Financial Product Distribution in a Google and YouTube World

Media companies have long battled over the content vs. distribution argument. Many companies – think Viacom – went the “content is king” route. Others, such as cable companies, went for distribution – controlling access to households. Still others – Disney, Time Warner – hedged their bet and played both sides (we might point out that for years their stockholders suffered!).

The rapid growth of the Internet, search engines such as Google, audio through podcasts and video through YouTube, has dramatically changed the game – in favor of distribution players. MTV.com – a globally branded, 25 year old player attracts about 5 million visitors per month. YouTube.com, virtually non-existent less than two years ago, is running around 34 million. Given YouTube’s “open content” platform allowing anyone at anytime to post content, YouTube is a distribution company. MTV, of course, is a content company.

What, you might be wondering, does this have to do with financial product distribution? Well, everything, we think. And like YouTube, agents/brokers/planners are becoming more important than ever. Just think of the buying process these days for long-term care as an example. The information gathering process through a search-engine begins with the topic of “long-term care” (the same way you can search for specific videos of interest on YouTube). Consumers don’t search by looking for a branded company such as John Hancock, MetLife, GenWorth or Prudential (four leading “content” or product providers). They search by topic and it’s the distribution companies (it might be an agent or a brokerage general agency) who have built the more interesting “open content” websites (meaning all carriers are represented). Of course, the “last mile” of connecting product to customer (in other words, making a sale) is controlled by the… AGENT!

The moral of the story is that access to distribution – because of the power of the information network called the Internet – is more important than ever unless the big insurers choose to also build direct-to-customer sales platforms. Insurance companies are proprietary content players in an increasingly open content world.  A corollary is that both product manufacturers and agents also need to play the game differently with respect to online marketing, the creation of educational websites and blogs. Many internet-driven changes are ahead.  A website that gives a rating to long-term care carriers due to claims management on the back-end versus pricing on the front-end is not hard to imagine.  It is also easy to envision a web-rating service of agents – think of a Craig’s List and an Angie’s list for agents.

The game has changed. Content companies – product manufacturers and distribution companies agents and agencies – will be well rewarded by playing the game differently.

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