Television remains the most powerful tool in the advertising armoury of insurance companies — but they must adapt to changing view patterns and innovations to survive in the market, says Ralph Savage.
When The Buggles brought us the 1979 hit Video Killed the Radio Star, it ruminated on the golden age of radio after popular music had found a new visual medium to reach the masses.
Yet, in 2011, even the idea of MTV now appears slightly anachronistic in an environment where media platforms are evolving through new technology. So, the challenges for both platform owners and the brands that want to take advantage of them as advertisers are highly complex.
Insurers are well known as some of the biggest investors in mass media marketing, with leading brands consistently spending eight-figure sums each year on advertising through television, radio, outdoor, direct mail and online.
Describing his firm as "top of the second, bottom of the first division" in the context of marketing spend, LV's marketing director for general insurance, Guy Hedger, says if it is brand recognition that is desired then no platform comes close to TV. "Although aggregators have changed the distribution landscape, it's important to maintain a brand," he says, pointing out that this informs click-through activity online. "Well-known brands will perform better. Similarly conversion rates for known brands are much higher."
Broadly speaking there are two types of television advertising for which insurers and, more recently, aggregators have become known: those that aim to encourage a direct response to a specific product message, for example, it is easy to compare or very cheap; and those that seek to convey a brand's values in order to elicit an emotional connection with consumers, for instance, friendly, cool or cautious.
Mr Hedger says his company does not believe in pure brand advertising. "That's a little too self absorbed and we don't believe in tatty pure direct response," he says. "We have a hybrid strategy in which we try and build the brand while delivering short-term sales. We do focus on pricing and product enormously in our advertising but we put it into a very appealing environment, which says a lot about the company in the subtext. We are not purely about direct response on cheap daytime telly, with ads saying 'we're cheap'; we're actually building a personality and character."
It is certainly horses for courses though, as Hiscox — a more recent entrant into the public consciousness with its UK retail and small commercial arm — prefers a pure brand awareness appeal in its television advertising campaigns. Annabel Venner, marketing director at Hiscox UK, explains how in 2010 it began a Channel 4 sponsorship strand. "Channel 4 was quite a good partner and we've decided to continue that into 2011 as well. You will find a lot of the creative in those spaces is brand-based. We're trying to communicate the values of Hiscox, why we're different."
TV also forms a component of niche brands' strategies as Sarah Howe, marketing director at over-50s specialist Rias, details: "We've moved from being a very strong direct mail oriented company to a multi-channel approach. We use direct mail, press, inserts, TV brand awareness and direct response TV advertising."
While Hannah Squirrell, marketing and e-commerce director at Bennetts says the broker famous for its 'Bennetts Babes' campaigns utilises "highly targeted TV activity to bolster its mix"; but only at the right cost/reach ratio.
"For example, our use of TV idents on niche channels covering key bike events that we sponsor extends our reach to our target audience at a viable cost," she says.
Ms Howe goes on to explain that demonstrating return on investment leads Rias to plan a degree of flexibility into its campaigns. "We are constantly chopping and changing. If you know more about the customer you can be better targeted in your delivery; this will give you a better return.
"Broadcast media like TV isn't ever going to pull at the customer as well as direct mail where you've really learned about them and targeted them well."
"You can create a certain market share without using TV advertising, but you will reach a glass ceiling very quickly," adds Mr Hedger. "One break during Coronation Street reaches eight million people and if you don't use TV advertising you'll create a niche but it'll struggle to grow past that." He describes these mass audience programmes as 'appointment to view', emphasising that family viewing time and soap opera slots remain an effective way of reaching broad demographics who have earmarked that time to watch their favourite show.
However, the delivery of content is undeniably changing and the introduction of streamed programming through the internet and, more commonly, recordable broadcasts on set-top boxes have presented a threat to advertisers' message. Put simply, viewers have been fast-forwarding through the adverts.
"I don't think the channel's effectiveness has diminished," argues Ms Venner. "We have found that by using 'bumpers' at the beginning and end of each break with our sponsorship of Channel 4 programming that this isn't a problem. With any type of advertising channel, the onus is on people to really understand how customers use them and ensure that everything is joined up."
Fergus Hynd, account director at marketing agency VCCP, declares TV will never be dead. "At some stage you are going to face circumstances when you are eclipsed by new things which mean your offer, however shiny and carefully considered, looks slightly defunct and anachronistic. There will always be a brand lifecycle and the need for an element of brand fame to capture the public consciousness — however cursorily that actually raises and lifts you above what the rest of the market is doing.
"It's well known the best way of achieving brand fame always has a TV element to it and delivering brand fame is the quickest way to achieve a real return on investment. You need these things to hit the consciousness and the most effective way to do that is TV."
Having said that, Mr Hynd adds that the "always on" approach to TV advertising by some brands could be on the way out. "With the aggregators we are seeing a TV-led arms race illustrating this need to be wall-to-wall in nearly every break with a sonic mnemonic that works while people are making a cup of tea. In the insurance space TV is always going to be important, but it will be more judiciously used; people will make it work without piling it high and selling it cheap."
Kevin Taylor, CEO at digital agency Gravytrain, adds: "TV is by no means a thing of the past, although it's clear that, particularly in the insurance price comparison market, that it's only there to drive people online.
"Take Go Compare and Compare The Market, which both spend around £25m a year on their marketing efforts with a huge chunk of that going on television. What is important, however, is that when spending a large amount of money on TV, it's a huge advantage to have strong organic listings otherwise your pay-per-click spend runs the risk of going through the roof.
"With Go Compare no longer in the top 10 for car insurance it is clearly at a disadvantage when the customer starts their journey. They simply don't appear and will be reliant on increased brand searches and pay-per-click for the term 'car insurance' which will be costly."
Meanwhile, insurers may shortly get their wish for better targeting if the news coming out of Sky is anything to go by. In March, the broadcaster announced a new project designed to provide targeted advertising to individual homes. Sky's Ad Smart system will download a selection of ads to your hard disc, much like the existing Sky Anytime service. It will use postcode, age, viewing packages and other data to create a profile for advertisers.
Ms Howe says this is a natural and interesting development: "If you are a media owner, your requirement is to be able to serve up relevant content to consumers, so they have to improve the ROI for the advertiser."
Mr Hynd continues: "This will be massively important for insurers. As we move to the generation of TV set-top boxes whereby people aggregate their own selections of channels and, by those choices, we are going to know more about creating spot-led breaks that are much more targeted and with the green button, much more interactive.
"That is the very beginning of a much more agile and focused approach to TV advertising. Those companies that need to drive sales and need to keep the tills ringing will use them first. Moreover, some of the brand-led communications will want to use it cleverly as the sophistication develops."
As the public's consumption of media content evolves, so too are the advertisers' efforts to attract their attention. However, Ms Venner at Hiscox says the amount of TV people watch hasn't changed, it's just that they may also be using other channels simultaneously. "You have the classic modern picture of someone watching TV with their laptop open and their smart phone next to them. It's about joining up all the messages so you get consistency between what they might see on TV against what they find online through pay-per-click or even a display add."
Ms Venner explains Hiscox has been trying to innovate in this area, with one example being an integrated campaign at Waterloo Station in London in late 2010. "We joined forces with Jiwire and BT Openzone. A lot of business customers are out and about, spending very little time in their offices but may have downtime such as waiting at a coffee shop for their next train.
"We had an outdoor ad and, if someone was at a coffee shop wanting to access the web via BT Openzone, we would serve them an ad. It's a joined up approach thinking about when they might like to engage."
Where there are smart phones and web content the discussion inevitably leads to social networks and whether these can be effective channels to hook customers in. So far, only a handful of brands have made a concerted attempt. Swiftcover is currently engaged in a brand awareness campaign through Facebook called 'Roadology' that, through a combination of competitions and interactive content, had generated more than 5400 'likes' after one month of action.
The jury is still out, however, with Mr Hedger saying "agnostic would be a mild adjective to describe what I think of social networks as a marketing tool. There is not a lot of evidence in my experience that they deliver ROI. If you look at the top brands in the world that have adopted social networks, they tend to be car companies or luxury goods or brands like Apple and the thing they have in common is they are 'high engagement'.
"When you get into low engagement brands, I don't believe they have a future on social networks. You do insurance once a year and that's that; I can't see how people will want to become a fan and all that sort of stuff, but if you are Nike then fair enough."
Consumer insurance brands have been nothing if not creative with their marketing strategies over recent years. However, it appears that the way consumers receive advertising messages is likely to change. The 'always on' approach of the aggregators has cost a significant sum and, as Mr Hynds suggests, it may be a case of "who blinks first" as the £15m to £25m annual advertising spend becomes too burdensome. "We've already seen Uswitch cut its spend significantly. It doesn't go much further to think another will become unsustainable and it will be the one with the weaker brand," he says.
It is as good as certain that TV will remain a powerful part of the marketing mix and, even as audiences diminish, the pull of family programming and 'appointment to view' shows will offer sought-after positions for brands seeking to demonstrate their universal appeal.
The challenge as always remains with the marketers themselves as Ms Venner concludes: "As an advertiser your concerns should be what are you trying to achieve and with the budget you have. The question is what is the best way to spend it?"
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