLife made changes to its online tools to enhance the navigation of the tools and improve usability. The changes were initiated by the customer activity MetLife tracked. "We can track how many people start using the tools and finish using the tools," says Hirschhorn. "That gives us an indication of how well they're working. And that's another opportunity for us to improve them."


Many insurers are providing online quoting and application functions, and those companies that don't are really losing out, says eMarketer's Phillips. "Even doing just an online quote is a good first step," she says.

Precedent's business relies on this capability. "We focused on developing the infrastructure on the Web site that would accommodate doing an online application and providing an immediate real-time quote," Michaelson says.

The company implemented business rules technology from Corticon Technologies Inc., Redwood City, Calif. "The application takes only about 10 minutes and then the rules engine provides a quote that's customized for that individual."

And the accuracy and speed of those quotes is important, says Corticon's senior vice president of marketing, David Straus. "When you look at the decisions that need to be made in a quoting or underwriting process, there are many that are pretty sophisticated."

Business rules can also help the application process when it comes to forms, Straus says. "In a lot of forms, you're going to get unnecessary questions. You're going to have to read them and bypass them." But with business rules, you can eliminate these. "If the applicant says he's male, he won't be asked if he's pregnant."

Kaiser Permanente and MetLife each monitored their potential customers' activity while applying to find out where they could improve their online application forms.

MetLife sent out three different forms for consumers who wanted to be contacted by a representative. "We tested three different types to see which had the greatest completion rate in terms of the length of the form and how much information people wanted to provide and we just redesigned our form based on testing three different versions," Hirschhorn says.

Kaiser saw the need to improve its online forms, after monitoring drop-offs in the application process, Weber says. "Several years ago, when there was a big drop-off on one of the functions on the main site, it became clear that people were having a problem there, so you're able to go through and try to figure that out; look at redesigning, look at usability."

Even after only few weeks of operation, Precedent is already making a change to its online application. "We're finding a significant percentage of the people who get quotes don't wind up registering so we're not able to contact them in any way," Michaelson says. "We're implementing a system whereby we don't provide customers all of the information about their rate quotes once they've been approved."


A few insurers are even testing the social networking waters. Precedent is going to use Facebook, a social utility that connects people with friends and others who work, study and live around them. Though that piece of Precedent's campaign has yet to be officially launched, Michaelson is sure this method is a good way to approach is targeted clientele-healthy, 19- to 35-year-old consumers.

Kaiser Permanente is also sticking its toe in waters that may include podcasting and Verizon mobile technology as avenues to attract more customers. "We're not there yet, but it pays to look ahead, because the online space is changing so fast," Weber says.


"The online piece is a lot easier than offline because we're able to track every banner we run and every search engine ad we run," says Precedent's Michaelson. "We measure click-through rates, the amount of time people spend on the site and the number of page views. More germane to us is how many people begin an application, how many complete an application, how many get a quote, how many purchase."

Until recently, the standard measurement has been page views or unique visitors who come to your site, Phillips says. "For insurance companies, that isn't necessarily a great measure because insurers want potential clients to keep coming back to find out more and more. Insurers that want to convert somebody want to see where they went on the site, what were they looking at. They can tell if the visitor hit click-to-print and other actions the visitor takes."

Kaiser Permanente tracks activity. "That's the beauty of online marketing-you can track it a lot better than offline," Weber says. "We use tracking technology on the various pages of our site, where we want people to go. We're able to tell what methods are bringing in the best bang for the buck."


"The Internet is not a stand-alone medium for us as an industry," says MetLife's Hirschhorn. "The online medium and the way you use it has to support what your brand promises. All of the improvements we've made are to achieve that end."

Creating a cohesive marketing initiative using offline and online mediums and brands may require a more integrated approach, such as Kaiser Permanente's.

"We're starting to move away from the silos-online is over here, advertising is over here," Weber says. "We're starting to work cross-functionally in a way we never did before. We have a cross-function team made up of 13 different marketing and communication departments-it combines the offline and online people and we meet every two weeks, which we never did before."

Some people may still argue that online marketing isn't worth the time and effort. Weber and others would disagree, and have found the right mix to make online marketing effective.

Online Activity Across Lines of Business

Personal Lines Auto: Celent LLC, Boston, estimates that 70% of this year's auto insurance purchases will be at least Web influenced, 30% will be Web initiated and 10% will be purchased 100% online.

Life: Due to the complexity of life insurance products, the growth for Web-initiated or 100% online purchases will be slower than that of auto and individual health. Though Web-influenced purchases will rise significantly, from more than 40% this year to more than 80% in 2011, Celent estimates that Web-initiated buys will increase from 10% to 30%, and those buying 100% online will grow from roughly 3% to almost 10%.

Health: Celent estimates that the percentage of Web-influenced purchases will increase from more than 50% this year to 90% in 2011. Over that same period, Web-initiated purchases will increase from 20% to nearly 60% and 100% online will grow from 10% to more than 50%.

U.S. Online Advertising Spending by Financial Services and Insurance Companies, 2006-2011 (billions and % of total)


Financial services-$2.54


Insurance % of financial services-28.4%


Financial services-$3.26


Insurance % of financial services-30%


Financial services-$4.32


Insurance % of financial services-32%


Financial services-$5.10


Insurance % of financial services-33%


Financial services-$5.85


Insurance % of financial services-34%


Financial services-$6.60


Insurance % of financial services-35%

Source: eMarketer Inc., 2007

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