Battle lines drawn in adland

With Gocompare and Confused.com now household names, insurance aggregators have firmly planted themselves in the public consciousness.

Accounting for one third of all insurance related marketing spend this year, they have stolen a march on traditional distributors with multi-million pound advertising campaigns, targeting the man on the street.

So what are brokers doing to protect themselves?

It is telling that when Insurance Times asked a number of brokers to outline their marketing strategies, all declined to comment. Could this hesitancy to sell themselves to the public eventually mean the death of the broker market, or can the two distribution channels work together?

Experts predict that the staggering weight of insurance advertisements is set to grow. “There has been an explosion of spending by price comparison sites,” notes Debra Williams, managing director of Confused.com.

She points out that, in the past year alone, aggregators have expanded their share of media spend on insurance from 12% to one third.

With new entrants – notably Tesco – into the market, the trajectory will continue to rocket.

Williams says: “The overall volume of spend on car insurance advertising has been led by aggregators. Spending on television and press advertising in August 2007 hit a new record of £20m. But this isn’t the full picture as a lot of businesses pay for click-through and radio advertising.”

Williams says that insurers maintain a notable presence in television advertising, but there are few brokers. Rather than see the aggregators as the enemy, many brokers, such as the AA, rely on them for a large proportion of sales, she says.

“Price comparison sites opened the door to brokers to access the mass market that they were struggling to reach. They have been losing market share since the mid-80s – from 80% to 45%. Price comparison sites are an opportunity for them to grow their business.”

A recent entrant to the marketing war has been Gocompare.com, which launched a television campaign in March followed by advertising on London buses.

A Gocompare spokesman says the advertising and marketing budget is in the millions of pounds, varying from month to month.

He acknowledges that brokers generally have never had large marketing budgets. “We feed a huge amount of business to the broker market – more than half our sales go to brokers rather than direct writers.”

He added that direct writers have realised they get more leads through price comparison sites.

“Direct writers like Norwich Union and Admiral will pull back their television advertising in a few years’ time and let aggregators do the market spend,” the spokesman predicts.

Richard Mason, head of insurance at Moneysupermarket.com, agrees, and believes new aggregators will continue to enter an already crowded market.

“This will be at the expense of brokers, which are reducing their spending,” he predicts. They will be looking to transform into aggregators themselves, like the AA and Saga.

“It is inevitable that bigger brokers like Kwik-Fit and Screentrade will be looking to set up aggregators. Banks will follow in the footsteps of the Royal Bank of Scotland and Tesco,” he says.

One insurer upping the ante on advertising is Zurich, with its ‘Because change happenz’ television and print campaign.

A Zurich spokesman said the campaign was not prompted by the flurry of comparison website, but it was a fortuitous coincidence, nevertheless.

Not everyone agrees that brokers need to follow this example and plough their own resources into marketing – fighting back against the aggregators.

“As a broker do we need to invest in our brand position?” asks Tony Tyler, head of marketing at Jardine Lloyd Thompson.

“Brokers don’t need to make large marketing investments. The key is smart marketing in distinctive segments where we can truly differentiate and achieve returns on investment.

“Brokers don’t have a long way to catch up, as aggregators only have a short time span. There will be room for only a couple of aggregators in a few years’ time.”

For many brokers this will be a comforting prediction. But as aggregators pour millions of pounds into marketing, perhaps it is time for the traditional broker to consider doing the same.