Identity Crisis.

Insurers are implementing new branding campaigns to reintroduce themselves to consumers.

Powerful business forces converging on the industry are changing the way insurers market their products and craft their images.

Consolidation is at the top of the list of business issues propelling these changes. As companies restructure after a merger or acquisition, they need powerful branding campaigns to reintroduce themselves to consumers. In many of today's branding campaigns, organizations are trying to break out of the narrow image of an insurance company and present themselves more broadly as financial-services advisers and providers.

St. Paul Cos., John Hancock Financial Services, Nationwide Insurance Enterprise and Northwestern Mutual Life Insurance Co. are among the companies that recently launched branding campaigns.

The challenge is to differentiate themselves as many of their products take on commodity-like characteristics, particularly with the growth of direct selling over the Internet. Insurance aggregators, such as Internet-based Quotesmith.com, InsWeb and Quicken Insuremarket, allow consumers to obtain quotes from among dozens of insurance companies. The aggregators are also beginning to offer property/casualty and group benefits for small businesses.

Brand names will be the primary tool consumers use to differentiate products online, said George Johnson, vice president of communications and marketing for Safeco Insurance Cos., Seattle, which started its branding campaign two years ago. "Consumers need something to attach themselves to," he said.

David F. D'Alessandro, president and chief operating officer of Boston-based John Hancock Financial Services Inc., says high-quality brands give the insurance aggregators' sites credibility. "We sold over 15,000 policies via the Internet last year and have been the No. 1 brand on Quotesmith," he said.

The reasons insurers are embracing branding extend well beyond the ability to sell personal-lines products over the Internet. When St. Paul merged with USF&G in 1998 and shed its personal-lines business the following year, the company was forced to redefine itself in a commercial market long suffering from low pricing and intense competition for business.

St. Paul chose Bruce Martin, a consumer-products marketing veteran, to lead the first branding campaign in its 146-year history Martin's challenge was to create a brand identity that differentiated St. Paul in the commercial-lines market. Martin previously worked on enhancing the brands of such well-known products as Downy fabric softener and Ivory soap at Proctor & Gamble.

"The industry continues to slide into the track where all products are alike. We have to do something to get customers to think that we're better than the competition," said Martin, vice president of corporate marketing.

In developing St. Paul's branding campaign, Martin found commitment at the top. Chairman Douglas W. Leatherdale views the campaign as a long-term investment to make St. Paul more competitive, Martin said. "The support from such a high level is extremely important; if you don't have it, the campaign is just a marketing thrust." In turn, the promise the brand makes to the public also must be backed by the company's commitment. "The brand has to match up with how the company is run," he said.

To find the one attribute that could be the underpinning for a $20 million ad campaign, Martin used qualitative and quantitative research, including phone interviews and focus groups, to determine St. Paul's brand awareness with consumers.

St. Paul discovered that trust was the attribute that differentiated it from the rest of commercial insurance sellers to its target audience of independent agents and brokers and risk managers. Campbell Mithun Esty, a national marketing agency, was hired to create two 30-second commercials to underscore that message. In "Rhino," the ad that kicked off the campaign, a young girl stands unflinchingly while a 4,500-pound rhino races toward her. The rhino comes to a dramatic stop inches from the girl, then stands still as she gives the beast a kiss. A voiceover says, "Trust is not being afraid even if you're vulnerable."

After an initial burst of the ads last year, St. Paul will rerun them in the second quarter on network and cable television, particularly golf telecasts. Then it's back to the phones to measure the effectiveness of the campaign. After this second-quarter push, the insurer will measure its name recognition by asking, "When you think of a property/casualty company, who do you think of?" and, "When you think of St. Paul, what comes to mind?"

Martin's goal this year is for half the people surveyed to mention St. Paul first.

As insurers broaden their reach in the financial-services arena, several are changing their names to emphasize their broader role.

Aetna Inc. recently named its two restructured business units Global Health and Global Financial Services. Massachusetts Mutual Life Insurance Co. has adopted Mass Mutual Financial Group as its brand name. John Hancock Financial Services Inc. is the new name for John Hancock Mutual Life Insurance Co. Many insurers are leaving behind old-fashioned terms like assurance, cooperative and mutual to appear more dynamic and aggressive, said Naseem Javed, president of ABC Namebank, a New York-based company that specializes in corporate identities. "As they cross the century, they would like to be seen as more highly sophisticated e-commerce entities than as 17th-century monumental-type buildings with high columns and traditional names," he said.

Northwestern Mutual Life Insurance Co., which bills itself as "The Quiet Company," hasn't abandoned the traditional columns, and its name change is rather subtle.

After 18 months of research with its agents' field force and consumers, Northwestern Mutual discovered that although it had high consumer recognition for life insurance, when it came to investment products, respondents most often thought of Merrill Lynch, said spokeswoman Deanna Tillisch. "We have to let consumers know we offer annuity and investment products, too."

Effective this summer, Northwestern Mutual's distribution system will be known as the Northwestern Mutual Financial Network, and its master brand will be Northwestern Mutual.

"We're concentrating on the strength of our name," said James D. Ericson, Northwestern Mutual's chief executive officer.

Image Makeover

Nationwide's branding strategy was a dramatic departure from its past. Nationwide saw immediate results from a new branding campaign that included a name change from Nationwide Insurance Enterprise and discontinuing a 45-year-old logo. Since the campaign started in September with the company's first national advertising campaign, brand awareness is up 6%, and the company has measured a 4% increase in "likeability" among consumers.

Nationwide spent $21.2 million on advertising in the first 11 months of 1999, up from $14.8 million for the same period a year earlier.

In launching its branding campaign, Nationwide Chairman and CEO Dimon R. McFerson said technology, globalization and consolidation in the insurance and financial-services industries were forcing players to home in more effectively on customer needs. The campaign was designed to communicate how Nationwide was changing.

In the past few years, Nationwide added distribution channels and acquired Iowa-based Allied Group and California-based CalFarm Insurance Co., giving the company a national presence.

Nationwide is the fourth-largest auto and homeowners insurer based on net premiums written in 1998 and the 12th-largest life insurer based on assets. In the auto market, it is sandwiched between No. 3 Farmers Insurance Group and No. 5 Progressive. Its market share has remained at 4% since 1996, and it gained only 2.4% in premiums in 1998, according to A.M. Best Co. data. The auto insurers that spent the most for advertising were Allstate, the second-largest auto writer, and Geico Corp., the sixth largest. Allstate spent $175.6 million in 1998 and Geico spent $139.2 million, according to Auto Insurance Report.

Nationwide considers the financial-services industry a more formidable competitor than property/casualty insurers. "The banks and brokers are well financed and can afford to buy lots of advertising," said Steve Johnston, vice president of advertising and brand management.

Besides modifying its name, Nationwide dropped its eagle logo in favor of a blue frame that highlights different customers. "We learned through research that not only did they see Nationwide as monolithic and unapproachable, but as far as our trademark, they asked: 'What about me?'" Johnston said.

By humanizing the logo into a "living logo," the focus goes back to the customer, he said. Nationwide's new commercials center on vignettes about how the company can serve clients during various life events. The vignettes are portrayed inside the blue frame.

Nationwide also had to withstand internal skepticism about changing the name and logo. "We had to overcome a 45-year history with our logo and make everyone understand why were doing this," Johnston said.

One agent had the Nationwide eagle tattooed on his leg. "He came up to me at a conference in Hawaii and asked me, 'What are you doing?' "Johnston said. "He now has a frame logo on the same leg."

Olympic Effort

Protecting the brand "is important first and foremost," said John Hancock's D'Alessandro, whose book on the subject, Branding Warfare, will be published by McGraw Hill. Last year, John Hancock backed away from advertising during this summer's Olympic games in Sydney, Australia, after a bribery scandal involving the Olympic Committee was uncovered. This year, D'Alessandro negotiated a first-of-its kind ethics clause into its renewal of Olympic sponsorship. "We said if there was any negative spillover into our brand we wanted to be able to leave," he said.

In addition to sponsoring the Olympics, John Hancock signed a multimillion-dollar, five-year deal to be an official sponsor of Major League Baseball. The agreement is the largest and longest sponsorship in Major League Baseball history and grants John Hancock exclusive rights to the financial-services category, which includes insurance, annuities, investments and pensions.

The deal puts John Hancock in the same category of Major League Baseball sponsors as Gillette, MasterCard and Pepsi-Cola, said Derrick Johnson, a league spokesman.

"We believe in the power of Major League Baseball," D'Alessandro said. "Its value to John Hancock as a marketing co-branding tool is enormous."

Betting on Sports

Safeco turned to the branding consultant Interbrand to help it craft a branding initiative two years ago after acquiring Indianapolis-based American States. Its mix of 60% personal lines and 40% commercial combined with its mutual funds and annuities made it a competitor in the national financial-services arena. In 1998, Safeco was the seventh-largest writer of homeowners insurance with a 2.3% market share and was No. 11 in private-passenger auto with a 1.5% market share, according to A.M. Best Co. data.

During the makeover, Safeco modernized its logo from a shield to an "S." "Successful brands improve customer loyalty, bring referrals and even help the stock price," said George Johnson, Safeco's vice president of corporate marketing and communications.

The first move was to buy the naming rights to the new Seattle Mariners ballpark. Paying $1.8 million per year for 20 years, Johnson saw it as a bargain compared with the cost of $2 million per 30-second spot for Super Bowl advertising. "The ballpark projects our name nationally and is a powerful marketing device," Johnson said.

Safeco also is considering switching from Cole & Weber, the advertising agency it has used since 1975. "We already saw a big change in name recognition because of Safeco Field, and we want to jump off of that," Johnson said. Safeco put its account up for review, targeting 2001 for the completion of the new $7 million-plus campaign. "That campaign has to take the increased visibility from Safeco Field and inject branding that strategically supports all our initiatives-e-business, insurance, investments, everything," he said.

Meanwhile, Safeco's current TV commercial, which began the branding process, will continue to run in key markets. Safeco likes to advertise in spot markets nationally, integrating local agents' names at the end of the commercial. But for now, Johnson said, he is looking for a new media plan--one that prompts "Aha! A brand breakthrough!"

                           Insurance Ad Spending
                       Here's a look at ad spending
                        by several large insurers.
                                  ($000)
Company                           Jan.-Nov. '99 Jan.-Nov. '98
Allstate Corp.                       $103,515.7     $77,756.2
State Farm Mutual Auto Ins. Co.        91,890.6      68,130.0
Progressive Corp.                      67,497.3      30,691.8
Nationwide Insurance Enterprise        21,231.1      14,860.1
Northwestern Mutual Life Ins. Co.      14,089.2      18,767.8
Farmers Group Inc.                     10,097.4      10,050.1
St. Paul Cos.                          11,183.7       6,155.3
Safeco Corp.                            3,313.0       3,301.1
Travelers Group                         7,905.1      10,995.9
Source: Competitive Media Reporting
and Publishers Information Bureau
                               Big Spenders
                      Here are the financial-services
                       firms that spent the most on
                           advertising in 1999.
                                   $000
Rank Company                     Jan.-Nov. '99 Jan.-Nov. '98
 1   Charles Schwab Corp.           $167,328.0     $86,356.1
 2   FMR Corp.                       146,603.6      81,131.5
 3   Morgan Stanley Dean Witter
      Discover & Co.                 146,172.4      75,366.7
 4   First Union Corp.               145,421.3     145,945.6
 5   E-Trade Securities Inc.         121,400.6      36,562.3
 6   Ameritrade Inc.                  94,074.8      13,493.8
 7   Merrill Lynch & Co. Inc.         92,822.8      45,798.4
 9   American Express Co.             74,511.2      65,191.7
 9   Prudential Insurance Co. of
      America                         64,655.4      61,222.7
 10  Bank of America                  60,725.7      94,769.6
 11  Bank One Corp.                   53,152.0      26,123.5
 12  Citigroup Inc.                   50,030.0      62,275.7
 13  Axa Group                        42,049.2      22,936.1
 14  Chase Manhattan Group            40.023.6      38,245.9
 15  T. Rowe Price & Assoc. Inc.      39,390.4      36,939.6
Source: Competitive Media Reporting
and Publishers Information Bureau

Speaking With One Voice

Branding uses a company's physical assets--its signs, vehicles, business forms and all points of public contact--to stamp an impression into the minds of consumers that differentiates it from others, according to Interbrand Group, a New York-based branding consultant.

As the brand becomes ingrained, it also must be backed up by quality and satisfaction that helps to build a relationship with the customer, according to Landor Associates, a branding consultant. As consumer choices grow, branding must create an emotional bond between a company and the consumer.

The nature of the products makes it difficult for insurers to develop that bond.

"People don't speak passionately about making a financial decision with a company. They care more about their sneaker brand," said Raymond Perrier, global director of brand value management for Interbrand.

To show how emotional appeal can sell products, Perrier points to the Virgin brand in Great Britain. More than 200 businesses, ranging from airlines to retail stores to soft drinks, carry the Virgin brand.

Virgin entered the financial-services business in 1998 with Virgin Direct Personal Financial Services. It competes against 350 companies for personal equity plans--Britain's version of a 401(k) retirement plan. Within one year of its entry into the market, Virgin became the second-largest seller of these plans. "People who had a good experience on the airline or in the store were prepared to trust them," Perrier said. "On the other hand, the other 349 companies were all reliable, all boring. Everything they sell is defined by the company, not the customers."

Perrier said Nationwide Insurance Enterprise's new advertising campaign offering personalized vignettes on how the company's products can help consumers at various times in their lives can create an emotional tie, in contrast to it previous logo--an eagle.

A big part of branding is putting the customer at the center of what the company does, and with Nation-wide's new frame logo, consumers can put themselves in the center of the frame, Perrier said.

A successful brand is necessary to the growth of a company's financial success. "There is a direct connection between brand and financial performance. As the brand improves it impacts on revenue and stock performance," said James Gregory, chief executive officer of Corporate Branding Partnership LLC, Stamford, Conn.

Realizing that, top executives have changed their view of branding. Instead of treating it primarily as an expense, "they're treating the brand as an asset and approaching it in a businesslike way," he said. A brand is only a 5% to 7% factor in terms of stock price, but in terms of revenue it's enormous, according to Gregory.

A good ad campaign can build loyalty, brand value and create positive post-purchase emotion, said Bruce Martin, vice president of corporate marketing for St. Paul Cos.

As consumers become aware of a brand, that company will see sales increase, said Steve Johnston, Nationwide vice president of advertising and brand management.

A strong brand also can create some level of premium pricing, and it opens the door to cross selling. "Selling more to the same customers costs less. You're not continually chasing accounts," Perrier said.

But he cautions that insurers should make sure their legacy systems are interconnected before attempting to cross sell. "It's similar to meeting someone on the street and then two days later seeing them in a restaurant and acting differently," he said. "Banks made this mistake in wasting years before tying mortgages with homeowners insurance sales."

Taking the Time to Explain

Made famous by exercise machines and kitchen gadgets, infomercials--or identity television--have become increasingly popular vehicles to build the brands of Fortune 1000 companies in the telecommunications, consumer electronics and financial-services markets. This medium of 30-minute commercials that explain products is being used to sell complex products that can't be explained in the usual 30-second spot.

"Identity TV takes time to explain the products or service; there is no punch line, only a story," said Randy Spencer, president and chief executive officer of the Tyee Group, an ad agency in Portland, Ore., that produces infomercials.

Life insurance is a good candidate for this medium because of its complexity. Having the time to explain the product and to present feedback from actual customers is a benefit of this medium.

Spencer points to the success of the infomercial for Philips Electronics Web TV infomercial. When the quasi-computer product burst onto the market in 1997, retailers and consumers didn't understand how it was used. "The 30-second spot didn't explain much, but after running the 30-minute commercial, the item sold out in stores," he said.

By using testimonials and man-on-the-street interviews, life insurers could use identity television programs to show consumers how buying life insurance can benefit families. Identity television can drive consumers to a Web site or toll-free number, so results are quantifiable.

It costs, on average, from $103,740 to $593,760 to produce an infomercial, according to the Direct Marketing Association, a trade organization in Arlington, Va. That's only slightly more than it costs to produce a 30-second commercial, Spencer said. The average price for airtime has decreased since 1995. In 1995, a long-form infomercial time slot cost $884.64 vs. $828.14 in 1997. The number of time slots purchased has grown from 916,379 in 1995 to 998,736 in 1997, according to the association.