SOURCE: eMarketer

August 13, 2007 09:00 ET

Insurers to Double Online Advertising to $2.3 Billion

But eMarketer Report Finds Insurance Web Sites Are Trailing Expectations

NEW YORK, NY--(Marketwire - August 13, 2007) - Insurance marketing online has exploded in recent years and the Internet will continue to play an increasingly important role for targeting consumers. But the true test of insurers' online success comes when Internet users do their own research on price, policy and customer service on the companies' sites. It is a test that insurers are failing, even as they are spending more on digital advertising.

Internet users expect the same level of sophistication and service from insurers' sites that they find at their favorite online retail sites. But several studies show that insurers' sites are failing to keep pace with those in other industries, according to eMarketer's report "Insurance Marketing Online: Meeting Customer Expectations."

Consumers say lack of transparency, privacy concerns and a poorly designed site experience prevent them from signing up as customers. In fact, a survey from Compete found that almost one-quarter of those who abandoned an online application began with the full intention of opening an account.

Yet, US insurance companies will still spend a total of $980 million advertising online in 2007, accounting for 30% of all online ad spending by financial services companies. By 2011, these figures will be $2.3 billion and 35% respectively.

One reason for the growth is that marketers are heavily targeting the first wave of retiring baby boomers, the vanguard of which has not yet reached age 65. Spending will also increase as the health insurance industry transitions from a wholesale to a retail environment, impacted by a decline in employer-sponsored health plans and the 2003 introduction of health savings accounts.

Lisa Phillips, senior analyst and author of the report cautions, "consumers do not lower their expectations for service, privacy and usability when contacting their insurers, so companies risk harming their reputations and brands by not improving their online customer experience and service."

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