Featured Health Business Daily Story, May 11, 2012
Reprinted from HEALTH PLAN WEEK, the most reliable source of objective business, financial and regulatory news of the health insurance industry.
It’s no surprise that health insurers are becoming more consumer-centric as 2014 and the launch of state health exchanges near. But an analysis performed exclusively for HPW of advertising spend shows that insurers not only are boosting their overall advertising budgets, but also are shifting their messaging to the Internet and television with less emphasis on outdoor and radio.
Five of the nation’s largest publicly traded health insurers collectively spent $366.8 million on advertising last year — up 51.6% from 2010 (see chart, p. 3), according to data provided to HPW by Kantar Media, a marketing and branding firm that also monitors advertising spend.
All but one of those insurers — WellPoint, Inc. — increased their spend on Internet advertising, including Cigna Corp., which boosted its expenditures on this media more than six-fold, from $679,000 in 2010 to $4.2 million in 2011. WellPoint also was the only insurer that decreased its advertising spend year over year. That company did not respond to a request for comment by press time.
But insurers are increasing advertising spend with one eye on their medical loss ratios (MLRs). Advertising is part of the 15% to 20% insurers are allowed to spend on administrative functions.
“We’re very cognizant of our costs, as far as what we’re spending,” Tony Ryzinski, vice president of marketing at Highmark Inc., tells HPW. “It puts pressure on our people to be more creative and more efficient to reach the market.”
Although the biggest share of Highmark’s advertising spend goes to television, Ryzinski says he anticipates shifting more toward the Internet, especially in 2013, as the insurer focuses its Web efforts on building a retail platform to participate in state insurance exchanges. Also, since Internet users tend to already be “primed” and looking for specific information, Web advertising can be more tailored and less general than in other forms of media.
In addition, Highmark monitors how its competitors advertise, and most are also focusing on the Internet and television, according to Ryzinski.
He adds that the insurer focuses its advertising efforts on television because it’s easier to convey emotion there compared with any other media. However, due to the growing emphasis on consumerism in the industry, Highmark also is emphasizing its innovations, new products and expansive provider networks in its messaging. To highlight its provider network, Highmark ran an advertising campaign dubbed “Accepted,” Ryzinski says.
In other forms of media, Humana Inc. increased its magazine advertising 1,424% from $2.2 million to nearly $34 million year over year. And Cigna more than doubled its television spend from $5.4 million to $12.2 million.
However, both Humana and UnitedHealth Group were the biggest spenders on television in 2011 with, respectively, $57.5 million and $59 million. And by a huge margin, television remained the undisputed king of insurer advertising media in 2011.
Part of the reason advertising spending went up so drastically in 2011 is that insurers have begun to strongly focus on reform and its impact on individual consumers, industry experts tell HPW. Some insurers, such as Aetna Inc. and Cigna, also recently launched major marketing and branding campaigns (HPW 1/30/12, p. 1).
One of the most significant changes in insurer advertising in recent years is the emphasis on the individual, Kathleen Ellmore, vice president of consumer health behaviors at Silverlink Communications, tells HPW.
Ellmore cites Kaiser Permanente as an insurer that has been ahead of the curve in terms of focusing advertising efforts on the consumer with its “Thrive” campaign.
“Fifteen million dollar ad campaigns are great, but they also have to be consistent with the everyday experiences members are undergoing,” she says. “Kaiser has had more of a consumer feel” since the insurer provides services such as tips from the chef and a Web page where you can type in your ZIP code and find local farmers’ markets.
Ellmore says insurers need to focus on four key themes in their advertising:
(1) Consumer empowerment. Ellmore says Blue Cross Blue Shield of Florida, which recently rebranded itself as Florida Blue, is using bold colors and aspirational messages, “setting a tone of the next generation of advertising.” In a new television ad, the commercial ends with the message, “We want to be your partner in the pursuit of health.”
(2) New messaging on health. “Dive a little deeper as time goes on to separate from the pack,” she suggests. Find out what messages are resonating with consumers and then use them to really drive and hone the message for specific populations.
(3) Tools. Aetna has several mobile apps, including a payment estimator, she says. Another burgeoning area is gamification (HPW 4/30/12, p. 1). “Engagement is critical.”
(4) Member satisfaction. “Everyday experiences are the difference between what makes people happy or unhappy with their insurer,” Ellmore says. You have to make consumers “feel you are working for them and working for your brand. It’s really about those touches they’re having with you and how it enhances your brand.”
2010 Total Ad Spend: $241,571
2011 Total Ad Spend: $366,765
Source: Kantar Media, May 2012. Visit www.kantarmedia.com.
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