The Future of Insurance Marketing The Top 10 Trends That Will Reshape Insurance Marketing in the Next 5 Years

1The Future of Insurance MarketingThe Top 10 Trends That Will Reshape Insurance Marketing in the Next 5 YearsAs millennials come of age and a new wave of connected devices reshapes consumer behavior and purchase patterns, insurance marketing is poised for a fundamental shift. Below are 15 key trends that will insurance marketers will need to embrace in 2016 and beyond.

Consumer TV Watching Will Move from TV to Over-the-Top (OTT).

A number of forces will converge to cause insurance marketers to rethink big branding dollars on traditional TV. The explosion of online video watching, a plethora of connected devices, and declining traditional TV viewership among the valuable younger adults (pictured below) – all will push insurance marketers to begin shifting dollars to OTT platforms. The proof: while upfront ad sales rebounded in 2016, previously upfront ad sales had declined 3 straight years for broadcast networks, and 2 straight years for cable networks. i

Key Fact: Connected TV users in the US (those who use the Internet through a connected TV device once per month) will rise from 140 million in 2015 to 190 million in 2018. ii

Time spent on watching traditional TV vs. watching video online by demographics

Traditional TV

Video Online

K 2-11 T 12-17 A 18-24 A 25-34 A 35-49 A 50-64 A 65+

60

50

40

30

20

10

0

Weekly Time Spent on TV (Hrs)

Weekly Time Spent on Internet (Hrs)

6

5

4

3

2

1

0

Source: Neilsen Total Audience Report 3Q15

Brand advertisers know that a large portion of TV brand advertising is wasted. Whether because consumers are skipping commercials with DVRs, not watching commercials, or simply unqualified to buy an insurance product, TV brand advertising is a hope and prayer. To help audiences achieve reach AND better targeting with video adverting, OTT video providers and online video ad services will drive digital video advertising to $17 billion by 2020 (see below).

Key Fact: Although subscription-based online video services like Netflix and Amazon Prime garner the most viewers and revenue today, ad-supported online video (AVOD) will surpass subscription-based online video ( SVOD) by 2018 – and reach $11 billion by 2021. iii

US TV* vs. Digital Ad Spending, by Device, 2014-2020billions

2014 2015 2016 2014 2018 2019 2020

$68.54TV* $68.88 $70.60 $72.01 $73.81 $75.29 $77.17

$49.69Digital* $59.61 $68.82 $77.37 $86.61 $96.11 $105.21

$5.24Digitalvideo** $7.66 $9.84 $11.72 $13.39 $15.15 $16.69

$175.31Digitalvideo** $182.78 $192.02 $201.32 $212.20 $223.11 $234.25

$19.15Mobile $31.59 $43.60 $52.76 $61.20 $69.15 $77.10

$1.54Mobile $2.88 $4.24 $5.39 $6.31 $7.20 $8.06

$30.54Desktop/Laptop $28.02 $25.22 $24.62 $25.42 $26.95 $28.11

$3.70Desktop/Laptop $4.77 $5.60 $6.33 $7.07 $7.95 $8.63

Note: *incudes broadcastTV (network, syndication & spot) & cable TV;**includes advertising that apperars on desktop and laptop computers as well as mobile phones, tablets and other internet-connected devices, and includes all the various formats of advertising on those plat-forms;***includes advertising that appears on desktop and laptop computers as well as mobile phones, tablets and other internet-connected devices; includes advertising that apperars before, during or after digital video content in a video playerSource: eMarket, March 2016

As online video ads grow in popularity and measurement matures, advertisers are realizing that online video ads are more effective for two key reasons. First, because online video watchers are often tethered through a device-in-hand like a smartphone or tablet, viewers are less likely to stroll to the bathroom or kitchen during a commercial – and are much more engaged. Second, online video watching affords better targeting of viewers. While traditional TV is trying to catch up to digital targeting via smart set-top boxes and addressable TV, Web tracking technology is far ahead.

Key Fact: According to a 2015 survey, 72% of ad agencies say online video advertising is as effective, if not more effective, than television. iv

10%

31%

41%

18%

In your experience, how effective is online video advertising when compared to the following

alternatives?

Online video is more effective than TV

Online video is about the same as TV

Online video is less effective than TV

I don’t know

Source: BrightRoll 2015 Agency Survey, Dec 2014

Millennials and GenXers account for 48% of consumer spending. But these segments have media consumption profiles that are unlike previous generations. One example: 18-34 year olds watch 31+ hours per week on OTT -- more than TV or radio (see below). Millennials are also more style-conscious, impatient, less brand loyal, distrusting of authority, and humor-loving – all elements to be taken into account when creating advertising campaigns.

Key Fact: 50% of Millennials describe themselves as politically independent of any major party, and 29% are not affiliated with any religion – percentages significantly higher than other generations. v

Source: Nielsen

Adults Spend The Most Time Watching TVWeekly hours: mins of usage (in population)

Adults P 18-34 P 35-49 P 50+

35:26

13:01

4:09

6:43

11:36

3:42

3:44

14:23

6:28

7:02

10:54

20:24

32:07

13:40

4:18

8:20

14:34

5:29

2:42

8:07

5:59

2:07

14:01

47:18

TV Radio TV - connected devices PC Smartphone Tablet

2Qualified, Pay-Per-Lead Pricing Will Overtake CPMs.

Led by the overall trend toward pay-per-lead and away from CPMS that is taking place more generally in the world of digital advertising, successful insurance marketers will make pay-per-lead services like InsuranceRevenue.com an important part of the marketing mix. The most successful lead generation services will become content marketing specialists to improve the yield of qualified leads and conversions.

Key Fact: 90% of US brand marketers prefer to use at least some digital-specific metrics—clicks, views, conversions or sales—to measure the value of their digital advertising engagement. vi

3Advertisers Will Demand Transparency in Digital Marketing.

The big cloud over digital advertising – especially in the last year – is fraud. By some studies, 25% of video ads were the result of bot fraud, approximately double the rate of display ads. vii The result: advertisers and ad service providers will put in place fraud measurement, advanced targeting, and third party measurement and auditing capabilities to assure advertisers.

Key Fact: In 2016, an advertiser using Yahoo’s programmatic video ad platform said that between 30%-70% of its ads were not running or not in line with the CPM paid – in part because the video ads were embedded in banner ads. viii

4SEO and Search Marketing is Still Worth the Spend.

Buying insurance search terms can be incredibly expensive. However, search is – and will remain – one of the most effective forms of insurance marketing. What’s so special about search? Timing. When a user types in “auto insurance”, the chance that the user is, at that moment, considering a purchase is much higher than other forms of advertising. The trick: insurance marketers must optimize web pages and buy search terms that are tied to “long tail” search – off-the-beaten-path terms which account for 80% of Internet search traffic . Tools like Hittail (which helps identify long-tail search terms to boost SEO organic traffic) and SEMRush (which does the same for SEM terms) acquire traffic at a much lower cost than over-bid keywords or traditional forms of offline or online marketing.

Key Fact: Despite growth in mobile and video advertising, US search advertising will still total $52 billion by 2020 – 43% of all US digital ad spending—by far the largest category of digital marketing. ix

Source: Experian. SEOMOZ.org

Popular Keywords vs. Long Tail Search Traffic

Top 100 KWs

0

20

30

40

50

60

Top 500 KWs Top 1.000 KWs Top 10.000 KWs The Long Tail

5InsureTech Investments Will Disrupt Distribution.

Following along the path of the FinTech wave of the last 5 years, InsureTech investments from venture capital are ballooning to an all-time high (see below). While many of these investments will provide software and services for processes like real-time processing of claims, account management, mobile apps, and usage-based pricing, a large number of the new companies will disrupt the distribution marketplace. Insurance marketers are best served to know and experiment with new players like aggregators and lead generators like InsuranceRevenue.com, price comparison sites – many of which will displace traditional agents for millennials.

Key Fact: VCs are not the only ones investing in InsureTech. In 2014, Walmart partnered with Autoinsurance.com in 2014. In 2015, Google partnered with Compare.com and CoverHound. x

Total ($) Amount of Private Financing Transactions in the Insurance Tech Space

Total # of Deals

($ in min)

2010 2011 2012 2013 2014 2015 2016

$133

1917

32

46

69

97

91

$108

$586

$327$582

$2.617

$1.487

US Programmatic Digital DisplayAd Spending, 2014-2017billions, % change and % of total digital display adspending *

Programmatic digitaldisplay ad spending

% change % of total digital display ad spending

6Insurance Marketers Will Become Programmatic Ad Experts.

Programmatic advertising – online advertising that is aggregated, bought, and executed automatically using web interfaces and computational algorithms (think computer-driven program trading in the stock market) – is overtaking digital marketing. As the charts below show, they will impact all forms of advertising: display, mobile and video. Insurance marketers can work with major programmatic ad platforms like Google or Facebook, or invest in proprietary ad platforms as insurance companies like Geico and Progressive do.

Key Facts: 67% of US digital display advertising is programmatic. 69% of mobile ads are programmatic. 56% of digital video ads are programmatic. xi

Note: digital display ads transacted via an API, including everything from publisher-erected APIs to more standardized RTB technology; includes native ads and ads on social networks like Facebok and Twitter; includes advertising that appears on desktop/laptop computers, mobiles phones, tablets and other internet-connected devices; * includes banners, ricj media, sponsorship, video and other

Source: eMarketer, April 2016

$10.32

118.6%

49.0%

$15.83

$22.10

$27.47

2014 2015 2016 2017

59.0%

53.3%

67.0%

39.7%

72.0%

24.3%

US Mobile Programmatic DisplayAd Spending, 2014-2017billions, % change and % of total digital display adspending *

Mobile digitaldisplay ad spending

% change % of total mobile display ad spending

Note: digital display ads transacted via an API, including everything from publisher-erected APIs to more standardized RTB technology; includes native ads and ads on social networks like Facebok and Twitter; includes ad spending on tablets

Source: eMarketer, April 2016

46.0%

234.3%

$4.44

118.2%

$15.45

$21.22

2014 2015 2016 2017

$9.68

60.0%

69.0%

59.6%

78.0%

37.3%

US Mobile Programmatic DisplayAd Spending, 2014-2017billions, % change and % of total programmatic digital video ad spending

2014 2015 2016 2014

$0.44Desktop/Laptop $1.82 $3.03 $3.73

$0.19Mobile* $1.16 $2.48 $3.89

162.9%% change 313.6% 66.3% 23.2%

914.0%% change 517.0% 112.9% 56.8%

30.54%

% of totalprogrammaticdigital videoad spending

28.02% 25.22% 24.62%

30.0%

% of totalprogrammaticdigital videoad spending

39.0% 45.0% 51.0%

Note: digital display ads transacted via an API, including everything from publisher-erected APIs to more standardized RTB technology; includes advertising that appears before, during or after digital video content in a video player; * ad spending on tablets is including

Source: eMarketer, April 2016

7Print, Direct Mail, and Radio Are Left in the Dust.

When looking at expected overall increases in spending by media type, digital channels dominate (below). Email leads the way not for purposes of customer acquisition, but largely as a result of CRM investments for purposes of cross-selling and retention of existing customers. Media left behind continue to be print, direct mail, and radio – beset by measurability limits and reduced user engagement.

Key Fact: While direct mail may work for more complex financial products such as financial advisor services, most financial marketers have seen that email acquisition costs are much lower than those experienced by direct mail – especially for commoditized products like credit cards and insurance. xii

MarketingCharts.com | Source: StrongView / Selligent

Marketing Spending Plans for 2016, by Program

based on a survey of 295 global business leaders, 72% of whom are with companies headquartered in North America

59.7%Email marketing3.1%

56.3%2.7%

55.9%3.4%

51.9%2.0%

42.4%3.4%

27.8%4.4%

26.8%11.5%

16.3%12.9%

13.6%23.4%

9.2%10.9%

6.1%2.7%

% increasing spend

% decreasing spend

Social media

Online display advertising

Mobile marketing

Search (SEO/PPC)

Public relations

Direct mail

Tradeshows & events

Print advertising

Radio/Television advertising

Other

8Streaming Audio Ads Provide Effectiveness, Without Intrusion.

Where broadcast radio once reigned, online radio and podcasting is now seeing a resurgence in usage and advertising dollars. Half of all adults over 12 years old listen to some sort of online radio in the last week, a rise of 44% over the previous year. Activity is greatest among younger consumers (below). Insurance marketers take note: according to podcast service provider Midroll, 63% of podcast listeners report making a purchase after hearing a podcast ad, in part because of a strong affinity for the content and host, and higher attention to the ad message itself. At rates of #15 to $30 CPM, podcast ads are worth testing to reach non-broadcast audiences.

Key Fact: Pandora remains the most-known online audio brand with 82% awareness, followed by the retooled Apple Music (67%), iHeart Radio (65%) and Spotify (52%). xiii

Age 12-24

68%

Age 25-54 Age 55+

75% 77% 79%

52% 50%

61%65%

20% 21%26%

31%

2013 2014 2015 2016

Source: Edison Research. TRITON DIGITAL

Online Radio = Listening to AM/FM radio stations online and/or listening to steamed audio content

available only on the Internet

9Internet of Things (IoT) Will Create New Opportunities.

Source: Statista

The Internet of Things (IoT) – a network of Internet-connected physical objects and machines embedded with sensors, software and electronics which collect and share data – will transform insurance marketing by better customizing products and offers for customers. Smart home sensing technologies from companies like Nest or Honeywell track and collect data about temperature, water presence or other conditions to avoid costly claims. Fitness trackers like Fitbit and Jawbone track health fitness and activity. With a wealth of data, insurance marketing will be smarter.

Key Fact: According to Accenture, 78% of insurance customers would be willing to share personal data via IoT technologies or Internet applications in return for lower premiums or quicker claims processing. xiv

2014

6.053

Total Home automation Security Home entertainment

Ambient assistent living

2015

9.793

2016

15.624

2017

22.961

2018

30.935

2019

37.867

2020

42.987

Energy management

0

10.000

20.000

30.000

40.000

50.000

In m

illio

n U

.S. d

olla

r

Revenue in the Smart Home marketin million U.S. dollars (worldwide)

Home automation, security and entertainment will drive smart home growth through 2020

10Connected Cars/Telematics Will Reshape Auto Insurance Rates.

The rise of vehicle telematics – sensors and electronics embedded in cars to wirelessly transmit data in real-time – will afford insurance marketers the opportunity to identify trends and patterns. Armed with data, insurance marketers will be able to fine-tune pricing and customize insurance packages that do more than just serving the “average” customer. This data, combined with digital user data (from set-top boxes or mobile providers) and online behavioral data, will make for highly effective marketing campaigns targeted at an individual level.

Key Fact: Drivers overpay an average amount of $368 annually for auto insurance. xv

Global Automative Telematics Revenue

2014 2015 2016 2017 2018 2019 2020 20210

500.000.000

1.000.000.000

1.500.000.000

2.000.000.000

2.500.000.000

3.000.000.000

3.500.000.000

4.000.000.000

4.500.000.000

U.S

. dol

lar

Source: IHS

i From Media Dynamics. Media Matters, July, 2016 ii Based on projections from eMarketer, 2014.iii From Ooyala, based on a study by Digital TV Research, June, 2016. iv From a survey conducted by BrightRoll (owned by Yahoo), February 2015. v February 2013 study from Nielsen and ad measurement company Vizu, as cited in “Digital Display Advertiser Roundup”, a November, 2013 report from eMarketer.vi Pew Research Center, March, 2014.vii From Association of National Advertisers, as cited in Forrester Research Report, “The Forrester Wave: Video Advertising Demand-Side Platforms, November, 2015.viii From a CNBC news story, “Inside Yahoo’s Troubled Advertising Business,” January, 2016. ix eMarketer, January, 2016.x From “Prepare for the InsureTech Wave” by Financial Technology Partners, September 2016. xi eMarketer report, April, 2016.xii EMI Strategic Marketing, “10 Credit Card Trends to Watch in 2015.” xiii In nite Dial 2016 report, from Edison Research and Triton Digital.xiv Accenture Consulting Report “Connected home insurance insight for P&C insurers”, 2016. xv From Gartner Report, Market Guide for Human Capital Management Applications, 2014, as cited by Capterra, “The Top 11 HR Technology Statistics for 2016.