Internet lead costs soar for insurers as competition escalates

But advertisers have to change their view of search engine leads, says Harvard professor

Internet lead costs soar for insurers as competition escalates


By Allie Sanchez

So, they’ve Googled you. Can you expect a sale afterwards?

Not so fast, says the “Customer Journey Analysis: Insurance” study, which says that the cost per click for insurance firms has gone up by $40 more last year compared to 2015.

Further, it says that leads from placements in mobile searches for tablets and smart phones have led basically nowhere as sales figures on the platform continue to stay in the doldrums.

The study also observed that insurers spend half their online revenue to attract customers through search engine advertising.

“In addition, comparison portals…make life difficult for insurers as they promote competition and make qualifications more difficult,” a report on the study said.

While traffic on the mobile space is growing, as more than one third of visitors flocked to insurers via devices such as tablets and smart phones, sales leads have been paltry.

Cost per click (CPC) is also more expensive in the wireless space, the study revealed. CPC for smartphones stands at $3, while tablets’ CPC is $4.75, which are hefty compared to the $2.1 euros for desktop computers.

However, Benjamin G. Edelman, an associate professor at Harvard Business School wrote in a paper for the American Marketing Association that “Most advertisers assess the efficacy of their campaigns by comparing advertising expense to the sales that follow paid ad clicks. For example, an advertiser might compute ‘cost per acquisition’ as a simple quotient: dollars spent on advertising divided by number of sales made to the users who saw or clicked on the ads.

“But this calculation embodies crucial assumptions, most notably that those users wouldn’t have made purchases without the advertising. That’s a poor assumption in many circumstances, especially for top brands. Consider a user who searches for ‘ebay’ or, for that matter, ‘geico insurance’ or any other phrase mentioning a company name. Such a user is distinctively likely to buy from eBay or Geico, with or without advertising.”

Related stories:
Five tips on how to connect with the next generation of buyers
One Farmers agent has a cunning (and cheap) marketing plan – and it’s going viral

Keep up with the latest news and events

Join our mailing list, it’s free!