By the mid-1990s direct auto insurer GEICO had already enjoyed strong growth through the use of massmarket advertising, expanding beyond direct mail to include humorous television commercials. At the start of the new century GEICO scored a hit with its commercials that featured a cartoon gecko. In the spring of 2003 GEICO released a second, complementary effort, the ‘‘Good News’’ campaign.
‘‘Good News,’’ developed by the Martin Agency of Richmond, Virginia, was essentially a television campaign, although some of the material was recycled for radio spots. The commercials played off the familiar pattern of ‘‘good news, bad news’’ jokes. In each spot someone was told by another that there was ‘‘good news,’’ then learned that the good news had nothing to do with their predicament. Rather, the bearer of glad tidings had just saved a ‘‘bunch of money’’ on his car insurance by switching to GEICO. In one of the early spots, for example, a prisoner thought that his sentence had been commuted, only to learn that his lawyer’s good news concerned car insurance.
The ‘‘Good News’’ campaign was effective in carrying GEICO’s money-saving sales pitch, while the gecko advertisements served more to build the brand image, and a third campaign focused on a younger demographic. The company did not disclose how much of its more than $200 million ad budget was devoted to ‘‘Good News.’’ But it was clear that it worked: after the campaign began, GEICO’s brand recognition improved among consumers, and sales soared. Moreover, the ‘‘Good News’’ reversal-of-expectation ploy began to be adopted by consumers for comedic purposes, and they invariably mentioned GEICO by name. The value of such free advertising was incalculable.
A direct marketer of auto insurance that for nearly 60 years was dependent on direct-mail advertisements, GEICO began to spend an increasing amount of money on television spots in the 1990s.When legendary investor Warren Buffett acquired control of the company in 1996 through his holding company Berkshire Hathaway, Inc., GEICO allotted even more money to its advertising budget in order to meet the kind of growth that was expected. To get noticed GEICO and its ad agency, the Richmond, Virginia–based Martin Agency, looked to exploit humor in an industry that had traditionally adopted a serious tone in its advertising. Lacking the support network of State Farm, Allstate, and other agent-based insurers, GEICO made its humorous pitch on the basis of price and found a strong brand promise in the slogan ‘‘Fifteen minutes could save you 15 percent or more on car insurance.’’ Furthermore, because GEICO lacked the personal contact of an insurance salesman, it used humor to make the company seem less impersonal to potential customers, who needed to feel comfortable and confident, not to mention motivated, to place a telephone call—or later, log onto the Internet—to purchase a policy.
With an increasing amount of ad dollars at its disposal, the Martin Agency developed a wide variety of advertisements for GEICO. One, a television spot featuring a gecko (customers often mispronounced the GEICO name as ‘‘gecko’’), struck a chord in 1999 and became the anchor for the company’s marketing and the inspiration for a long-term advertising campaign. In 2003 GEICO and Martin developed the ‘‘Good News’’ television campaign, which ran alongside the gecko spots, sometimes back-to-back in 15-second clips. The gecko spots began to focus on reinforcing the GEICO brand, while the ‘‘Good News’’ spots reminded consumers of the insurer’s low-price promise.
In general GEICO’s advertising targeted every person who owned a car and was required by law to carry insurance. But because older drivers tended to be loyal to their insurance companies, GEICO focused a great deal of its attention on a younger demographic, essentially 25 to 40 years of age, in hopes of peeling away customers from rival insurers. Younger drivers were especially attractive potential customers because they had not built up a relationship with an insurer and by nature were more willing to look around for a better rate. Having less money than most older drivers, they were also more price-sensitive and especially open to GEICO’s lower cost. For this group the absence of a personal relationship with an insurance agent was not deemed as significant a factor as the price of the policy. With their often irreverent and playful tone, the ‘‘Good News’’ commercials were especially effective in reaching younger consumers.
When GEICO began its advertising push in the early 1990s, it was seventh in a crowded field of companies offering car insurance. As it moved up the ranks, its main competition was winnowed down to market leader State Farm, which had less than 20 percent of the business;
Allstate, with about half that amount; and the Progressive Corporation, a distant third. The big two spent hefty sums on advertising to remind the public of their individual brand promises: State Farm with ‘‘Like a good neighbor, State Farm is there,’’ and Allstate with ‘‘You’re in good hands with Allstate.’’ They were well entrenched with a strong core of loyal customers, and as conservative companies, it was not surprising that these insurers produced conservative advertising that focused mostly on their honesty and concern for their customers. Making a sales pitch on the basis of price was not part of the strategy and was almost beneath their image. Moreover, by emphasizing price State Farm and Allstate risked turning car insurance into nothing more than a commodity, the buying and selling of which was based on the lowest price possible.
Progressive, with more to lose to GEICO, quickly followed suit and increased its ad budgets. Thus, Progressive and GEICO forced their larger competitors to spend more advertising dollars as well. Allstate even began to compete in terms of price. But there was another reason why these insurance companies began to spend more on advertising: there were more profits to be made. Cars were better built and less prone to accidents. Moreover, the large baby-boomer population was growing older, driving slower, and experiencing fewer accidents. With fewer claims to pay out, insurers made more money, even if they lowered rates to lure business away from their rivals.
Because direct marketers such as GEICO did not have the expense of an agent network to support and could offer the lowest rates, the direct model became the fastest-growing segment of the auto insurance industry. GEICO had to continue to spend heavily on advertising to fend off a new breed of Internet direct marketers of car insurance. Traditional agent-based companies such as Nationwide, Hartford, Travelers, and AIG (American International Group) also began pursuing the direct model through their websites.
The ‘‘Good News’’ campaign broke on March 1, 2003, and adhered to GEICO’s successful three-part strategy. First, it used humor to make the television spots stand out; second, it reinforced the company’s brand promise, ‘‘Fifteen minutes could save you 15 percent or more on car insurance’’; and finally, it made a strong appeal for action, urging the audience to initiate contact with GEICO, especially via the Web.
The campaign began with a series of three television spots. In ‘‘Lawyer’’ a man waited in prison while his lawyer took a call and then pronounced, ‘‘Good news.’’ The prisoner hoped that he had gained his freedom but learned that, in fact, the good news was that his attorney had just saved ‘‘a bunch of money’’ on car insurance by switching to GEICO. This reversal of expectation was the pattern followed by all subsequent commercials in the campaign. In another of the initial spots, ‘‘Pitcher,’’ a baseball manager visited a pitcher on the mound with good news. The pitcher thought that he would be allowed to stay in the game but instead was told that his manager just saved money on GEICO; the pitcher was still on his way to the showers. The last of the three spots, ‘‘News,’’ featured a news anchor covering a volcano eruption. He told viewers not to worry because, despite the obvious disaster unfolding, there was good news: he had just saved money on his car insurance. The first wave of ‘‘Good News’’ commercials were effective but drew criticism as being somewhat nasty. Bob Garfield, critic for Advertising Age, called them ‘‘strikingly cruel.’’ The reason they were effective, according to executives at GEICO and the Martin Agency, as cited by Stuart Elliott of the New York Times, was ‘‘the added twist that the person being told the good news is on the outside looking in, almost chumplike, and is not invited to share in the good fortune.’’ Moreover, Elliott wrote, ‘‘The approach defies the hoary rules of so-called slice-oflife advertising, which require that the person serving as the sponsor’s proxy welcomes everyone else to change their lives wonderfully, too, by buying the product.’’ Although GEICO and the Martin Agency maintained that they received few complaints about the ‘‘Good News’’ commercials, the second round of five spots, which began airing in August 2003, were softer in tone. They also veered further away from the slice-oflife approach, as four of them focused on tricking viewers by parodying typical television fare. Brian Steinberg of the Wall Street Journal called them ‘‘situational commercials, ones designed to play off the shows consumers are watching.’’ One of the new spots spoofed a soap opera: a man told his lover the good news about his car insurance only to watch her storm out as he pleaded, ‘‘I saved. I thought that meant something to you.’’ Other programming that became grist for the mill included homeimprovement shows, televised congressional hearings, and infomercials (such as a parody of a hair-losstreatment product spot). To make the spots even more effective GEICO took care to shoot them on video rather than film and to air them during the type of programming that they tried to imitate—for instance, running the soap opera spot during soap operas and the prisoner spot with courtroom dramas.
GEICO and Martin also developed what they called ‘‘Mini- Campaigns,’’ a collection of humorous spots that began airing in 2004 along with ‘‘Good News’’ and the long-standing gecko spots. GEICO was now running three campaigns simultaneously, saturating the airways with 15-second spots that espoused the GEICO brand promise. In addition, each of the campaigns emphasized a different part of the marketing strategy. The gecko spots became more of a brand-polishing effort, while the ‘‘mini campaigns’’ mostly targeted younger viewers with their off-the-wall humor. For its part, ‘‘Good News’’ focused on GEICO’s savings pitch. The ‘‘Good News’’ spots were rotated constantly, with new ones occasionally added to the mix. In the spring of 2005, for example, GEICO unveiled a pair of new spots. ‘‘Speed Racer’’ was a parody of the classic cartoon series of that name. In it the hero, Speed, received a call from Trixie warning him that the bridge was out and that he was headed for disaster. ‘‘But I have good news,’’ she declared, then delivered the standard punch line to the bewilderment of Speed. The second spot featured personal trainer Tony Little, familiar to television viewers for his infomercial pitches. Once again, the viewer was tricked into thinking that the commercial was actual programming.
It was impossible to determine how much credit the ‘‘Good News’’ campaign deserved for GEICO’s success, since it was initially paired with the gecko ads and then became one of three simultaneous TV campaigns. But there was no doubt that GEICO was pleased with the ‘‘Good News’’ effort. In August 2003 Edward Ward, GEICO’s vice president of marketing, told Elliott of the New York Times that, since the campaign had begun, the company was ‘‘ecstatic with the volume of phone calls and Web activity and sales.’’ He also told Elliott that results were ‘‘running at record levels.’’ The spots clearly resonated with consumers,who,much to the delight of themarketers, began to use the campaign as a source of humor in their own telling of jokes. ‘‘When a campaign slogan makes it into the common vernacular of popular culture, you know you’ve got yourself a hit,’’ wrote Rae Ann Fera for Boards in 2003. ‘‘Two famous instances of the tag being used—without duress or influence—are when an airline pilot and an on-air weatherman relayed bad news to their audiencewhile following upwith the good news that they [had] switched to GEICO.’’ Fera also reported that, after the spots began airing, GEICO’s unaided brand recall was the highest in company history.