The UK insurance sector is often seen as being driven primarily by price, especially since the advent of price comparison websites, but a bold experiment by Direct Line Group suggests this is not necessarily the case.

Around 80 to 85% of consumer insurance is now bought through such sites, and usually people buy the most competitively priced product they are offered, but there is real value in brand investment, according to Nic Pietersma, Business Director for Advanced Analytics at Ebiquity.

The fact it’s hard to measure the effect of investing in brands doesn’t mean the effect doesn’t exist, he told a recent WARC event.

Nor does investment in brand work like a sausage machine, with output directly proportional to input or, in the case of brand building, spending.

“It’s not just about deciding how much investment to put in and how much brand equity you’ll get out,” he stressed. “In order to make a difference to your brand, you actually have to change the way consumers think about the brand.”(For more, read WARC’s report: Lidl and Direct Line Group show how brand investment lifts long-term sales.)

Back in 2010, Direct Line Group took advantage of having a portfolio of brands to test what would happen if it simply stopped all ATL advertising for one of them – Privilege.

The company continued to track both sales and brand awareness over the years that followed, and was able to see a “glide path” in both, down from a high point at the height of ad investment, to a lower baseline level.

The drop was not immediate; the effect of previous marketing investment in the brand had a lingering effect on not just brand awareness but also the volume of quotes and sales – but only for between two and three years.

“There was a tangible measurement of the fact that they’d disinvested in their long-term brand support,” said Pietersma.

And, crucially, it found that, despite Privilege being cheaper, people were willing to spend more with Churchill, one of its best-known brands.

“The key insight for us is that it only takes a nudge to have a very large effect,” Pietersma said.

“The more aware you are of a brand, the more likely you are to trust it.” This is especially so in the insurance category.

Sourced from WARC