How much do insurance companies spend on advertising? Compared to years past, advertising spend for insurance companies is on the upswing—particularly for digital ads. Digital ad spending is expected to rebound this year as inflation moderates, with the trend continuing into 2025.* Insurance advertising becomes a powerful tool in driving customer acquisition with the right strategy. 

Typically, industry benchmarks suggest allocating up to 10 percent of revenue for marketing in the financial services sector, with insurance falling within that range. While many companies are continuing to increase their budgets*, recent challenges specific to P&C insurance have caused some insurers to pump the brakes. 

But reducing ad spend can come with drawbacks, leading to a decline in market share. For many companies, short-term savings result in long-term struggles to regain lost visibility. Contractions in P&C advertising only underscore the need to test effectively, ensuring smarter spending when budgets are tight. You can read more here about how we use testing to cut costs for our insurance clients. 

What Goes into Insurance Ad Spend? 

As much as customers need insurance, attracting them requires a targeted strategy. To get the most bang for your buck, there’s no one-size-fits-all approach. Major insurance companies continually strategize, test, and refine, with the end goal of creating a well-balanced advertising budget. 

Several factors influence an insurer’s ad spend: 

• Company size: National giants can afford broader campaigns, with companies like Progressive and State Farm listed among the top spenders. These companies have the resources for expansive marketing campaigns that may include primetime TV ads and celebrity endorsements. In contrast, regional players might focus on local channels and community engagement. 

• Product lines: Car insurance requires different messaging than life, impacting ad strategies. Whatever the product may be, an insurer is likely to see better results when sending personalized omnichannel campaigns. Using data to direct campaigns can be an automatic money-saver, making certain each insurance offer reaches responsive customers. 

• Market competitiveness: In a crowded marketplace, multiple insurance companies are vying for a customer’s attention. To capture market share, an insurance provider needs a prominent advertising presence. Extra funds may be allocated to highlighting a unique value proposition, producing memorable creatives, and marketing on additional channels. 

More channels can mean more exposure, as we’ve seen first-hand with our clients. Recently, the SeQuel Response branch of our digital team helped an up-and-coming auto insurance provider add direct mail to their marketing strategy. Within the first year of the initial mailing, their audience list grew by a staggering 2,000 percent, while achieving a nearly 2-percent response rate on their demo offer.  

With results like these, it’s easy to see why testing should be included as a line item on any annual budget. Testing is one of the most cost-effective ways to identify and act on growth opportunities. 

How to Optimize Your Insurance Advertising Budget 

Turning your advertising budget into a well-oiled customer acquisition machine requires a data-driven strategy.  

Here’s how to ensure every dollar delivers: 

• Establish KPIs. Without key performance indicators (KPIs) in place, it’s impossible to measure return on investment (ROI). Website traffic (how many people visit your site after seeing your ad), lead gen (the number of potential customers who express interest by requesting quotes), and conversion rates (the percentage of site visitors who convert into customers) are all useful metrics.  

• Put your money where it matters. Analyzing your ROI data can identify the channels that are yielding the best results. This gives you the information you need to shift resources to high-performing channels, cut underperformers, and continue to test and attune your strategy. The goal is to invest in what works and adjust course where the data suggests. 

• Test and test again. When you have a dedicated testing budget, you get the chance to experiment with less risk attached. Testing can quickly tell you what is and isn’t working, minimizing money and time waste. Ad copy, creative formats (visuals, video content, ad types, and even direct mail), and landing pages can all be optimized through continued testing. 

• Let the numbers guide. Successful marketing is data-driven; there’s no guessing. Harnessing data analytics gives you valuable insights about your target audience. Data from user behavior can illuminate trends and inform more exact targeting for upcoming ad campaigns. Data insights can also reveal the ideal times and locations to display your ads for maximum impact. 

To stand out, creativity counts as much as precision.

Data can also be used to direct the most impactful creative strategies—like humor tailored to demographics, storytelling aligned with needs, micro-targeting to specific interests, and research-driven visuals (i.e., using warm colors to evoke feelings of trust and security). Storytelling is said to increase product value by as much as 2,706 percent. 

With insurance advertising in constant motion, companies with an adaptive strategy will thrive. Along with an emphasis on omnichannel marketing, it’s possible that we’ll see an even greater focus on hyper-personalization in the years ahead. This shift may necessitate a two-pronged budget approach. Resources will be needed for analyzing data, as well as crafting individualized messaging. 

Suppose an insurance provider wants to market to a young homeowner who recently bought a fixer-upper. They may start by looking at the data. Learning more about this homeowner’s house—age, location, and potential risks—could spur the creation of strategic banner ads showcasing home insurance plans made for older houses.  

When budget line items are already allocated to testing, data analysis, and personalized creatives, it becomes effortless to capture highly specific market needs. 

Use Targeted Testing to Amplify Your Advertising Budget 

At FM Engage, we go beyond guesswork, leveraging deep data insights to ensure your advertising dollars are well spent. Wondering where to direct your resources? Want to know if your creatives are worth the cost? Ask us how our proven testing methods can help drive your decisions.