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Mike Tildesley, marketing director at Royal & SunAlliance-owned direct sales insurer More Than, is backed by money in every sense. Seated in an office high up in RSA's new Fenchurch Street pad, the City landscape behind him includes the 'gherkin', the Lloyds Building and Tower 42.

Surrounded by some of the richest buildings in the world, he's about to explain how he plans to spend a £30m marketing budget as RSA continues to support More Than in the latest period of the brand's extraordinary growth. And Tildesley says £6m of this could well go on digital this year.

Tildesley is an insurance veteran, having been marketing chief at Prudential for several years, and believes online is changing the sector irrevocably.

Having become one of the best-known direct insurance brands, thanks partly to its canine advertising star, Lucky, he hopes More Than is in a position to take advantage. He reckons up to 50 per cent of its sales could be arriving online before the spring is out, due to many things, not least the cut-prices it can offer by not having to use brokers.

One insurance analyst points to the growth of rival Admiral as testament to the success that insurers are finding with direct sales: "The internet market does appear to offer growth. Insurance is moving towards direct sales, rather than intermediated sales, which allows their rates to go down. They have a 15 per cent margin advantage since a broker will typically take 10-15 per cent of a premium. Direct players don't have to pay that."

Tildesley comments: "What I think we're seeing is a massive tipping point in web business. If you take a classic, exponential growth curve, there's a point at which it is the same shape of curve, but all of a sudden the acceleration really happens - I think the insurance sector is at that point in terms of online."

He believes the sea-change is a result of both the growing prevalence of broadband and increasing level of comfort with which the UK population is buying online. "All the barriers to entry into this medium appear to be falling away," he explains. "There are more high speed connections, people are obviously less concerned about being online, and it's across the whole demographic mix - people of all ages."

Such is the level of acceptance among consumers for researching and buying insurance online that Tildesley agrees that any insurance company not online might as well not bother doing business. "If our business is anything to go by, any insurer that's not playing in the online space is going to have a tricky time," he reckons.

"We're big players in the offline space as well. We're spending a large amount of money that's not aimed at web sales but, even so, the web is becoming an increasingly important part of the business. I think, two years ago, people were saying 'If I could do 25 per cent of my business online, that'd be absolutely brilliant'. Today, we're saying 50 per cent feels about right. Where's it going to go from here? It's quite frightening and quite challenging."

Steve Jay, e-business media manager at More Than, who has been helping to convince Tildesley of the potential of online, agrees: "There's a real danger that if you're not there, you'll simply drop off the consumer's radar. It's quite clearly the first port of call in terms of research, so if you're not figuring there at all, you're in trouble."

But, there remains the belief that the web is not the be-all and end-all. Consumer-buying habits are not so straightforward and neither is the way in which they consume advertising. Tildesley explains: "There is an absolutely key point around integration. There's integration of the 'consumer process' - between telephony and post and email and online and so on. You've got to be integrated there. We have to accept that E consumers will show preference for one channel, but they certainly don't use them exclusively in my experience.

"Also, you're never going to know what the entry route is for people - it's a complex route. People may start offline - they might consume a TV or press ad or a door-drop or whatever and then maybe go online and start to do their initial research, and then they may not bother anymore and just pick up the phone. Other people may start the process online from an ad and do the reverse. They may end up offline or they may end up online, and you have to be prepared to integrate all those activities."

Tildesley says call-centre staff will often pick up customers halfway through an online quote or after they've got a quote and are preparing to buy. While confidence is growing, some people still prefer to buy over the phone. Yet, Tildesley is aware that to keep costs low, getting people to buy online is the goal. Like many of its competitors, More Than offers discounts to those who buy online. While seeking to attract buyers to the cheapest method of delivery, there can be problems if they fail to fit a prescribed model and want to mix and match media.

For him, it's a question of taking what savings you can get. "This whole point about online pricing - and discounting online - is standard market practice. The difficulty is when they come to you on the phone - what do you do with them? I think you just have to accept it and say 'well at least part of the process has been cheaper, even if not the whole process'.

Even if they have done their research online, that's cheaper," he says.

This complex process also makes it key, he adds, to get all the marketing - whether TV, email or through an affiliate marketing programme (More Than has two) - to mix smoothly. "That's why it's absolutely critical that all of your media lines up, so that it's a pretty seamless experience for consumers because they are bound to deal with you in different ways at different times for different products," he points out.

Having said that, Tildesley is also excited about the web's role as a marketing tool, so much so that he wants to devote half of his £12m broadcast media budget to digital marketing this year. This will include the two affiliate programmes through dgm and TradeDoubler, search marketing, banners and, increasingly, online sponsorship. The latest is a complex, content-sponsorship deal on various MSN channels, which Jay signed this week.

The move comes after the appointment of a new media buying agency, Universal McCann, after a pitch last year (it uses glue London for online creative), as well as what Tildesley struggles to describe as phenomenal returns so far. "It's a moving feast really since it depends on how well it goes.

But, so far, this year it has gone off like a train. It's absolutely motoring at the moment, incredible - I'm mixing all my metaphors here. But, we really have had a phenomenal response. We're almost at a point where we've just got to calm it down a little because it's going almost too well."

Sarah Doughty, digital account manager at Universal McCann Interactive, who works on the More Than business, comments: "Online works to drive sales and is really accountable, plus the opportunities are great to do really integrated stuff - it just works, particularly because people use the internet to search for insurance."

Tildesley's concerns about getting too much response appear to have something to do with not believing the returns to date and wanting to ensure the web site (www.morethan.com) can cope with the traffic. Having invested heavily in affiliate, search, banners and sponsorship - as well as a new TV spot pushing the internet-only offer - it is important to make sure the site doesn't fall over when people get there. "There is a limit to the amount of physical business you can shove through your system online," he says. "We want to give our prospective customers a decent experience. It's a bit like advertising telephone sales and not managing to pick up the call."

To avoid such problems, the firm has signed off a "substantial multi-million-pound investment" to rebuild the site technology, the last phase of which should be completed by September. Jay explains: "It's to put us in a place where we can make the right investments now, so that future changes will be easier for us."

For now, Tildesley is happy to attract all the business he can. Traditionally, on the web, this has arrived in the motor insurance sector. In fact, the bulk of his online budget will go on promoting car cover, despite the fact that More Than also offers home, pet, life, travel and business cover, such is motor's success. However, Jay believes the growth he's seeing in online sales of other services is coming as motor insurance buyers return to try out other products having been happy with the experience.

As technology moves on and buyers become more confident online, Tildesley sees the pattern of growth shifting to other services. But, at the moment, "I think home insurance is the next big area," he says. "We're beginning to see some really good results. The reason why it isn't such an obvious thing to do is because it's a more complicated purchase. It requires more information. So, at the beginning (of the digital boom), people were going online and it was slow and cumbersome, and there was too much information to put online, so they didn't bother. Now that we're getting into faster connections and slicker methods of getting information in and out of the back-end systems, that's going to remove all the issues."

So, the sky's the limit for Tildesley. However, there are some issues he thinks the sector should address. Chief among these is how to maintain a relationship with a customer you never meet and never speak to. As he puts it: "A lot of people use the web because it is remote, because it is depersonalised, because it is anonymous, and that's not a good set of circumstances in which to try and have a personalised relationship."

He is also concerned with the perception that online insurance buyers shop by price. He is positive that brand is as key for attracting consumers online as it is offline. "It's not just a question of going online and finding the cheapest price. You've got to be price-competitive because the web gives a transparency of price that you don't get in the offline space. Even if you don't see them side-by-side on an aggregator, it's very easy to compare, so you've got to be there or thereabouts on price. But, I do think the brand and what you stand for is really critical."

This belief helped to push More Than into undertaking its first online campaign aimed purely at building brand awareness in last year's £900,000 deal with MSN. The ink has just dried on the new agreement to sponsor various parts of the MSN portal, which will kick off this month - another sign that More Than plans to stay lucky with a focus on digital.

MIKE TILDESLEY'S CV

2000: More Than - marketing director

1998: CGU Financial Management - managing director

1996: Prudential UK - marketing director

1994: Prudential Intermediary - marketing director

1990: Prudential Investment Products - head of marketing

1988: Halifax Building Society - regional insurance manager

COMPANY BACKGROUND

- MoreThan launched as the direct arm of Royal & Sun-Alliance in June 2001. It offers financial services via the internet and telephone, including home, motor, pet, travel and life insurance, as well as a credit card.

- Employs over 1,800 staff in the UK. Main offices include its HQ in Horsham, West Sussex, four call centres in Bristol, Peterborough, Sunderland and Liverpool, plus a specialist pet insurance centre in Henley, 'staffed by animal lovers'.

- Marketing begins with the 'Where's Lucky?' ads. A new strapline was introduced in 2002: 'Don't accept less than More Than.' And 'That's More Than lucky' joined the ranks as an end-line in 2004, continuing with its star, Lucky the dog.

MORE THAN UPS AWARENESS ONLINE

More Than has advertised on the web since launch, but decided to run its first brand awareness campaign online in late 2004. It worked with glue London to develop the push, with media planning by Universal McCann.

The aim was to generate leads for the future, test the responsiveness of untried activity, and look at online as a branding medium. Driving internet sales was secondary.

The campaign ran from 15 June to 31 October 2004 with activity focused on More Than's key cover: motor and home. Creative mirrored the TV ads by ad agency CCHM, featuring potential disasters that somehow worked out all right in the end.

The More Than ad server delivered 21.7 million ads during the campaign, which led to 50,000 clickthroughs to the homepage. Of these, 16,700 users requested a quote and the brand achieved 1,773 sales.

Online ad awareness rose 10 per cent and online brand awareness 4.5 per cent, up from a base figure of over 80 per cent (Dynamic Logic).

Seb Royce, creative director at glue London, said: "It was a test online brand campaign for More Than to test consumers' responses to non-product specific advertising."

DIRECT LINE HIKES WEB MARKETING SPEND BY POUNDS 7M FOR 2005

Direct Line Insurance has big plans for online advertising in 2005. The brand, owned by The Royal Bank of Scotland, plans to boost its marketing spend online by 50 per cent next year to £7 million.

This will be spread across a range of techniques, particularly paid-for search results. However, the insurer keeps its spend under constant review and shifts investment according to the performance of campaigns.

Currently, half of its budget is allocated to search market-ing, with the rest going on partnership deals with insurance sites and affiliates.

Justin Skinner, marketing manager at Direct Line, said: "If we find paid-for search increases in media cost beyond what we want to pay, we'll find other media that works. It's a growing channel and it is important that we invest in it to drive people to our site," he says.

"The company spends about 50 per cent on search and the rest on partnership deals with core media such as insurance sites and affiliates. Large deals with names like AOL, and the money and travel sections of web sites, leverage the frequency and exposure of traffic to these sites." The insurer is also looking at a deal with AOL, following sister company Green Flag's sponsorship of its sports channel during Euro 2004.