"Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Steve Yi, CEO at MediaAlpha.
Cold feet, rate comparisons and digital noise are all common distractions that might stop a customer from doing business with a specific insurer. But that customer could still be a good fit for a competitor.
That may sound like bad news, but it really could be a benefit for all players. These days, an insurance company can turn into its own publisher and sell ad inventory to the competition at various points in the insurance-buying process, generating a secondary source of revenue.
You can call it the ultimate piece of the click-revenue pie.
There are sound reasons for insurers to engage in this process. On the sell side, a company might realize that it can’t offer competitive rates for a special type of coverage, or perhaps a national brand can’t underwrite in certain states. In either case, the insurance company can act as a publisher itself, selling ad space to competitors and allowing potential customers to click on a competitor’s display ad. The best-case scenario here would be to see those customers eventually come back to where they started, giving insurance companies a revenue double-dip from both co-opetition and conversion.
On the buy side, competitors see a lot of value in these potential leads, knowing that the amount of data already gathered provides some key insight into consumers they may want to target. Competitors are willing to pay more for the customers who have gone deep into the buying process on a competitor’s site because they know there’s a greater chance of conversion. Someone who has filled out a lengthy quote request form before figuring out that one company doesn’t offer what they need or isn’t competitive enough is going to be worth more than a consumer who just visited a website and spent about 30 seconds reviewing plan terms.
While insurance companies are relatively new to the co-opetition ad game, it’s not an entirely new concept in the programmatic ad world. Just look at the travel industry. During a search for a hotel room on Kayak, customers might see an ad on the side of the page for a leading hotel chain. With one click, they can book a room directly. But while that banner ad directs customers away from the original site, Kayak is generating revenue through that one click of the mouse, and it still has the hope that the customers will return to its site.
A Bigger Slice Of Digital Revenue
Passing these customers on to the competition might seem like small potatoes compared to the huge amount of money insurers spend on more traditional ad formats. From Flo to talking lizards and Mayhem, insurance companies spend millions of dollars on TV, radio and print ad campaigns that realistically result in few conversions.
Many find that investing further in digital is a good way to generate conversation and benefit from data-driven targeting. Money spent on digital display ads is nine times more effective at driving awareness than TV, radio and print, according to a recent Rocket Fuel survey. Insurance advertisers can generate brand awareness by reigning in spending to competitive levels on traditional channels and increasing spending on newer and underserved channels, such as display, mobile and video.
The Evolving Industry
Despite its recent explosion in popularity, programmatic media buying is still an evolving industry, with spending expected to reach $53 billion by 2018, according to Magna Global. As publishers continue to learn more about the intricacies of the technology, including the importance of transparency and fraud prevention, they’ll also be looking for new and unconventional ways to optimize and increase their revenue stream.
A programmatic strategy that engages in a little bit of friendly co-opetition for those high-quality sales is just the tip of the iceberg of what we might see in the near future.