Sometimes Advertising Does Pay
Monday, July 2nd, 2007
I would bet you won’t get an argument from Geico about the value of advertising.
The auto insurer that has increased its ad spending a whopping 75% since 2004, ranks No. 1 in new-customer acquisition and is the only top insurance brand to achieve double-digit growth during the past four years — 13.1%, according to the J.D. Power and Associates 2007 Insurance Shopping Study released in late June.
Spending a tracked $501 million in media, nearly twice that of any other player in its category, Geico ranks No. 1 in new-customer acquisition at 5.8%, followed by Progressive at 4.4%, State Farm at 4.2% and Allstate at 4.2%, according to the study, which surveyed 6,050 recent shoppers to track behaviors and motives for switching auto insurance over the past 12 months.
It’s working for them. They have over 90% awareness and people love their advertising. Including one very important person who probably has a lot of influence over their ability to keep spending on advertising — Warren Buffett, CEO of Berkshire-Hathaway (GEICO is a subsidiary of Berkshire Hathaway).
In a Wall Street Journal article titled “How a Gecko Shook Up Insurance Programs” (January 2, 2007), Warren Buffett is quoted as saying, “I love the advertising. (The ad growth is) sustainable as long as I am willing to write the checks. And I love writing them.”