Throughout most of 2023, there was a notable decline in overall marketing spending across personal lines insurance. While there are a number of reasons, including strategic moves by insurers to mitigate the impact of elevated loss ratios brought on by inflation and other economic factors, what has emerged is a deeper investment in digital marketing.
In fact, through the first nine months of 2023, paid social spending increased by nearly 30%, and online video increased by 3.9% year over year, according to Comperemedia. Though online video advertising was only slightly up in the first nine months, in the third quarter spending was up more than 50%, signifying momentum that should continue through 2024. Perhaps the most notable digital metric comes from TikTok, where P&C insurers increased paid spending almost 200% in Q3 2023, year over year. All of this has occurred despite budget reductions, which have included not only marketing cuts but operating cuts.
What Does This Mean?
First and foremost, let me decry the death-to-direct-mail song that many have sung in recent years. Direct mail is still a pivotal channel in insurance marketing and will remain so for the foreseeable future. In addition, some of the investments toward digital channels can be attributed to the budget cuts many firms have made, because their use can be easily tied to customer conversion and they are seen as more efficient and agile.
However, the growth in insurance digital marketing in 2023 is not transitory and reflects the larger consumption of digital media overall. In many ways, today’s insurance media mix serves as a precursor to more sophisticated omnichannel strategies. And while direct mail will remain a formidable acquisition tool, over time it will likely be leveraged more as a way to pivot consumers to other channels and less as a bottom-funnel marketing tactic.
See also: Underwriting in the Digital Age
How Can Insurers Boost Their Digital Strategies?
Several key tips will help insurers as they build out their digital strategies in 2024. They include:
Establish Authenticity
Authenticity is crucial for digital marketing, especially across social media platforms. Insurers looking to maintain authenticity on social channels can do so by first staying true to who they are as a brand while also staying true to the cadence and decorum of the specific platform they are advertising on. This means using TikTok, for instance, in a way that does not disrupt the usual experience for the customer. There is also opportunity to leverage mascots or visual logos to make the brand more personable and “real” on social channels. For brands that don’t use mascots, broadcasting real customer testimonials to play up a network effect would help increase credibility. This route also highlights the quality of a brand’s products, acting as a differentiator in a market that is grappling with high shopping rates and waning consumer satisfaction.
Develop a Short-Form Video Strategy
Short-form video has become a highly leveraged marketing tool in recent years, as platforms such as Instagram and TikTok have grown in popularity. The momentum behind short-video consumption growth led YouTube to develop its own short-form ad features in 2022 and 2023. Mintel data also shows that video ads are the most recalled ad type on digital channels. Therefore, short videos that are more product-focused are attractive for consumers in the consideration stage of the customer journey and have a downstream effect on conversion.
Use Digital for Brand Awareness
While many insurers still lean on performance marketing to grow their books, the opportunity for brand awareness marketing will remain strong in 2024, especially as insurers continue to try to boost profitability. Companies should use digital channels to differentiate their brands and show the value they offer customers. Social media remains an effective tool for brand awareness, as 98% of internet users visit social media sites regularly, according to Mintel. However, efforts to boost brand awareness can be incorporated across channels, and firms should remember that using their native social media account is a great, low-cost approach.
Create a "Phygital" Experience
Direct mail still maintains a notable share of overall insurer marketing spending and can be leveraged to direct customers to digital channels. Therefore, by leveraging both physical mail alongside digital channels (phygital), insurers can get the most bang for their marketing buck. Insurers have the opportunity to move customers to digital channels via QR codes or social media handles placed within direct mail pieces that help answer or simplify consumer questions or concerns when purchasing a product. Insurers that rely heavily on direct mail can slowly introduce more digital engagement to test and learn. Adding an entertainment element could also be an effective strategy that casts the insurer in a new light.
See also: Top 10 Challenges for Insurers
What Will Digital Marketing Look Like in 2024 and Beyond?
Digital marketing has helped carriers as they wrestle with growing their book of business profitably, and this will continue into 2024 as they look to maintain consistent brand awareness and engagement.
Mintel projects advertisers across all industries spent $257.7 billion on digital advertising through the end of 2023 (up 13% from 2022), and insurers will continue to play their part. Additional factors, such as the growth of television streaming, podcast listenership and gaming across generations, create even more opportunities for insurance marketers. Finally, the rise of AI in marketing will allow for deeper and more sophisticated targeting and personalization, further boosting the digital marketing boom.
