Hurricane Sandy isn’t the only storm to roll through these past few weeks and impact our industry. You and your business are under attack from the forces of nature within the insurance industry. This isn’t the first time it’s happened, and it won’t be the last. Are you prepared to weather this most recent storm and come out stronger on the other side?
In recent weeks a number of large buyers in our industry have been in the headlines, making changes that could severely impact your business if you aren’t ready for their next moves. Keep reading to find out how and what you can do about it.
- After months of downward trending results, high agent attrition, and carrier complaints BankRate announced they are launching quality initiatives – cutting more than 500,000 leads/month and promising change to their shareholders.
- When presenting their most recent quarterly results, Quinstreet, parent company of SureHits and Insurance.com, announced that similar trends within the insurance space contributed to them falling short on their earnings expectations. They are expecting flat revenue and margin performance in auto insurance for Q2 2013 with limited visibility to when they will return to growth.
What History Tells Us
Bankrate and Quinstreet have to deliver on 2 points:
- Increase the quality of their traffic to retain thier agents and buyers
- Deliver growth to their shareholders and revive stock price
So, how does one gain control of supply? By eliminating competition, reducing subsidization of the marketplace, and increasing direct to site traffic – it’s a strategy that is fundamental to business. The history books tell us that buyers, especially when they are in a position of strength and market domination, look to this strategy. Often times at the expense of their partners. Don’t believe me?
- In 2009 Insurance.com made the decision to all but abandon their B2B and affiliate channel, instead focusing on building their brand and increasing their direct to site traffic. Their first move was to increase payouts and sign exclusive deals with their top partners to clear competition. The pay increase was short lived, soon after they cut partner payouts to increase their own margin and limit affiliate growth. They thought affiliates were so dependent on them that you’d accept it, they were wrong.
- In 2010, Quinstreet tried to increase its consumer presence by acquiring a number of premier websites including Insurance.com and Carinsurance.com. They have struggled significantly since adopting this strategy; their auto insurance vertical has posted year over year declines in revenue of 15% or more each year since.
- Now, during the November 1, 2012 shareholder meeting, Bankrate stated, “As previously mentioned, the year over year margin increase is primarily a result of trimming the ratio of affiliate leads compared to traffic to our destination sites in insurance through direct, organic and marketing activity.” They go on to say “we are concentrated on driving consumer adoption directly to our sites.” If we’ve learned anything from history we know there will be fallout from this strategy and you need to protect yourself.
Your Next Move
Be prepared! What to expect in the market over the next few months:
- Large buyers in the space will likely increase your payouts in the short term as they look to build your loyalty and dependence. Make no mistake, the increased payouts are not sustainable. It’s a short-term play to grab traffic, and they will soon cut payouts as they need to take more margin to re-coup earnings lost from cutting volume.
- They may dangle the carrot of greater riches in return for exclusive rights to your traffic. This may seem like a good thing, and it could be. Just make sure you negotiate a quick out if the relationship or pricing goes sideways, and the ability to send up to 25% of your traffic elsewhere for testing. Don’t let your business become dependent on someone else, you need diversity.
- If neither of the above work, there will be threats of losing their partnership altogether if you don’t give them what they want.
Explore Your Solutions
Remember, you aren’t alone and you do have options. Tell us what you need, we will help you diversify and solidify your business.
- Do you need help fulfilling extra legs of a lead?
- Are there buyer relationships you need help obtaining?
- Is there a technology solution you need access to?