Crashing the Party
Insurers are navigating what they hope is a path to success on the social Web.
Kristin Brewe was once asked to pull off a television ad campaign in 10 weeks.
She had a $100,000 budget but her employer, Esurance, was after a new kind of brand awareness. The direct insurer wanted to generate buzz online, where the core of its target demographic hung around and socialized.
More than four years later, the San Francisco-based insurer is still riding the coattails of the virtual celebrity Brewe's campaign created: Erin Esurance. The animated, pink-haired special agent has taken on a virtual life of her own in social Web circles.
"We hoped that would happen and it's been even more successful than we'd imagined at the beginning," said Brewe, Esurance's director of brand and public relations.
The viral effect that Esurance capitalized on enlisted the consumer as a collaborator. Esurance has made art and audio files available online for fans. The fans then helped push the brand before Facebook and MySpace users.
"I think it's an interesting pressure point on companies because I don't think we were used to the idea of thinking of the audience as a partner in the creation of ideas," Brewe said.
"I think that's a very different kind of approach to how all of us corporations have treated that group of people."
It's also let Esurance leverage brand awareness amid a reduction in ad spending for the first half of 2008. According to an analysis by TNS Media Intelligence, Esurance's estimated ad spending was $72.4 million for the first nine months of 2008, nearly a 29% drop from a year earlier.
"We've all seen a slowdown in shopping behavior so it made sense to cut back a little," Brewe said.
The unique path that Esurance has navigated may become more necessary for insurers striving to bolster online revenue.
It's due to a pitfall that happens in traditional advertising--consumer indifference. As the number of people reading and generating online content keeps growing, the mindset of those on social Web sites is focused on communicating with other people, according to Karsten Weide, an industry analyst for Massachusetts-based International Data Corp.
"It's not focused on consuming information, and therefore they are less receptive to advertising, and therefore advertising will be less effective," Weide said.
A recent IDC analysis indicated that only 57% of online consumers clicked on social network ads, below the 79% rate found across the Internet as a whole.
Weide also noted that advertisers are reluctant to place their brands alongside user-generated content because it's "less brand-safe."
"You have little control over that because you never know what people will say," Weide said. "It could be content that might be critical of your product."
Big Social-Net Growth
While insurers share commercials and videos on YouTube, a gap remains with respect to winning over the next generation of employees and consumers in the digital marketplace. The Internet analytics firm comScore estimated last summer that there were more than 860.5 million unique visitors to social networking sites in the 12 months leading up to June 2008, an 11% increase compared to a year earlier.
According to the Marketing Executives Networking Group, an October 2008 survey of 137 executive-level marketing professionals indicated that 67% felt they were beginners with respect to using social media for marketing purposes. More than 67% of respondents said they would increase social media advertising budgets in 2009, while nearly 80% said social media was not fully integrated into their marketing programs.
By comparison, a survey last year of 40 insurers by Financial Insights and Life Office Management Association indicated that about 55% of respondents access the digital marketplace through some type of blog, social network, RSS feed, wiki, podcast or through mash-ups that cross-pollinate media formats.
When asked the most pressing need for online transition, Barry Rabkin, an insurance industry analyst for Financial Insights, said he found it painful that product development ranked fourth in the survey behind sales and distribution, marketing and customer service.
Rabkin said Financial Insights and LOMA held a forum last month on the digital marketplace for insurance. The goal, he said, was to create an ongoing consortium where insurers could come together and better understand ways to capitalize on what the Internet has made possible. The forum addressed a range of issues that a company may face across the digital marketplace.
Social Web sites have not only given the individual a voice and the chance to be a critic, but allowed them to generate product feedback through an established circle of online friends and contacts.
Yet accessing the growing conversation among those online consumers will require a more delicate approach, according to one marketing professional.
"The big question is how much of the product research-purchase decision process will migrate toward these ways of pinging your network to get those opinions," said Jim Nail, chief strategy and marketing officer at TNS Cymfony, also of Massachusetts.
"The question for marketing," he said, "is how to be present and participate in the conversation without being so intrusive that you really tick people off."
Allstate Financial is now weighing that prospect. Plans are in the works to develop an online community in the first quarter of 2009 where individuals can discuss financial planning and retirement issues.
Desiree Rogers, who joined Allstate Financial as its president of social networking in June 2008, said the company was looking for ways to educate customers on financial planning options.
"The research showed that this particular segment, the $50,000 to $125,000 (average household income) customers, everyday Americans, are getting information from the Internet, as well as people that appeared to them to be like them, whether it's a neighbor or brother-in-law," Rogers said.
The company has already launched AllstateGarage.com, where motorcycle enthusiasts can request an insurance quote, build a chopper prototype online or chart a cross-country trip. As for the product discussion, Allstate is still wrestling with the best way to forge ahead with an online community.
"We don't want a corporate hand over the site," Rogers said. "The intent is to have something more free-flowing that provides a realistic view of what people want to talk about. Allstate is really the company that is bringing folks together to have that dialogue, as opposed to trying to lead or guide or police the dialogue."
Regulatory issues have Allstate considering whether to host this discussion area through its own site or through an external host. That planning will continue without Rogers, who has been named White House social director by President Barack Obama.
Such online dialogue has become a critical research tool for companies. A growing trend has staffers seeking out consumer feedback that appears on blogs or in chat rooms, which can better position an insurer to review and address complaints.
Nail said TNS Cymfony serves as a "listening post" for companies, harvesting content from blogs and discussion boards about a client or its competitors. Those details, Nail said, are then used to help the company craft a strategy.
"We do some work for some insurance companies and we often see a very, very high percentage of discussion around generic questions such as ‘should I get term or whole life?'" Nail said.
Esurance has one employee dedicated to tracking online discussions. Brewe said that in the coming year customer service representatives will be trained to seek out service issues online.
She believes that public relations personnel will focus more on this in the next two years. The prospect may panic some, she said, especially choosing which conversations to engage in.
"That's a strategy we're evolving," Brewe said. "But we're getting involved in conversations where it's a matter of correcting the public record, which is the job of any public relations team."
She has other staffers that she describes as "mini-buzz machines" to push the Esurance brand in cyberspace; one staffer focuses solely on environmental causes. Brewe makes no apologies for the company's online focus.
"We're not trying to please all comers," she said. "We're not trying to serve people that want to have a relationship with an agent, for example."
Brewe sees a distinct advantage to her company's online focus, particularly the immediacy of its data-intensive approach.
"With our model you're connected to the computer already and all that data is already in there," Brewe said. "You can see market by market, you can look to see what genre has performed better for you on television, so you can get pretty jiggy with the data."
But Rabkin questions whether the U.S. market was ready for Esurance's approach.
"If they were in Asia-Pacific it would be another story, because if you looked at the demographics of folks in various Asian-Pacific countries who are using digital marketplace media, they're way ahead of us," Rabkin said.
Rabkin suggested that insurers looking to capitalize on the capability of the Internet should chart a narrow course at first, after defining their objectives and a measure of success.
Even a small project or approach, he said, can have a large reach in the digital marketplace.
"You have to do it right because I don't know how long people will wait before they forgive you if the first attempt fails," Rabkin said.
Learn More:
Esurance Insurance Group
A.M. Best # 18718
Distribution: Direct, online, telephone service center
Allstate Insurance Group
A.M. Best Company # 00008
Distribution: Exclusive agencies, independent financial professionals
For ratings and other financial strength information visit www.ambest.com.
By Al Slavin, senior associate editor, Best's Review
