Why Insurance Advertising is Losing Money for Independent Agents
Insurance advertising is losing your agency money.
Most insurance agents understand that to survive they need to advertise. A lot of business comes from referrals but the life blood of an agency is the ability to bring in new business.
We work with many agencies and we are find that agents are actually losing money on their insurance advertising efforts. The point of advertising is to receive some kind of ROI. I think we can all agree that Advertising with the goal of losing money is a terrible business practice.
In the midst of helping these agencies increase their marketing profits, we came across 5 common themes that are causing them to lose money on advertising.
1) Their insurance advertising leads the consumer nowhere
I drive by this agency’s billboard every day and I can never remember the name of the agency. On the billboard there is no address, phone number, website or even a mention of services offered. There is a family on the billboard and the company’s logo largely spread across it. On the side in small letters in the agency’s name and cities.
If this advertisement would make me take action (and that is a big if) the only thing I would do is call the insurance company because that is the only thing on the billboard that I can remember.
Every advertisement should have a direct action regardless of whether it is traditional advertising or online advertising.
2) The advertisement ROI is not trackable
When discussing marketing plans with agents, two of my first questions are “how much money are you spending on advertising, and how much business is it bringing you.” At first I was surprised, but after a while I began to expect the same answers.
Most agents spend thousands of dollars on advertising in a year but have no idea how much business is actually earned. Take a second and think about your own agency. How much do you spend on advertising? Which ads are the most profitable?
By not knowing this information you could really be throwing your money away. Tracking the ROI for advertisements allows you to see what is working, what is not, and ultimately take wasted funds away from the failures and put them into something you know will provide a positive return on investment.
3) They think small
Go big or go home!! Often times buying the smallest ad option is the worst choice. How often do you buy the $10 year book ad or take the $20 sponsor spot just to be included in the back of pamphlet with 200 other local businesses? This is about as effective as buying business cards and throwing them in the trash can.
If you are going to spend money advertising go big for a big return. Would you rather pay $2000 for a 110% return or pay $20 for a 0% return? When you look at it this way, which ad was really more expensive? The one that led to a profit or the one that cost us time and money we will not get back?
4) They are not getting the most out of their Co-op dollars
One of the great things about consulting for insurance agents and carriers is that we get to see both sides of the coin. While carriers do not always deliver how agents feel they should, most of them have the agents’ best interests in mind. They are striving to make changes that are more profitable for the agent but most agents do not properly use the resources available.
I could talk all day on underused company resources but one of the major resources regarding advertising is co-op advertising dollars.
Believe it or not, most companies end the year with unused co-op dollars. Many agents either don’t bother with co-op, don’t properly understand it or don’t fully apply so they do not get reimbursed. Agents are literally leaving thousands of dollars on the table which could have been spent to pay for their advertising efforts.
5) They do not promote their brand
One of the great things companies offer can also be a terrible thing for agents. Carriers offer great marketing materials so agents can easily marketing themselves and put advertisements up. The problem with this is that every agent has access to the same advertisements.
This is what we saw in our local newspaper a couple years ago:
The images shown were ads that ran in the same newspaper on the same day and the only difference was the agency logo on the left. At first glance they appeared to all be the same and if I had to guess, the agency with the last ad got the most bang for their buck.
In our experience we found that you are better off having your own ads designed by a local designer and putting the company logo on your branded ads. The above ads look great and are designed well but they are simply not unique to one agency.
When having a local designer create a unique ad just be sure to check with the company guidelines and remember to get all advertising pre-approved by the company marketing department. Most cases you can get the same amount of co-op money.
4 Things you can do to make your insurance advertising more profitable.
As an agency owner you likely find your agency falls into one or a couple of the above categories. That is OK, most agencies do. However, it does not take much effort to turn your advertising around and start seeing a higher ROI for the year.
We have laid out 4 simple things that you can begin implementing in your agency this week to see a better return.
1) Invest in Digital Marketing
A great way to bring in new business in an affordable way is through digital marketing. Many hesitate to jump into digital marketing because of the initial investment to make it successful but realistically it is no different than investing into traditional advertising.
Once you begin your digital marketing journey, and begin getting found online, digital marketing becomes much more profitable than traditional advertising. Not only are you bringing in more new business but online prospects generally cost less money per lead to gain.
2) Make everything trackable
You do not have to have a full blown digital marketing strategy right away but you should invest into some digital efforts to get a better understanding of your advertising’s ROI.
When we advertise for our insurance agency, we use tracking phone numbers, tracking links and often times trackable URL’s. We want to see what works and what doesn’t work. If an advertisement got us 100 local calls and another got us 3, then we know not to invest in one billboard but continue the other. If one website page brings in 3000 visitors and 0 leads but another brings in 500 visitors and 200 leads we want to know so we can adjust accordingly.
Without trackable data, you have no idea where you should invest your money and what advertising you should cut out completely.
3) Stop being afraid to spend money
As a business, profits keep your doors open. Most agencies, especially those who are declining, hang on tight to the available money they have. This is actually the opposite strategy you should have.
Advertising is supposed to lead to a positive return so it only makes sense that if you need to earn a higher profit, you need to invest into more advertising. I’m not saying go blow your agency’s last dollars on any advertising opportunities that come along. It should be strategic and you should expect a return. But in order to make advertising work and in order to see your business grow you need to invest money.
4) Get to know your media reps
Relationships are often times more profitable than any investment of money. As a local business, you will run into the same media companies who want to offer you advertising opportunities. If you get to know your reps they will begin giving you the heads up on special deals, new opportunities and can help get you good ad placement.
Some of the helpful things we have seen from these relationships are bundle opportunities for print and online ads, last minute special pricing opportunities (when no one else fills an advertising spot they offer us a special highly discounted rate to fill it before their deadline), and when you want to try something new they will likely be able to create a custom package for you.
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