Search Marketing

Sub-prime Mortgage Woes Mean Lower CPCs? Don’t bet on it.

Financial service products generate some of search’s highest CPCs, particularly for phrases like “auto insurance” and “mortgage” and (so I’ve heard) account for as much as 20% of search revenue. We’ve seen a lot of bad news lately in the sub-prime mortgage market, which even scared stock market investors into a major sell-off. While the sub-prime problems are real, the long-term trend for search CPCs is still in one direction – up. Here are three reasons why growth in search CPCs and total spend for financial services will continue for the foreseeable future.

1. Still Growing Consumer Acceptance

Consumers are still far more comfortable buying retail products online than purchasing insurance or getting a loan, but the gap will continue to shrink. Progressive Insurance, among others, has hastened this trend, with offline promotion of buying online. I think at some point most consumers will actually prefer buying their financial services products online. Sure, it’s slightly scary to tell eHealthInsurance about your recent bout of gonorrhea, but would you rather tell your local health insurance agent who you might see at the supermarket?

2. New Advertisers Are Coming

Many insurance and mortgage companies have been aggressively spending online for years. It may be hard to believe in 2007, but many major players have only dipped their toe in the water or are still sitting on the sidelines. For every online champ like GEICO and Quicken Loans there are great companies like Nationwide and Farmers who have not moved as much budget to search. That means there is still tremendous financial services ad budget coming online and most of it will come to search.

3. Website Process Improvement

Search budgets for financial services are ultimately set based on how many insurance policies are sold and how many loans are closed versus other marketing channels. As insurance companies and lenders pour more money into improving the throughput of their websites, they will sell more policies & close more loans with each inbound search click. Every year, it gets easier and easier for consumers to buy financial services products fully online as sites offer richer user experiences and more streamlined online purchase. And, judging by the pound or two of mail I receive each day, direct mail marketing isn’t getting any easier. Expect to see continued improvement in web throughput and declining direct mail response send more budget over to search.

Jon Kelly is the President of SureHits. SureHits is the ad network for insurance & loans and a boutique financial services SEM.

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