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Digital Marketing in Financial Services: An Overview of Global Best Practices

Carlos Pallordet

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Why are we here?

– The need of the financial services industry to overhaul its value model

– Trust and customer engagement

– Web-based consumers

The drivers of digital marketing

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Digital marketing offers brand new possibilities:

The take-off of digital

Digital allows companies to develop processes and employ channels to:

ReachRespond to web-based

consumers

SignalCreate and monitor

brand awareness

InformPromote new

products and services

DiscoverIdentify customer

needsImprove

Elicit feedback

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And the financial services must adapt:

• Financial services customers are turning digital

• Digital media is expected to become the largest marketing channel

• The rising stars of digital marketing: social media and marketing

• But there are major challenges to overcome…

The take-off of digital (cont.)

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• Financial services companies have turned to digital marketing:

The rise of digital marketing

2.591.81

0.59

2008

Total Size: USD 5 billion

5.7

3.43

2.41

2013

Americas

Europe

Asia-Pacific

Middle-East andAfrica

Total Size: USD 11.6 billion

Digital Advertising Spend in Financial Services (USD billion)

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• A trend that is expected to continue in the future:

The rise of digital marketing (cont.)

Digital Advertising Spend in Financial Services (USD billion)

5.7

3.43

2.41

2013

Americas

Europe

Asia-Pacific

Middle-East andAfrica

Total Size: USD 11.6 billion

9.44

5.09

4.79

2017

Total Size: USD 19.5 billion

Source: Timetric forecasts, based on Nielsen and eMarketers data

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• Key factors:

– The rise of the internet

– The spread of mobile: smartphones and tablets

– Generation Y

A new breed of consumers

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• Rising internet penetration has been the core driver of digital marketing:

The rise of the internet

Source: International Telecommunication Union

0.0

20.0

40.0

60.0

80.0

2008 2009 2010 2011 2012 2013

% of individuals using the internet

Developing countries

Developed countries

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• Which, in turn, has been driven in part by the spread of mobile broadband:

The spread of mobile

0.0

20.0

40.0

60.0

80.0

2008 2009 2010 2011 2012 2013

% of individuals with active mobile-broadband subscriptions

Developing countries

Developed countries

Source: International Telecommunication Union

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• Gen Y takes center stage. The oldest members of Gen Y, a population cohort characterized by its embrace of digital technologies, turn 34 this year

• Key insurance demographic. As they purchase homes and start families, Gen Y will come to represent an increasing share of total insurance business

• Customer relationship primacy. They are reaching the age where they decide on a primary financial services provider, perhaps for life

How can companies secure their business?

Generation Y

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• This new generation of customers eschews traditional business-to-consumer interactions

• It expects a richer set of offerings from its provider:

– Innovative user experiences

– Mobile access (over 66% of Gen Y prefers to bank by mobile – PwC, 2011)

– A collaborative approach built around social media – they trust their peers more than their provider

– Gen Y expects to have a voice

• They are the best-informed consumers ever – they will switch providers mercilessly, and only respond to those offering real intrinsic value

Generation Y (cont.)

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• And they are ready to put their money where their mouth is:

Generation Y (cont.)

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• Despite this, insurers are lagging behind in the digital sphere

• An EY survey of insurers worldwide found that:

– 79% of insurers considered themselves to “only play the digital game”

– 47% “have no single cohesive digital strategy”

– Almost 70% dedicate less than 10% of their business and IT development budget to digital

• Why have insurers been slow on the uptake?

Insurers’ reaction

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• Narrow view of potential short-term costs:

Insurers and digital (cont.)

1,038,401

650,361

641,993

638,496

619,360

Avg. costs of a social media incident (USD)

Reduced stock price

Litigation costs

Direct financial costs

Damaged brand reputation/loss ofcustomer trust

Lost revenue

Source: Applied Research, 2011

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• This isn’t to say that insurers have avoided digital entirely…

• Unlike a few years ago, it’s rare today to find a personal insurer with no social media presence whatsoever

• But insurers are often using social media simply as a form of customer service:

– Twitter and Facebook allow the creation of a rapid feedback loop between customers and insurers

– Posts and comments allow insurers to track consumer sentiment

• Some companies are keen to make a bigger splash…

Insurers and social media

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• Insurers can also make great use of video-sharing websites:

– Large reach:

• 1.3 billion unique online-video viewers by end of 2012

(83.8% of global internet users)

– Allows insurers to link to easily link their off-line and on-line campaigns

– Video comments give consumers a voice and can drive consumer purchasing decision

– Can be very cost-effective

Online video

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• Video-sharing allows TV ads to reach a younger demographic who don’t watch TV

• Very cheap, but can also generate high traffic

Example: Allstate’s Mayhem and Mala Suerte commercials:

– Large footprint (most viewed clip: 1.6 million views)

– Links off-line and on-line campaigns

– Linked in to Facebook – the Allstate Mayhem Facebook page has 1.8 million likes

Online video (cont.)

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• Social media allows insurers to create campaigns largely driven by the users themselves:

– Gives individuals a voice

– Generates a sense of involvement among consumers

– Lets users do the footwork, potentially reducing costs

User-driven campaigns

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Some user-generated content campaigns are relatively simple:

• ICICI Prudential Life of India created a YouTube advert entitled Achche Bande

• Ad “celebrates the everyday goodness of the Indian family man in his various roles”

• Invited individuals to tweet positive things about the men in their life using the hashtag #AchcheBande

User-driven campaigns (cont.)

• Huge success in India - hashtag trending on Twitter and over 350,000 advert views

• Many similar campaigns based on users’ tweeting around a chosen theme

• Examples below from Metlife’s #LifesLittleWins and AXA UK’s mother’s day #AXATreat

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While others are more involved:

User-driven campaigns (cont.)

AIA Hong Kong’s Real Life HK photography contest:

• Asked Hong Kong residents to upload photographs of their day-to-day lives, with the best images being selected to win prizes.

• All entries uploaded to social photo-sharing website Pinsta.me. Individuals could browse through the entries and like, share or comment on each other’s photos.

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SafeAuto’s user-driven social media campaigns:

Do The Jingle:

• Contestants must record their own version of SafeAuto jingle and upload to YouTube.

• Winner selected by popular vote to win $5,000 and appear in SafeAuto commercial.

• The winning video in 2014 received over 400,000 votes.

User-driven campaigns (cont.)

Name Your Car:

• Individuals must upload a photo of their car to the company’s Facebook page, along with an appropriate name

• $1,000 cash prize

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• Several insurers have launched social media campaigns based around charitable donations:

– Creates social media traffic - to contribute, people must usually go through the insurer’s social media sites

– Builds a sense of individual involvement

– Positive social impact, reflecting well on the brand

– Link between insurers’ products and selected charity

Charity and social media

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• United Concordia, a U.S. dental insurer, ran a competition in which users who liked the company’s Facebook page could vote for one of three health charities.

• The winning charity by votes would receive $20,000

Charity and social media (cont.)

Source: mobilemarketer.com

• The competition microsite and Facebook page also provided consumer information about dental health

• Daily voting drove repeat traffic to the company’s website and Facebook page.

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• Insurer The Hartford is the official disability sponsor of the U.S. Paralympic Team

• Current What Defines You campaign aims to raise $100,000 for the U.S. Paralympic team

• To donate, individuals simply have to post “what defines them” on the campaign’s Facebook page, Twitter (#WhatDefinesYou), or microsite

• The company donates $1 for each post

Charity and social media (cont.)

Sample Facebook post:

Sample Twitter post:• Supported by YouTube videos

of interviews with U.S. Paralympians

• $5,600 raised so far.

• Encourages viewers to consider the effect disability could have on their lives.

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• Increasingly, companies are utilizing apps and games to reach consumers:

– Online gaming market grew at CAGR of 10% from 2008 to 2012, to USD 35 billion

– Utilizes vast mobile market (over 2 billion mobile broadband users worldwide)

– Draw in a younger demographic

– Can easily be linked into social media via leaderboards and in-app posts

Gamification

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Several insurers have experimented with apps that combine road safety with game and social-media elements:

Tricky Traffic - mobile game by insurer GEICO:

– Encourages road safety among younger drivers

– Competition among users via achievements and leaderboards, with app posting scores to Twitter and Facebook

Gamification (cont.)

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Aviva Drive:

– Uses GPS to track how safely a user is driving and award them a score.

– High scores entitle the user to a discount on comprehensive car insurance

Gamification (cont.)

– Users can unlock achievements and post their scores to Twitter and Facebook

– Aviva insurance can be purchased from directly within the app

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• Consumer reviews common in social commerce, but traditionally absent from insurer websites

Customer feedback

• But especially in the UK, online customer reviews could no longer be ignored (Confused.com, Compare the Market, etc.)

• Aviva UK now hosts disaggregated customer claim reviews for car insurance and home insurance products, giving customers a voice

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• A successful social media campaign involves two types of integration:

– It integrates consumers, giving them a voice and a sense of involvement

– It integrates different media channels to create a unified experience

• Insurers must develop digital marketing strategies along these lines to attract a new generation of consumers

• Or face displacement by more innovative competitors

Final remarks

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THANK YOU!