Geico Takes Varied Roads to Customers

In an article featured in TV Week, Adam Armbuster examines the advertising campaign of auto-insurer Geico, a subsidiary of Berkshire Hathaway Inc. He interviews Ted Ward, the vice president of marketing at Geico, as well as Steve Bassett, the creative director at the Martin Agency, the small firm behind the Geico advertisements. Geico airs simultaneous and differing television campaigns, targeting their message to varied potential customer segments, hoping these campaigns will concurrently drive sales. Armbuster asks Bassett and Ward about the creative ideas behind the Cavemen, the gecko, and the celebrity spokesperson ads, which are the three major campaigns currently aired, and the reason for airing all three. Bassett says, “the Cavemen idea started with a simple laser-focused creative strategy to tell people that Geico.com is easy to use…Cavemen are historically dumb.” This lead to the coining of “so easy a caveman can do it.” Bassett said the gecko and the testimonials were inspired by the customers. The gecko was originally designed as a one-time commercial to help people pronounce Geico correctly, but developed an extremely loyal following and therefore became the face of the insurer. The celebrity appearances are fresh and engaging ways to produce one of the oldest advertising tools; testimonials. Ted Ward adds that the use of the three commercials help to reach a broad demographic of customers. Since car insurance is something that is needed by everyone who drives a car, whether age 16 or 60, Geico is trying to reach everyone with their diverse ads.

Ward goes on to further discuss the effect of the campaigns on the growth of the company. He says that Geico has nearly quadrupled in size from 1998, going from $3 billion to more than $11 billion in 2006. The ads have led Geico to become the fastest growing car insurance company in America, and his research concludes their brand recognition number to be in the high 90-percent range. The insight from Ward and Bassett lead Armbuster to believe that the concept of multiple campaigns does work. He reasons that it is difficult to think of any other auto insurer before Geico because of the genius behind Geico’s strategy; “to simply dominate the television airwaves with so many varied car insurance messages that any competitors’ TV ads are simply lost in the clutter.”

In order to execute such an extensive ad campaign, you need deep pockets. Geico spent an estimated $403 million on advertising in 2005, and its ad budget rose another 20 percent in the first nine months of 2006, according to TNS Media Intelligence. Coca-Cola, by contrast, spent $326.1 million in 2005 on advertising. The mass advertising budget has forced others in the industry to also spend more. Since 2000, ad spending in the auto insurance industry has increased an astounding 64% to $2.89 billion, and is growing faster than advertising for other competitive industries like wireless telecommunications, banks and prescription drugs (Vranica).

While Geico itself has undoubtedly grown as a company in the last 8-10 years, how has it faired against its competitors? Geico still trails Allstate, State Farm Mutual Automobile Co. and Progressive Corp. in private passenger auto insurance as of 2005, the last year for which figures are available. At the moment, Geico's market share is 5.6 percent, which is fairly low compared to State Farm’s 18.2 percent and Allstate’s 10.4 percent (Stevenson). However, this is a pretty significant change from nine years ago. In 1998, the market shares of State Farm, Allstate, and Geico were 19.71%, 12.34%, and 3.45%, respectively (Green). While the market shares of the “giants” have dwindled, Geico’s has increased. Its share of written auto premiums grew to 6.25 percent that year from 4.61 percent in 2001, according to insurance-rating company A.M. Best Co (Vranica). While Geico still has some work to do to eclipse State Farm and Allstate, the company has definitely made significant strides in the past few years.

In essence, Geico’s multi-campaign marketing strategy has led to their rapid company growth and increase of market share in the last few years. The diversity in advertisements allows them to reach a broad audience, essential in the automobile insurance industry, a product which is a necessity for a substantial amount of people. Whether you enjoy the Letterman-esque humor of the cavemen, find the accent of the gecko to be adorable, or take pleasure in listening to Little Richard scream, “Mashed Potatoes, gravy, and cranberry sauce,” you know