Why Geico's catching up to Allstate – for now


According to SNL Financial data, Geico’s about to replace Allstate as the second-largest US auto insurance company. According to a June 28 Advertising Age report, maybe not.

For the first quarter ever – January 1 to March 31,  2013 – Geico overtook Allstate sales, writing $4.72 billion in direct auto insurance premiums while Allstate wrote $4.53 billion. Of course, both combined add up to just $0.82 billion more than category leader State Farm wrote in the same period.

It’s a horse race

But for the year ending March 31, instead of just the quarter, Allstate remained ahead, albeit by a nose, with a $17.65 billion-to-$17.16 billion lead.

In any event, the horse race is far from the finish line. While reporting that “after years of consistent premium growth, Geico is in position to become the second-largest U.S. personal auto writer in 2013,” SNL also warns that its business is more seasonal than Allstate’s.

That’s why Geico CMO Ted Ward is hedging his bets until A. M. Best publishes its annual data. “[W]e’ve been the fastest-growing for the last 10 [years],” he told Ad Age, hoping that if trends continue “we will remain the second-largest.”

Advertising – specifically television advertising – has played a large role in Geico’s growth, but Ad Age picks up only one way how, namely, budget size.

  • Quantity – Geico advertising budgets have grown like mushrooms, sprouting from the 87th largest in all industries in 2003 to 7th in 2011, the most recent year for which totals are available. SNO estimates that their 2012 budget increased 12.45 percent, to $1.1 billion. When you consider that they spent $271.2 million more than Allstate and $322.1 million more than State Farm, you could easily infer that Geico’s advertising is either less efficient or less effective in the ROI department.
  • Homogeneity – What makes Geico’s advertising more powerful – or, if you pay attention to the ROI argument, less efficient or effective – is that they’ve been able to concentrate it all on just one property and casualty line – car and motor vehicle insurance – while State Farm and Allstate campaigns also had to cover home coverage, life insurance and agent-network support (something which Geico’s structure avoids).
  • Consistency – While Allstate and State Farm’s ad campaigns have changed over the years, Geico has been hammering away with the same message: 15 minutes can save 15 percent on your car insurance. Repetition has a certain value in persuading consumers. As Joseph Goebbels apocryphally said, “”If you repeat a lie often enough, people are bound to start believing it.” Same for repeating a truth. According to Edelmann research, 59% of consumers don’t believe an advertising message until they’ve heard it three to five times.
  • Not burying the message – Watch any commercial in Allstate’s Mayhem campaign, and you’ll never realize its objective is to compete with Geico. That part of the message in the audio, with a voice-over line that talks about disasters that cut-rate or discount or “15-minute” insurance doesn’t cover. Only problem is, we register, absorb and retain the schadenfreude of the disasters Mayhem causes so strongly that we slide right over the audio-only competitive message in that one line of voice-over. Allstate’s trying to communicate two ideas in 30-second commercials, and research has shown that that’s 0.75 ideas too many. As a result, the Mayhem campaign does a brilliant job of communicating the wrong thing. Geico’s commercials, in contrast, have the “15 minutes can save you 15%” message front and center, not only in audio, but often in video as well. The rest of the spot an attempt at humor (like a farmer who spells “cow” C-O-W-E-I-E-I-O), probably intended as relief from the stright-from-the-1950s hard-sell opening. Their latest commercials show ads within ads – i.e., characters looking at Geico magazine ads or outdoor boards in the spots’ opening seconds.

A stableful of critters

One thing both campaigns have in common, though, is use of what Leo Burnett, the Chicago advertising agency who basically invented the technique, called “critters,” i.e., live animated characters who personify the brand.

Burnett’s critters included the Jolly Green Giant, Kellogg Rice Crispies’ Snap, Crackle and Pop, the Keebler elves, and a human critter who changed a nation’s cigarette smoking habits, the Marlboro Man.

Mayhem is Allstate’s critter – and one measure of how well he’s worked is that a Facebook post in his name during the Super Bowl blackout saying, “I meant to turn off the scoreboard. Sorry, everybody. Wrong switch” drew over 39,000 likes. (People don’t like what they don’t get.)

In multiple campaigns airing at the same time, Geico’s used a whole stableful of critters, from the gecko to cavemen to a flying pig to the two guys with banjos who think they’re doing witty repartee.

So, as the race nears the end of the second quarter, will seasonality trip up the leader? Will repetitious singlemindedness of message beat out unfocused creativity?

May the best critter win.

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