Astronomical Ad Spending by Insurance Goliaths
Ad spending by insurance providers hit an all time high in 2008, approaching $3.5 billion! While ad spending figures for 2009 are not readily available, the big two of Geico and Progressive combined spent close to $1.9 Billion in 2008, roughly the GDP of a small country.
2008 Ad Spending By The Numbers:
Geico – $622.7 million – Adweek.com
Progressive – $470.4 million: Adage.com
Ad spending is a part of any solid insurance marketing plan. It’s a necessary (and costly) line item that requires creative resources and well-conceived strategy to be successful, especially in a Goliath versus Goliath battlefield. Nielsen makes a case for why so much is spent (especially on TV) with a report issued earlier last year. Nielsen IAG reports:
When asked about their own banks, insurance companies and investment firms, 55% of respondents who said they had seen more advertising for their financial institution reported having “complete confidence” in the financial health and soundness of their company and only 18% said they had “little or no confidence” in their company. However, among those who said they had seen less advertising, only 18% had “complete confidence” in their financial company and 45% said they had “little or no confidence” in their company.
Richard Khaleel, EVP of Nielsen IAG’s Financial practice explains the figures
“This research shows that ‘out of sight’ can mean ‘out of business. The current economic climate makes it more important than ever for financial institutions to bolster confidence among their clients and this study clearly demonstrates the link between advertising and confidence levels.”
Mr. Khaleel draws a clear line between “advertising” and “confidence levels,” but what are we really learning about our insurance providers from the commercials we see on TV? If you consider, both basically promise the same thing:
- Save Money
- Better Coverage
- Better Customer Experience
So who’s telling the truth?
More importantly, if the insurance providers are spending so many billions just to retain customers and develop the next reptilian, prehistoric or perplexingly sexy fauxsperson, something is being sacrificed. Considering the amount Americans pay for their insurance and the state of the economy you’d think insurers would want to scale back or reallocate some of those dollars into more tangible projects, say reducing premiums/deductibles, customer service or technology infrastructure.
Fortunately for agents, the Internet is an equalizer and the heaps of money Geico and Progressive are spending to drive people to their websites can be leveraged by creating an effective online presence and strategy. While independents will never compete with the ad spending of insurance Goliaths, the social web, insurance marketing programs and a customer-driven business model are a prescription for long-term growth. Furthermore, agents have an inherent advantage because customers are retained when they are serviced with personalized policy and claims support, not entertaining ad campaigns.
I love talking lizards as much as the next couch potato. But spending hundreds of millions of dollars to reiterate the same value propositions as the competition and convince existing clients of viability? The time is coming when “confidence levels” will have more to do with efficient and helpful insurance support and less to do with slick, saturated ad campaigns.