The GEICO Cavemen. Flo. Mayhem. The other Allstate guy. The Discount Doublecheck. We are Farmers…da da da da da da da da.
Why did an industry that seemed dormant in the advertising world suddenly come to dominate our lives, 30 seconds at a time?
Because good advertising creates market share. Duh.
It’s no secret that there are only two reasons that insurance companies advertise: 1. To retain current customers. 2. To convince new customers to change companies. The industry is profitable only if premiums outweigh claims. Since actuaries have already figured out the profitability odds, then it’s just a matter of having volume. The more volume, the higher the profits.
How do you get volume? You get people to think you’re better or cheaper than your competition. And make them remember you when they think about switching.
But who wants to hear about auto insurance?
When GEICO (“Government Employees Insurance Company”…now you know) started their new branding campaign (actually…several of them—but that’s another blog), they created a new competitive battleground for insurance companies—television. Soon, along came Progressive’s “Flo”, and to counteract campaigns that soon became part of pop culture (and gave personality to companies that have long not had one) stalwarts like Allstate stepped up and created their own personality. By 2009, Allstate’s market share had dropped in consecutive years, and the GEICO’s and Progressive’s of the world were only behind by a slim margin. Now, it was serious.
In a very short time, insurance advertising became a $4 Billion business. And don’t expect it to end soon—with millennials now making their first auto insurance decisions (and largely depending on the internet to compare rates), the momentum will likely continue.
Being aggressive with ad budgets has paid off, and now insurance company advertising has become the “Cola Wars” of the new millennium.