top-of-mind insurance webinar presentation

Proprietary & Confidential. Copyright © 2014.1

Q3 2014

TOP-OF-MIND AWARENESS INSURANCE STUDY


STUDY METHODOLOGY

1,026 consumers were surveyed about their top-of-mind awareness with respect to Auto insurance providers.

Data from Rocket Fuel’s 2012 study on Auto Insurance awareness was also used to model shifts year-to-year.

SURVEY DATAMARKET SHARE

DATAKANTAR SPEND

DATA

Lastly, cross channel spenddata was collected fromKantar Media a leading mediaand market researchcompany.

The data collected from 2012and 2013 was used to modelinsurer awareness as afunction of ad spend acrosschannels.

Market share data for 2012 and 2013 was collected from the National Association of Insurance Commissioners (NAIC) based on premiums written.

Market share data was compared to Awareness data and spend data to model future shifts.


01 THE AUTO INSURANCEPATH TO PURCHASE


AUTO INSURANCE SHOPPING TRENDSA Q1 2014 TransUnion study found that:

• Nearly half (44%) of auto insurance shoppers will only look at a single quote before making a purchase

• Over the past 5 years consumers have continued to shop for auto insurance at the same rate

Consumers aren’t changing their habits or perception toward insurers but they are seeking new mediums with which to research and purchase auto insurance—Rocket Fuel’s study found that 55% of consumers that start their journey digitally will apply for auto insurance online.

Source: John Ittner, “What TransUnion’s Unique Data Assets Reveal about Auto Insurance Shopping and Consumers”


BRAND DISCOVERY

recommendation of a friend, parent, or colleague.

Initial exposure to a customer’s auto insurance provider will typically come from one of two sources:

Exposure to an ad, either on TV or online.

Personal Networks

Advertisements

25%

41%

Online Research

55%


ONLINE’S ROLE IN THE PATH TO PURCHASE

Ultimately, a consumer’s final decision is most likely to be influenced by price (though reputation and policy benefits play a role as well). This is where digital information sets the stage and seals the deal: 39% of consumers rely on a digital source to make their final decision.

Digital information is extremely important in the path to purchase with more than half of consumers (55%) researching providers online• Price/product comparison sites (13%)• Insurer websites (13%)• Consumer reviews (9%)• Digital ad content (5%)

Price 49%

Reputation 17%

Policy Benefits

10%

Factors contributing to switch


02 AWARENESS


WHY DO WE CARE ABOUT AWARENESS?

It’s not immediately obvious why top-of-mind awareness is important as a KPI for auto insurers. As we’ll see, the small consideration set for consumers in the space means that high awareness will often translate directly to sales.

The correlation between market share and top-of-mind awareness is very strong—83%. Not only does top-of-mind awareness bring in initial business but it can be viewed as a predictor for an insurer’s market share.

As we saw earlier, nearly half (44%) of auto insurance shoppers will only look at one quote before making a purchase. 15% won’t even request a quote prior to making a purchase. The brands most likely to be in this small consideration set are those that are Top-of-Mind for the consumer.


CURRENT TOP-OF-MIND AWARENESS

Q. WHEN THINKING OR AUTO INSURANCE, WHICH BRAND COMES TO MIND FIRST? (OPEN-ENDED) N=1,026

• One year later, Geico still leads auto insurance brands, though State Farm has passed Allstate.

• The top 4 auto insurers command 67% of the top-of-mind awareness in the auto industry (though less than half of the total market share—47%)

Market share for Geico rose by +0.7% YOY, the largest increase among auto insurers over that span.

This may be attributable to the significant gap between its top-of-mind awareness (25% in 2013) and its market share (9.6%), which could forecast similar shifts for other brands.

Erie Insurance

Hartford

Liberty Mutual

American Family

Farmers

AAA

USAA

Nationwide

Progressive

Allstate

State Farm

Geico

1.3%

1.4%

1.7%

1.8%

2.8%

3.0%

3.3%

3.8%

10.6%

16.0%

19.4%

21.2%

+1.1

-4.1

-3.8

-2.2

+0.1

+0.9-0.9

+0.6

+1.0


AWARENESS AND MARKET SHARE

AWARENESS MARKET SHARE

BRAND 2014 RANK 2013 2014 RANK 2013

Geico 21.2% 1 25.3% 10.3% 2 9.6%

State Farm 19.4% 2 18.3% 18.5% 1 18.4%

Allstate 16.0% 3 19.8% 9.95% 3 10.0%

Progressive 10.6% 4 12.2% 8.5% 4 8.3%

Nationwide 3.8% 5 3.9% 4.0% 8 4.1%

USAA 3.3% 6 2.4% 5.1% 9 4.8%

AAA 3.0% 7 3.9% 4.2% 5 4.2%

Farmers 2.8% 8 2.2% 5.4% 6 5.9%

American Family 1.8% 9 0.8% 1.9% 10 1.9%

Source: National Association od Insurance Commissioners, 2013 & 2014 premiums written

Looking at the top 10 auto insurance brands in terms of awareness and market share, we can see how the two are closely aligned, though awareness is disproportionately weighted toward the largest brands.


The question then, is how does ad spend across various channels affect Top-of-Mind Awareness, and ultimately market share, for auto insurers?


03 MODELING AWARENESS


BUILDING A MODELTo answer this question, we built a Marketing Mix Model using cross-channel ad spend data for each auto insurer, and used that to model awareness. Data from both the 2013 and 2014 studies was used to insure greater accuracy.

In other words, we set up a regression analysis that looked like this:

Brand Awareness = (a1)*(TV spend) + (a2)*(Display spend) + (a3)*(Print Spend) + …

By solving for a1, a2, a3, and so on across all brands and spends, we can identify how important each of these spend elements is in generating Top-of-Mind Awareness for an auto insurance brand.


MODELING TOP-OF-MIND AWARENESS

Results were good: Our model was near perfect at predicting top-of-mind awareness (95%).

The chart on the right shows Top-of-Mind Awareness and Total ad spend for the top 10 auto insurers in 2013 and 2014.

TOTAL AD SPEND (MILLIONS)

AUTO INSURANCE: TOP-OF-MIND AWARENESS VS. TOTAL AD SPEND

TOP-

OF-

MIN

D A

WAR

ENES

S (%

)

State Farm ‘12State Farm ‘13

Geico ‘12

Geico ‘13Allstate ‘12

Allstate ‘13

Progressive ‘12Progressive ‘13

Nationwide ‘13

Hartford ‘13



As we look at this chart, we can see which brands are performing above their expected Awareness based on Total Ad Spend.

Those along the line (or within the gray error bars) are generally ‘getting their money’s worth’ with regard to their ad spend while those above and below are either over- or under-performing.



TOP-

OF-

MIN

D A

WAR

ENES

S (%

)


Geico ‘12


Allstate ‘13


Nationwide ‘13

Hartford ‘13

Overperforming

Underperforming

Performing

Appropriately



Based on that, Geico is where we’d expect them to be, but State Farm was a surprise, as they appear to be generating considerably higher awareness than their spend would indicate in both 2013 and 2014.

Why?



TOP-

OF-

MIN

D A

WAR

ENES

S (%

)


Geico ‘12


Allstate ‘13


Nationwide ‘13

Hartford ‘13


As our model would show, TV ad spend on network TV had only a slight positive impact on Top-of-Mind awareness, while cable ad spend was actually detrimental.

Which isn’t to say that cable ad spend is bad for awareness, but that it won’t increase top-of-mind awareness comparatively to other brands—it’s a zero sum game!

The most likely reason for the low effect from TV ad spend is oversaturation: If too many brands are spending similar amounts on TV, they will compete for awareness among the same consumers.

AUTO INSURANCE: TOP-OF-MIND AWARENESS VS. TV AD SPEND

TV AD SPEND (MILLIONS)

TOP-

OF-

MIN

D A

WA

REN

ESS

(%)

AWARENESS AND TV AD SPEND


TOP-OF-MIND AWARENESS BY TV CONSUMPTIONLooking at Top-of-Mind Awareness among TV viewers (and by amount of TV watched) seems to support the “oversaturation” hypothesis.

Despite Geico significantly outspending other brands on TV advertising, Top-of-Mind Awareness among TV viewers is similar across all viewership buckets, where we might have expected Geico to have a proportionately higher share of Awareness among heavier viewers.

For the large auto insurance brands, it is difficult to outspend the competition with meaningful results while for smaller brands it is difficult to spend enough to even “make a dent.”

TOP-OF-MIND AWARENESS BY HOURS OF WATCH PER WEEK

1 H our or l e s s

2 - 4 H ours 5 - 7 H ours 8 - 1 4 H ours

1 5 - 2 1 H ours

2 2 - 3 0 H ours

More t ha n 3 0

H ours

13% 14% 14% 18% 19% 17% 13%

18% 18%28%

13%20%

16% 23%

22% 23%

22%

18%

20%20%

24%

9% 12%

10%

10%

12%

8%

12%4%4%

1%

6%

3%

4%

4%

Allstate State Farm Geico Progressive Nationwide


From the previous model we saw State Farm exhibiting outlier-type nature spending much less than its competitors while achieving higher levels of awareness than other brands.

Examining our model against digital display spend channel shows why State Farm has achieved higher levels of awareness—higher spend in the display channel as compared to its competitors.

In fact, the model showed that display ad spend is 9x more effective at generating top-of-mind awareness than TV spend.

AUTO INSURANCE: TOP-OF-MIND AWARENESS VS. DISPLAY AD SPEND

DISPLAY AD SPEND (MILLIONS)

TOP-

OF-

MIN

D A

WA

REN

ESS

(%)

Geico ‘12

Geico ‘13


Allstate ‘13

Allstate ‘12


PREDICTING TOP-OF-MIND AWARENESS


Given what we saw for TV spending, we wanted to determine where Geico’s extra awareness advantage came from and we were surprised to find that impressive spend levels in radio were the key contributor to their massive top-of-mind awareness advantage.

AUTO INSURANCE: TOP-OF-MIND AWARENESS VS. RADIO AD SPEND

TOP-

OF-

MIN

D A

WA

REN

ESS

(%)

RADIO AD SPEND (MILLIONS)

Geico ‘13

Geico ‘12


Allstate ‘12

Allstate ‘13


PREDICTING TOP-OF-MIND AWARENESS


ANOTHER WAY TO LOOK AT IT…We’re big baseball fans, so another way to think about this is to think of auto insurance brands like baseball teams: Geico, the current awareness and spend leaders, are like the Yankees, who get their money’s worth, but outspend.

Comparatively, State Farm is like the Oakland Athletics, currently enjoying significantly higher-than-expected results given their spend. Nationwide are the Mets.

NY Yankees

NY Mets


04 GENERATING AWARENESS


WHERE DO I SPEND?

When auto brands compete evenly in TV spend, spending more, even exponentially, in that channel is not likely to increase awareness of their brand—we’re at a point of diminishing returns. Therefore, it behooves an auto insurers to seek out under-served channels to exploit market inefficiencies.

Currently, we recommend increasing display budgets in as efficient a manner as possible to improve top-of-mind awareness for auto insurers. Ultimately, the first brands to do this will reap the benefits.


05 IMPROVING CREATIVE


5 WAYS TO IMPROVE PERFORMANCE

Insurance ads that don’t mention price average slightly higher conversion rates (10%) than those that do.

1.

Insurance creatives featuring a human face (regardless of whether it was an agent) average 2x higher conversion rates.

2.

Creatives with blue or red backgrounds averaged 20% higher conversion rates than creatives with other colors, and had higher click-through rates.

3. Animated creatives average higher click-through rates, but comparatively lower conversion rates, a reversal from the usual trend (and established benchmarks).

4.

Insurance ads with the “Apply Now” call-to-action average the highest conversion rates.

5.Source: 722 creatives, 530M impressions, 44 campaigns, 2013


05 RECOMMENDATIONS


TURNING SPEND INTO AWARENESS

$1MM +.16%

$1MM +.18%

$1MM +.02%

Ultimately, a brand can expect to see a more efficient and robust use of its ad spend by doubling or even tripling down on digital display compared to TV. For every $1MM spent on display advertising, an auto insurance provider could expect to see a .18% increase in awareness, compared to .16% for radio and only .02% for TV.


RECOMMENDATIONS• INCREASE SPEND IN DIGITAL, PARTICULARY DISPLAY

– Display advertising was a strong positive feature of our top-of-mind awareness model. Top auto insurers demonstrated that shifting dollars from overcrowded TV channels to digital display generated additional efficiencies.

– Although data for video is sparse, it is likely the case that advertising in digital video provides a similar positive impact to display, given how little spend is currently dedicated to the channel. It also provides a way for auto insurers to re-use existing assets created for TV.


RECOMMENDATIONS• UPDATE CAMPAIGN KPIs TO FOCUS ON MORE THAN SALES

– Although consumers are becoming increasingly reliant on digital channels to evaluate auto insurers, request quotes, and make purchases, many will still take the final steps offline, or may do so long after being exposed to an ad. For these consumers, driving top-of-mind awareness should be the primary goal, and advertising KPIs should reflect the importance of doing that.

– Auto Insurance advertisers should also consider closed-loop measurement and optimization solutions for campaign performance—such as those that are offered by Transunion and Rocket Fuel—to get a complete view of the impact of digital spend on insurance policy applications


RECOMMENDATIONS• TRADITIONAL INSURERS SHOULD FOCUS ON RELATIONSHIPS

– Auto insurers have already well-covered the “price” factor with advertising, though only half of consumers see price as the most important factor in their purchase decision. For non-price sensitive consumers, consider messaging that focuses on reputation and other differentiators like usage-based insurance, and mobile claims and account management.

– Additionally, consider focusing Likelihood to Recommend as a KPI—consumers are still relying on recommendations from friends and family to make insurance purchases and so finding ways to influence those recommendations can provide additional value.


RECOMMENDATIONS• DIRECT INSURERS SHOULD INCREASE CROSS-CHANNEL EFFORTS

– Traditional brand like State Farm and Allstate have long standing relationships with older adults that makes it difficult for direct insurers to compete. Increasing cross channel spend will allow direct insurers to take advantage of smarter spending mix as well as capitalize on the preferences of younger consumers ultimately leading to a stronger grasp on market share.

– Additionally, direct insurers should continue to focus on “challenger” messaging that highlights the price benefit to the consumer.


QUESTIONS?

THANK YOU FOR YOUR TIME

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