• by Alex Miller , February 21, 2006

Car insurance, sexy? Come on. Ad campaigns for such industry giants as Geico and Progressive have shown that the serious life-and-death topic of insurance can be effectively treated with irreverent humor. Esurance, a direct-to-consumer auto insurance provider with a mostly online presence, took this trend further and added sex appeal when it launched a TV campaign last year featuring an animated female super-spy. Secret agent Erin Esurance zooms around the country in cars, planes, and even snowmobiles. She even went to racing school, pens a blog, and chronicles her adventures on a video cam.

While it's still nowhere near the size of its rivals, in the five years since its launch, startup Esurance has managed to grow its business by using aggressive online marketing tactics. Last July, the company decided to turn up the volume with a series of TV and radio spots in selected markets as it expands its business across the country.

"The launch of the TV campaign came a little bit more quickly than we thought," says John Swigart, managing director and chief marketing officer for San Francisco-based Esurance. The effort was driven by an online marketplace that suddenly seemed somewhat saturated and pricey. "We saw the opportunity to do TV in May of 2004, and we went from concept to air in 10 weeks," Swigart says.

Although it was a quick transition, Swigart says it was something that had been in the pipeline for some time. "We always knew that if we were to continue scaling the business, we'd have to branch out. We knew we'd get more brand awareness out of TV and add depth to the overall campaign."

While Swigart says that online media remains the cornerstone of Esurance's marketing strategy, he acknowledges that TV has been the most effective form of offline media. TV and Internet media combined helped Esurance surpass the 200,000 mark for customers at the end of 2005. "Online is absolutely critical and the foundation of what we do," Swigart says. "TV and online work very closely together. The goal is to drive people online to our Web site, and we've implemented a very consistent messaging and imaging campaign across the channels."

Ensuring Erin

The consistent look and messaging are embodied in the svelte Erin Esurance. Playing off the pun that an "agent" could be someone either in espionage or in insurance, Kristin Brewe at Esurance came up with the idea. In partnership with Wild Brain, a Bay Area production company, Erin Esurance was born as a comic book-style character with her own distinct identity.

"We've had four years of experience online seeing what customers react to," says Brewe, Esurance's director of corporate communications and one of its main creative forces. When it came to the TV spots, she says, the goal was to create something humorous and visually stimulating.

"I do like the Esurance ads a lot. I think they're cute," says Todd Bault, an analyst at Bernstein Investment Research & Management who studies the insurance industry. "I think you're going to see quite a lot more advertising in general with auto insurers, because the market is more competitive." Bault says the focus online and the snappier visuals make it clear that companies like Esurance are targeting the youth market, where customers are focused on price rather than a bundled package of insurance products.

But Brewe thinks there's more to it than that. "There could be a 25-year-old who'd rather work with an agent or a 75-year-old man who likes to buy things online," she says. "That's more of a predictor." Esurance looks at the typical metrics when buying media, Brewe says, but most important is whether the target consumers are heavy Internet users. In those quarters, Erin has earned something of a cult following. "We get e-mails every day. People really like it," Brewe says of the spy campaign. "People blog about her, they ask me about her, they want to know what's next."

Multimedia Coverage

By insurance industry standards Esurance is still a pipsqueak. It's a division of a larger company -- New Hampshire-based White Mountain Insurance Group -- and its marketing budget is relatively small, Brewe says. With the company's focus on providing the lowest price for its customers, big marketing spends don't fit the business plan.

"We're very cost-conscious and opportunistic," Brewe says. "Online is the bedrock of our advertising strategy -- we grew the business that way and we love the numbers. The results let us know right away if something is working."

While the company declined at presstime to release performance metrics for 2005, all indications are that the TV spots kicked new policy registrations into high gear. "Every time we air the Erin ads, the needle moves in the right direction, both in terms of driving unaided awareness and actual response. We've been very pleased with the results so far, which is why we'll continue to expand Erin's presence across media throughout the year," Brewe notes.

Swigart says that TV represents the biggest chunk of the ad budget, and it's worth it. "TV and offline enhance online from a conversion standpoint," he says. "Offline media has a much greater impact on awareness, and online performs better when it's running with TV and radio and direct mail." The multimedia approach will guide the company's marketing plans for 2006.

"In 2005, we did mostly local TV and radio and it drove response, but with local TV, it was almost cost-prohibitive," Swigart notes. So this year, Esurance is switching to a national push on cable TV. "It should give us a much better response at lower cost," he says. "That was the biggest lesson for us: TV is a better national medium than a local one."

Expanding its business makes that national approach more practical. Esurance currently writes policies in 22 states, with plans to add six more in 2006.

While online and TV drive the bulk of the company's marketing plan, Brewe says the media mix includes radio in local markets featuring vignettes from Erin's adventures; sponsorships, such as Esurance's involvement with the San Francisco Giants; and "pride marketing," which has Esurance running print ads in gay magazines such as Genre.

At Esurance.com, the focus remains on providing a streamlined interface that enables customers to purchase policies with relative simplicity. But there's plenty of entertainment content: The site sports an entire section dedicated to "Erin's World," where fans can catch up on the agency's latest exploits. In other online media, Brewe says, Esurance is "extremely aggressive with paid search and directing people to our Web site for national results. We have a ton of information about our natural rankings as well."

A Tough Sell

Buyer distaste is a recognized factor in the realm of insurance marketing, Bernstein's Bault points out. "People don't like shopping for insurance, not even a little bit," he says. "Unless the customer has a really good reason to want to shop, they probably aren't shopping."

That makes Esurance's rise all that more impressive, though Bault cautions that an upstart insurance company offering too many low-priced policies can cause problems down the road. "If you sell it too cheap, it could produce losses for years, so it's trickier than selling other things," Bault says. "But more companies are getting better at figuring it out with pricing that's more scientific."

Even so, Bault notes that it's hard to gauge how effective an insurance company's advertising is because the goals aren't the same. It isn't just about increasing market share, since profitability is tied to other long-term metrics. For Swigart, though, the rise in policies written for new customers is linked directly to the company's marketing efforts.

"We've been very aggressive with our media strategy and growth, and it's paid off pretty well," he says. "We keep trying to optimize it and make it better. It's going to be an exciting year for us."