Insurers Report BTB Sales Increase of $7.3 Billion

Insurance carriers and agents that combine targeted database efforts with direct marketing methods yield increasingly higher return on investment rates over time, according to a report released yesterday by the Direct Marketing Association.

The report — “2000 Economic Impact: U.S. Direct & Interactive Marketing Today” — also found that in 2000, every dollar spent by insurance carriers and agents on business-to-business direct response advertising generated $13.30 in sales, up from $12.90 in 1990.

“Increasingly, insurance carriers and agents are using direct and interactive marketing methods to generate a sale, a lead or drive traffic to their company,” said David Smith, vice president of business and strategic development at the DMA. “Last year, businesses spent $63.1 billion on goods and services from insurance carriers and agents as a result of direct and interactive marketers' media expenditures, a 13.1 percent increase over the $55.8 billion spent in 1999.

“There's no doubt that these groups are getting a better understanding of direct and interactive marketing dynamics and how they can utilize such techniques to maximize their return on investment and reduce customer acquisition costs,” he said.

Direct and interactive marketing can be used to generate leads, solicit direct orders and drive traffic. Of the insurance industry's $63.1 billion in sales from BTB direct and interactive marketing, $45.8 billion resulted from ads initially intended to generate a lead. In 2000, ads that were intended to result in direct orders produced an additional $16.7 billion of the insurance industry's total direct marketing sales. Ads intended to generate traffic to an insurance carrier or agent's place of business resulted in $630 million of the industry's total direct sales.

“Despite the recent economic downturn, insurance carriers and agents spent $4.7 billion utilizing direct and interactive marketing methods to reach businesses last year, which was a 9.8 percent increase over the $4.3 billion spent in 1999,” Smith said.

The report predicts that from 2000 to 2005, the use of direct and interactive marketing by insurance carriers and agents will become an increasingly efficient advertising tool, with sales projected to grow steadily compared with continued slower growth in general ad spending.

While direct and interactive marketing sales in that industry are expected to grow by 12.6 percent annually, overall ad spending between 2000 and 2005 is projected to grow at a slower annual rate of 10.3 percent each year.

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