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Online Marketing Tools: A Mixed Bag of Opportunities

Carrie Burns November 2007

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."

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