Insurance: Cutting advertising spending

Few industries waste more advertising dollars than insurance


Cutting advertising spendingMutual of Omaha’s “Wild Kingdom” was a mainstay of weekend television programming, starting in 1963. Viewers regularly tuned in to see what animals Marlin Perkins, Jim Fowler, and Peter Gros would come face to face with each week. Mutual of Omaha always found a way to interweave an animal into how Mutual of Omaha could provide viewers with insurance with Marlin Perkins interjecting, “Like the mother duck, Mutual of Omaha is there when you need us most.”

What Mutual of Omaha understood was their message in context. Viewers watched an episode of how a mother duck took care of her ducklings, especially right when they needed her, and wove that experience into a selling message that viewers could understand. It made sense.

As silly as it may sound, viewers could put themselves in place of the little ducklings emotionally and know what it would mean to have their mother there when they needed them. Moreover, Marlin Perkins represented a figure viewers respected and directed a generation to a belief that conservation was important.

Now, some 40-plus years later, the sincere and aspirational tone has all but disappeared in insurance branding.

Thanks Geico. Let’s Cutting advertising spending

First there was the GEICO brand. We all have come to know the bevy of GEICO branding spokespeople: a gecko, some cavemen, a stack of money and the CEO (played by Brian Carney). Through sheer repetition alone, we have learned that “15 minutes can save us 15% or more on car insurance.”

Cutting advertising spendingThough a great many people could parrot back this tag line, only a very small percentage has actually ever called. The proof? GEICO is only the third largest car insurance company in the U.S. One cannot argue that GEICO’s business is growing, but not at the rate their spending seems to suggest.

Geico actually has some idea that they are not getting enough bang for their buck.  They know this because they are constantly having to refresh their shtick in order to make it seem up to date and stay relevant – gecko, caveman, stack of money, and Mike McGlone asking us if “Ed “Too Tall” Jones” is too tall.

Next, there was Progressive with Flo. Though endearing, she is hardly inspirational or sincere. Progressive is growing but is also spending a ton of money on advertising without the same return.

Just to put it into perspective, GEICO is spending more than 225K per day with Google keywords and have become the top Google Adword spender in the U.S.

Spend. Spend. Spend.

Progressive is spending more than 137K per day. Yearly, that is $82 and $50 million spent respectively – and that is just with Google Adwords. GEICO spends in the neighborhood of $800 million a year in all advertising. Can you afford to play this game? Can you accord cutting advertising spending? It sounds like a catch-22.

Cutting advertising spendingNow, Nationwide has entered the fray into the  insurance branding wars. Apparently Nationwide is no longer on my side (at least not in their ads). Instead, Nationwide has employed the services of “The World’s Greatest Spokesperson in the World” and now uses words like “automagically” in their ad campaigns to talk about insurance. What is even worse than saving money “automagically” is that the new spokesperson is nothing more than the male version of Progressive’s Flo.

So what’s the problem?

Wasting Money

These insurance company brands are spending money foolishly. GEICO is the largest spender in the category yet only musters third place. Progressive and Nationwide are flailing around defensively, and it is only a matter of time until another competitor follows suit.

Cutting advertising spendingLet’s look at the messaging of these companies objectively. Though one might argue they have entertainment value, it is clear they are all designed to get someone to switch.

However, in the case of GEICO, the position of “…save 15% or more” is either not believed or simply not important. If it were believed and important to audiences, then why is GEICO only the number three player in the industry?

The same is true for Progressive. It remains to be seen what happens with Nationwide’s “World’s Greatest Spokesperson In The World” but it is safe to say that it too will suffer a similar fate. The GEICO phenomena alone show the problem with this kind of advertising. People do not switch or choose insurance simply on price (or on entertainment value). There is something else at play.

What the advertising from GEICO, Progressive, and Nationwide is missing is a meaningful and aspirational message that audiences can see themselves in. That is, their current marketing misses the point. It’s all about the company and not about the customer. There’s no place for the customer when the dominant campaign in this market is a series of discussions between a CEO and a lizard.

Why Mutual of Omaha’s Wild Kingdom worked is because they spent a half-hour creating a motif (mother duckling) in which viewers could see themselves in and could relate to on an emotional level. (We all have mothers and felt like a duckling in their presence.)

Give Consumers a Real Reason to Switch

Most people are not going to simply choose their car insurance based on which company is the most entertaining, has the lowest price, been around the longest, is the most stable or any of the other things insurance companies typically say. It may work in the short run, but once the joke is over, run its course, or a cheaper option is found the people who switched to will look to switch again. (That’s the real reason why GEICO has so many spokes-characters.)

Cutting advertising spendingNo one is giving target audiences a reason to switch that goes beyond common basic promises of the category. The current advertising models employed by GEICO branding, Progressive and Nationwide are blending into one. Therefore, they do not build long-term brand value. They are of the moment and will change and ebb to match the entertainment acumen of the market.

Believe it or not, an insurance company that forgets about this shtick and creates a meaningful, resonate message for this category could revolutionize the industry. Consumers are tired of being talked down to, which is why GEICO must spend $800 million to get people to notice them. With the right message borne out of the core beliefs of the target audience, a player could spend far less and have twice the impact. Insincerity is fine for fast food, but it is getting a little old in the insurance industry.

Insurance branding must find the emotional triggers that drive consumers to actually switch insurance companies. The current trend is actually a defensive position as the players start blending into one based on the notion that it must in order to retain a presence. That’s an insecure position.

(Read our study on the insurance category here)

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