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Direct Response Marketing

The Healthcare Market Booms!

1 Feb, 2014 By: Bridget McCrea Response

The Affordable Care Act, the nation’s aging Baby Boomers, and a desire for better advertising ROI push an increasing number of healthcare firms to add DRTV and digital mechanisms to their portfolios.

Whether they are educating consumers about Medicare or dental insurance, building databases of customers who use diabetic supplies, or creating new nutraceutical brands, a growing number of healthcare marketers are using direct response — both television and digital — to get the job done.

“Healthcare is a very strong category for DRTV,” says Michelle Cardinal, CEO and co-founder of R2C Group in Portland, Ore. “We continue to use the format to market everything from Medicare to mobility products to hearing aids.”

Marketers of higher-end healthcare products are also using DRTV. “Our clients have even sold expensive heart defibrillators direct,” Cardinal adds.

Credit the 78 million aging Baby Boomers with helping to spur marketers’ interest in direct response and digital advertising. According to Cardinal, the senior market continues to dominate the healthcare industry in DRTV. In fact, she says the fact that more than 10,000 new individuals become eligible for Medicare daily has pushed firms like Humana to use a mix of long- and short-form DRTV, DR print, DR radio and digital media to educate existing customers and attract new ones.

“Humana is way ahead of the curve and has been for more than a decade,” says Cardinal. “It’s one of the only healthcare insurance companies successfully utilizing long-form DRTV to educate and drive acquisition.”

Cardinal says the Affordable Care Act has created some demand around DRTV as a lead generation tool. “We’re starting to see some action from large providers like Humana and WellPoint,” says Cardinal, who adds that those entities’ use of DRTV currently is still much lower than she predicted. “This is primarily due to problems with national and local government websites and some states being slow to sign onto the exchanges. Most of the DRTV we are seeing is local at the moment — primarily in New York, California and Oregon.”

Insuring the Masses
Insurance firms have also jumped into the DRTV fray. Transamerica Life Insurance Co. began testing out the viability of marketing its term life insurance products via national long-form DRTV back in 2011. Transamerica engaged Hawthorne Direct to develop and launch the campaign, which was driven by the 28:30 “Transform Tomorrow” brandmercial, which debuted on TV in July 2012. The spot enjoyed a year-long run on television.

Transamerica recently launched another television campaign, this time for a Medicare supplement insurance product. In the spots, a series of seniors participate in a variety of activities, including golfing, gardening and antique shopping, while the announcer urges people turning 65 or changing Medicare supplement plans to call Transamerica for a free quote about their plans to help cover what Medicare doesn’t.

Insurance firms’ interest in direct response hasn’t gone unnoticed. In an online case study titled “The Humana Playbook: Is DRTV the New Hotspot for Insurance Advertising?” ( DR firm Marketsmith Inc., highlights Humana’s use of DRTV and examines the viability of the medium for other large insurance firms.

According to Marketsmith, in 2012 Humana’s Individual Medicare Advantage and standalone Prescription Drug Plan membership each rose by 18 percent. “Either DRTV advertising has a direct connection to success in the healthcare and insurance industry, or there is something uniquely effective to Humana’s strategy. If the connection exists, DRTV may be a largely-untapped advertising goldmine for companies in the insurance industry,” Marketsmith contends.

Clearing Up the Confusion
To say there was confusion around and frustration over the Affordable Care Act and online enrollments in late 2013 would be a major understatement. Well documented and publicized, the issues pushed DRTV producers to start developing direct response and digital strategies to help assuage some of the challenges. Expect that trend to continue well into 2014 as more healthcare insurers ferret out ways to reach their customer bases directly.

Scott Overholt, vice president, healthcare markets, for The Agency Inside in Yardley, Pa., says that when ACA open enrollment closes in March 2014, insurance firms will only have three months to figure out what did and didn’t work before filing new plans and pricing for 2015. That’s not much time.

“Extensive analytics will be the key,” says Overholt. “Plans will need to apply all the data they’ve collected to analyze customers acquired in 2014; understand how the campaigns brought in (or failed to bring in) desired customers; and define the type of customers to acquire during open enrollment for 2015.” (see sidebar, page 38)

According to Overholt, the ACA is designed to provide insurance for people with pre-existing conditions and low incomes, which happen to be the people that health plans tend to be least interested in acquiring. “The most desired targets are those who are the youngest and healthiest,” he explains. “Those people who are the most desired (who don’t think they need insurance) happen to be the most difficult to persuade.”

While traditional DRTV is successful in generating response, Overholt says that in this newly reformed healthcare market those who will respond aren’t necessarily the people that health plans want to attract. However, the new major avenue that health plans are leveraging is consumer portals that enable consumers to shop and buy without going directly to the federal or state exchanges (where competitors will also be found).

“Most plans have built such sites to ensure shoppers have a ‘competition-free’ experience,” says Overholt. “When consumers visit a health plan’s consumer portal, they find everything they need to know to make an informed decision about product offerings — videos, FAQs, buying guides and more. As far as getting consumers there, all channels used ultimately drive consumers to the health plan’s website.”

The push to effectively capture, analyze and use data is on in the healthcare space. “We’ve never witnessed more data-driven marketing in the healthcare space than we’re seeing right now,” says Overholt, who adds that insurance firms are hiring consultants, data modelers and analytics firms to learn all they can about their new members. “This is crucial for health plans to turn 2014 insights into concrete tactics with clear objectives and key performance indicators (KPIs) for next year’s open enrollment.”

Decision Makers Want ROI
Having worked with numerous hospitals, private practices and healthcare manufacturers over the years, Stewart Gandolf, CEO at Healthcare Success Strategies in Irvine, Calif., says those companies’ attention remains squarely focused on bottom-line results. By integrating DR into their portfolios, these companies are not only able to expand their advertising horizons but they also gain access to one of the medium’s most highly coveted attributes: accountability.
“We’re seeing an increased emphasis on advertising ROI from decision makers who demand more than just clever ads,” says Gandolf. “Savvier practices and hospitals that see the ROI from their DRTV investments tend to keep using the medium — based on the fact that they’re putting in, say, $50,000 for advertising and getting $250,000 in revenue out of it.”

For many healthcare firms, DRTV helps fill those ROI gaps while also creating direct channels between the providers and their customers. “Both insurance firms and healthcare providers are getting more and more interested in using DRTV in a bigger way and as efficiently as possible,” says Cardinal. “Humana and WellPoint are great examples of how DRTV can build brands and drive efficient transactions in the space.”

The Road Ahead
The DR agencies and healthcare advertising experts we interviewed for this article all agree that the DRTV and digital DR spaces are going to see even more new users from the healthcare sector in 2014. The category, which is already strong in its own right, is sure to receive a boost from the challenges being presented by the ACA and related healthcare reforms.

“Going into this first ACA open enrollment, lacking little in the way of applicable historical benchmarks, health plans’ strategies were reliant on hypotheses, with a huge element of uncertainty,” says Overholt. “But now, there is real data to work with. That data is key to reducing uncertainty, lowering risk, and gaining a healthy membership — whether financially or physically — next time around.”

Currently working to establish data models and analytics plans for several clients, Overholt says his firm is ready to hit the ground running when open enrollment comes to a close. “The health insurance providers that do the best job at analyzing their data, drawing the right insights out of it, and making the proper adjustments to improve for 2015,” he says, “will be the ones that capture the desirable segments and have the best chance of being sustainably profitable.”

To know what’s ahead, Overholt says healthcare firms — namely insurance providers — will have to figure out what just happened. “They don’t know if they can rely on the federal government. They have to regroup and evaluate very quickly in order to establish informed plans for 2015,” says Overholt. “As a result, there will be a continued emphasis on analytics in determining what were and will continue to be best practices in this new market.”

As the world transitions to the Affordable Care Act, Hawthorne Direct is also getting a few inquiries from brand-name companies but hasn’t seen any groundswell of commitments yet, says Gene Silverman, Hawthorne Direct’s vice president of marketing and account management. “I found this surprising based on the high number of inquiries we had for it during the summer of 2013,” he adds.

But that doesn’t mean healthcare’s affinity to DRTV is waning in any way. In fact, Silverman says the category was traditionally strong during the fourth quarter of 2013 and that the difficulties associated with the Act will likely exacerbate that demand.

“Healthcare is a growing category for DRTV, social media, and digital advertising,” says Silverman, who expects the number of health insurance firms using DRTV to double by late 2014. “It’s very clear that the competition among these firms is heating up. When one decides to use DRTV, its competitors are simply going to have to participate.” ■

About the Author: Bridget McCrea

Bridget McCrea

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