While some sectors are feeling inflation more harshly than others, US businesses in general have dialed back on spending during these difficult times. One common solution (which Forbes, among others, has indicated often isn’t a smart move) is to cut back on advertising and marketing spend.
“Often, the first budgets to be cut are advertising and marketing. With the recent steady flow of gloomy economic data, many are preparing for the worst, and that could deliver a big blow to the robust advertising recovery following the 2020 downturn.” – Variety, July 2022
These cutbacks certainly hit mobile app publishers hard, particularly those that have amassed massive consumer bases that are otherwise difficult to monetize without advertiser appetite. Pressured to focus on profitability versus growth, fintech and other consumer apps might also opt to lower spend on programmatic advertising and private marketplace deals.
That’s short-term fearful thinking rather than long-term strategic thinking – and a balance between the two is critical. “Business owners need to make cutbacks when the economy slows, but be wise about where they reduce spending when it comes to workers and long-term revenue growth,” advises CNBC.
But here’s the silver lining: In these times of inflation and potential recession, the Insurance Qualification Lens (IQL) solution serves as a reliable, non-cyclical revenue stream for the consumer app space.
The non-cyclical revenue stream major consumer apps need
First thing’s first: Insurers are still spending on ads
In order to understand the importance of Zendrive’s IQL solution, it's crucial to first take a step back and examine the current state of the insurance market. Insurance is one industry that’s cutting back on advertising – but is still spending billions on ads, primarily to build brand awareness and recognition.
More specifically, insurance digital ad spend is slowing, but still growing: Insider Intelligence reports that “the US insurance industry will top $12 billion in digital ad spending this year, up 15.0% from 2021.” Across the industry, there’s still plenty of advertising appetite for mobile app publishers to take advantage of.
Perhaps more important to note, after witnessing industry-wide responses in times of economic uncertainty or recession: we expect auto insurers to continue to invest in valuable solutions that allow them to acquire preferred risk policyholders and pave the way toward long-term profitability.
IQL: What is it and how does it work?
The IQL solution, which relies on massive amounts of global driving data via Zendrive’s Mobility Risk Intelligence platform, uniquely connects an ecosystem of app publishers including fintechs and home security companies, with top insurers, and tens of millions of consumers.
Publishers provide their customers with a new experience via their app: the opportunity to complete a 30-day test drive that could, in turn, help them save on their auto insurance (i.e. receive more fair and accurate pricing).
During the test drive experience, Zendrive’s MRI platform analyzes users’ driving behavior and offers them real-time driver coaching and insights to help them stay safe and alert on the roads. At the end of the trial period, Zendrive scores these drivers and, if they meet specific criteria set by insurers, they could receive an auto insurance quote based on how they actually drive, and not solely on traditional factors like gender, age, and location.
IQL creates a win-win-win scenario in which all three key players - insurers, publishers, and end consumers - benefit:
- Consumer apps earn non-cyclical, high-margin revenue while helping their users save 10-40% on their auto insurance (a potential savings of up to $1,000/year),
- Consumers get better and more fairly priced policies (which goes a long way in times of inflation and potential recession), and,
- Insurers – still eager to spend on solutions that work during economic downturns – benefit from fast, efficient acquisition of preferred risk drivers.
An added bonus for app publishers: they can leverage Zendrive’s mobility data to more effectively segment and target users, create other products, and create their own engaging in-app experiences.
A big step toward future-proofing your app
The current state of the economy is at the top of all business leaders’ minds. And especially now, successful mobile apps with massive user bases can’t afford to miss out on new ways to monetize as advertisers continue to cut back on spending.
But as we’ve learned with past resilience, times of economic downturn can reveal innovative, effective, non-cyclical solutions. For consumer apps, the time is now to invest in an ecosystem that brings them strong digital marketplace partners with billions to spend. These partnerships will continue to bring added value and long-term profitability in years to come.
Interested in learning more about Zendrive’s Insurance Qualification Lens solution? Click here or contact us directly below.