The direct marketing of insurance

An insurance company, like many in the financial services industry, will advertise a product in the press and some readers will avail themselves of it. Often the cost of an advertisement will exceed the income derived from the accepted respondents in the following years. It only becomes profitable if acquiring names into a database results in purchases in future years of the advertised and other, cross-sold products. Therefore evaluating advertising effectiveness requires the development of future lifetime values, which vary over time between individuals for the different products. Real examples include evaluating the media vehicle, size, content and frequency of advertisements.