Consumer Confusion Slows Healthcare Exchange Ad Market

Many states, insurers waiting for clarity

The confusion surrounding healthcare exchanges has had an unanticipated negative impact on the media sales business over the last few weeks.

Advertising tied to healthcare reform was expected to slam dunk more than $1 billion into media company baskets over the next couple of years—and the big-time dollars were expected to kick in this month. But there have been fewer advertisements from the federal government and states than envisioned, mainly because it doesn’t make sense to try to lure more consumers to something that will frustrate them. And while some insurance companies are placing ads, others are sitting on the sidelines.

Illinois is one state that's holding the line until the national program works out its kinks. So far, Illinois’ campaign has only been in print, and the duration was short and sweet. Kelly Sullivan, chief marketing and communications officer for Illinois Health Exchange, said the state got off to a slow start as it wrestled with whether or not to run its own exchange, and then worked to obtain $33 million from the federal government for the portal and a related ad campaign.

Illinois launched its campaign on Oct. 1 with print ads in 50 newspapers. Then it immediately went dark, relying on earned media. Once the glitches are smoothed out of the national portal, “we’ll use everything in the toolbox,” including TV, radio and print, “but heavily digital, mobile and online,” Sullivan said.

Towards the other end of the promotional spectrum is Oregon, whose state-run exchange has yet to launch. However, Jordan Delapoer, director of brand strategy at North, the agency running the exchange’s ad effort, said the exchange is in the second part of a three-part campaign launched this summer.

With a budget of $21 million, Oregon’s mix is currently about 30 percent broadcast, and about 15 percent each for cable, radio and out of home—with print, digital, sponsorship and minority outreach below that. But after the exchange opens in the coming weeks and the third phase (focusing on enrollment) begins, “there will be less on TV and more on direct mail and digital,” he said.

All told, 17 states and Washington D.C. are creating their own exchanges and have received funding from the federal government to promote them.  More money is being spent by an additional seven states that opted against their own exchanges but are spreading the word about the national site.

Of those that are advertising, only 13 have launched spots on TV to date, with New York the latest to do so, according to Elizabeth Wilner, vp of strategic initiatives for the research firm Kantar Media. Kantar projects that between Q3 2013 and early 2015, TV alone will reap $500 million on political advertising that mentions healthcare reform, including exchange-related advertising.

Medical and dental insurance spend last year exceeded $800 million for all media, according to Kantar, and it’s likely to be “significantly up” over the next year thanks to the healthcare policy changes, said Scott Roskowski, svp of marketing for the TVB.

Some insurance companies aren’t expected to start campaigns specifically tied to the new exchanges for an entire year, among them WellPoint and Aetna, according to Nathan Daschle, evp of political strategy at Clear Channel Media and Entertainment.

Some of the providers advertising now, such as Blue Cross Blue Shield, are doing so with negative healthcare reform messages in some states. Those insurers who are holding creative in reserve “are just being very cautious,” said Wilner. “This law has been hammered in hundreds of millions of dollars in critical political advertising in the last couple of years by candidates and lawmakers who are the natural political allies of insurers.”

There’s another source of revenue expected to surge as time goes by: medical service providers, like clinics and hospitals, says Michael Weiss, president of sales for CBS Radio.

Bottom line, no one’s downgrading projections for healthcare-related advertising in the long run. It’s just a matter of time before it reaches the high water mark. “I think it will take three months to get sorted out, and then we’ll see more money from the federal government and different insurance companies,” said Val Napolitano, president and CEO of Petry Television.