December 07, 2018

by Nigel Hollis

There is huge pressure for marketers to spend more on digital: it is where customers are spending more time, it is what everyone else is doing and the convenience metrics look good. So, it is nice to find an example of a company doing its homework and bucking the trend.

Direct Line Group won an IPA (UK) Gold Effectiveness Award in 2018 for a submission titled, ‘They went short. We went long’. Written by Carl Bratton and Ann Constantine of Direct Line Group and Nic Pietersma of Ebiquity the paper (which you can find on WARC) the paper documents how the team identified the full impact of Direct Line’s marketing on sales through its intermediate influence on brand consideration and other attitudinal metrics.

The analysis used to do so is very similar to Kantar Analytics’ Brand Structures modelling, first parsing out the influence of short-term sales drivers like price, direct media, and above the line media, then modelling the remaining base sales against consideration and awareness metrics. What they found was that on a short-term basis, marketing delivered around 40-50 percent of sales and that brand equity accounted for an additional 20-25 percent. The analysis found that when the full effects of brand media were taken into account, its cost per sale was very similar to that of acquisition media.

Price comparison websites have had a huge impact on how people buy insurance in the UK, essentially levelling the playing field so that price becomes the initial differentiator. As a result, most brands have cut their TV spend. By contrast Direct Line spends far more on TV share of voice than share of market, and have shifted budget from direct response TV, normally aired during the daytime, to brand TV, predominantly airing during peak. In 2017, 80 percent of the TV budget went to brand, up from just over 50% a few years earlier.

While Direct Line upped its investment in brand building TV and invested in its new ‘Fixer’ campaign starring Harvey Keitel, it also substantially reduced investment in digital display and programmatic online video compared to previous years spend and competitors. This change was not made without evidence. As the authors state in the IPA paper,

“We could find compelling evidence for both the long-term and short-term effectiveness of media lines such as TV and radio. By contrast, our research did not support continued investment in a number of programmatic digital media lines even on a short-term basis.”

As many of our own studies for clients highlight, advertising is just one means to improve business performance. Direct Line Group’s equity analysis also identified complaints, customer service perceptions and customer recommendations as important influences on consideration and took steps to improve the customer experience. No doubt that investment helped lower churn as well as improve customer acquisition.

While the IPA paper does not split out Direct Line’s performance from other brands in the Direct Line Group (they also market Churchill and Privilege), it does report total in-force policies as increasing since 2014. This accords with BrandZ data that shows the proportion of people choosing Direct Line last increasing over the same time frame. BrandZ also shows that Direct Line is more successfully differentiating itself from the competition and that its stronger brand equity is helping to support its price point in a highly competitive market.

The thing I like about this case study is that the decisions made are data-driven and recognise that cost per impression is not a surrogate for cost per sale. After reading this hopefully a few more marketers might be willing to do the math and figure out how best to drive sales. But what do you think?

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