Marketing Campaign Case Studies

Monday, January 12, 2009


Starting in the mid-1990s GEICO, a direct marketer of automobile insurance, began spending an increasing amount of money on advertising, particularly television spots. The company’s ad agency, the Martin Agency of Richmond, Virginia, produced a wide variety of commercials. Unlike traditional car insurance advertising that took a serious tone and focused on accidents, GEICO spots were lighthearted and humorous. In 1999 GEICO introduced a gecko cartoon character that became a company mascot and the subject of its own advertising campaign. In 2003 GEICO released its popular ‘‘Good News’’ campaign, a ‘‘good news, bad news’’ comedic formula that spoofed television programming, from soap operas to congressional hearings. Both of these campaigns were joined by a simultaneous effort, ‘‘Mini-Campaigns,’’ which was unveiled in 2004. ‘‘Mini-Campaigns’’ played on older GEICO formulas, such as explaining that in the time it took to do a particular thing, a person could purchase car insurance from GEICO. The campaign also introduced a group of sophisticated cavemen offended by GEICO’s claim that its website was so easy to use, even a caveman could do it. They became the subject of a series of spots. The wideopen campaign also allowed the creative team to pursue television-programming parodies that fell outside the ‘‘Good News’’ formula. The reality-TV spoof ‘‘Tiny House’’ proved to be particularly popular. ‘‘Mini-Campaigns’’ became one strand in a threepart, $200 million-plus advertising strategy for GEICO. Commercials from all three campaigns inundated the airways, keeping the GEICO message front and center with consumers and helping to drive increasing sales.

GEICO was a relatively obscure auto insurance company until the 1990s. For nearly 60 years it had operated as a niche player, using direct-mail pitches to attract customers with excellent driving records. In this way GEICO was able to offer cheaper rates than its competitors. The company almost failed in the 1970s as it adjusted to changes in the marketplace, but it found a savior in renowned stock-market investor Warren Buffett, who had held stock in the company since the 1950s. By the 1990s GEICO was the seventh-largest auto insurer in the United States and was eager to grow even larger and attract a wider customer base. In 1994 it hired the Martin Agency to serve as its ad agency and began for the first time to spend money on mass-advertising efforts, which quickly resulted in strong growth. When Buffett acquired GEICO for his investment vehicle, Berkshire Hathaway, Inc., two years later, the company was told to grow even faster, and the advertising budget swelled. GEICO honed its pitch into a brand promise that would anchor all of its subsequent campaigns: ‘‘Fifteen minutes could save you 15 percent or more on car insurance.’’ The Martin Agency also proved adept at crafting humorous television commercials, a significant departure for the staid car insurance industry, which had traditionally adopted a serious tone. Not only did the humor help GEICO to stand out from the crowd, but it also put a human face on a company that did not rely on agents. Instead, people’s interaction with the company was a voice on the telephone or an impersonal computer screen.
In the summer of 1999 GEICO aired its first commercial employing a cartoon gecko, playing off of the common mispronunciation of the GEICO name. A series of spots featuring the gecko followed and became a staple of U.S. television commercials. In 2003 GEICO launched a second successful campaign, called ‘‘Good News.’’ Commercials in this series featured someone, often in dire straits, being told by another that there was good news. Their expectations were dashed, however, when it was revealed that the good news was that the other person had saved a lot of money on their car insurance by switching to GEICO. The insurer ran both the ‘‘Gecko’’ and ‘‘Good News’’ campaigns simultaneously, with the former keeping the GEICO brand in the forefront and the latter focusing on the company’s money-saving message. GEICO’s ad budget swelled beyond $200 million a year, and with a mandate to achieve outstanding growth, the marketers released yet another campaign in 2004. Called ‘‘Mini-Campaigns,’’ the new effort was a collection of humorous television spots that provided the creative team with a outlet for ideas that did not fit into the ‘‘Gecko’’ or ‘‘Good News’’ models but continued to build on GEICO’s humor and brand image.

Because every person who drove a car in the United States was required by law to carry car insurance, GEICO targeted a vast audience, young and old, male and female, and all ethnic groups. GEICO tended to focus on a younger demographic, however, because a major part of its marketing strategy was convincing people to take action, to call GEICO or visit the company website and change insurance carriers. Older drivers tended to stick with their insurance agents, making it natural that GEICO should focus most of its appeal on younger drivers, essentially those 25 to 40 years of age. It was this demographic that the company believed was most likely to shop around for a better rate and ultimately do business with GEICO. The television spots that made up the ‘‘Mini-Campaigns’’ appealed to an even younger demographic: drivers between the ages of 18 and 34.

By the time of the ‘‘Mini-Campaigns,’’ GEICO had grown to become the fourth-largest auto insurer in the United States. At the head of the list since the 1940s was State Farm, controlling about 18.5 percent of the market. It had spent hundreds of millions of dollars on marketing over the decades and had one of the best-known slogans in all of advertising: ‘‘Like a good neighbor, State Farm is there.’’ Next in line, with just over 10 percent of the market, was Allstate, another well-entrenched competitor with its own timeworn slogan: ‘‘You’re in good hands with Allstate.’’ Coming in third and fourth were the Progressive Corporation and GEICO, with 7.1 percent and 5.5 percent market shares respectively. State Farm and Allstate did not wish to compete with GEICO on price, a move that the top-two companies feared would relegate car insurance to mere commodity status—a generic item people bought because it was the cheapest. The big two were not just selling insurance; they were selling their reputations. Progressive, not as well entrenched, was quick to follow suit with GEICO, increasing its ad budgets and emphasizing price. Eventually Allstate made some price appeals, and even State Farm beefed up its ad spending. But a major reason they were willing to join GEICO and Progressive in the car insurance ad wars was that there were more profits than ever to be made in the business. In the 1990s cars became better built, resulting in fewer repairs, fewer accidents, and consequently fewer insurance claims. In addition, the population was growing older on average, and typically the older people became, the slower they drove, again leading to fewer accidents. Thus, GEICO had to contend with companies larger in market share as well as a pack of smaller insurers also eager to attract more customers and reap the benefits of higher profits in the industry. Rounding out the top 10 in direct premiums written in 2004 were Farmers Insurance Group (4.9 percent), Nationwide Group (4.5 percent), United Services Automobile Association Group (3.5 percent), American International Group (3 percent), Liberty Mutual Group (2.8 percent), and American Family Insurance Group (2.2 percent).

Having enjoyed success with ‘‘Gecko’’ and ‘‘Good News,’’ both of which became populist campaigns embraced by consumers, GEICO and the Martin Agency launched ‘‘Mini-Campaigns’’ in September 2004. The freewheeling, humorous effort contained variety in hopes of touching a chord with consumers and perhaps giving birth to another popular ad concept.
The initial wave of the campaign comprised nine spots. Three featured cavemen and were intended to drive traffic to GEICO’s website as well as to appeal to younger drivers. In the first of the series, ‘‘Insult,’’ a TV announcer made the claim that the GEICO website was so easy to use that ‘‘even a caveman can do it.’’ A caveman who was part of the TV crew, however, took offense at this supposedly politically incorrect remark, shouted, ‘‘Not cool!’’ and stormed off the set. The second spot, ‘‘TV,’’ showed a pair of urbane caveman in their finely apportioned living room watching the first spot and grumbling, ‘‘What’s that supposed to mean?’’ In the third spot, ‘‘Apology,’’ the announcer tried to make peace by inviting the two cavemen to a trendy eatery. ‘‘We had no idea you guys were still around,’’ he pleaded, only to be dismissed with a suggestion that in the future he should do a little research first.
Three of the ‘‘Mini-Campaigns’’ commercials offered new humorous variations on an old GEICO commercial formula that used the phrase ‘‘In the time it takes . . .’’ For example, a husband was asked by his wife, who was modeling a new dress, ‘‘Does this make me look fat?’’ Only half listening, he replied, ‘‘You betcha.’’ The voice-over then commented, ‘‘In the time it takes you to pull out the sofa bed, you could save 15 percent or more.’’
The final three spots were parodies of infomercials and reality TV shows, territory the ‘‘Good News’’ campaign had been adept at exploiting. One spot spoofed an Old Navy commercial, making the point that the clothes would not save a person money on car insurance, while another was a takeoff of a Super Glue infomercial. The most widely acclaimed spot of all nine was a reality-TV parody called ‘‘Tiny House.’’ Taking its cue from the hit film Being John Malkovitch, which featured an absurdly low-ceilinged office space that was located between elevator floors, ‘‘Tiny House’’ appeared to be a promo for an upcoming reality show in which a newly married couple would have to spend a year in a miniature house. ‘‘The marriage was built to last,’’ intoned the announcer, ‘‘but the house was too small.’’ Snippets were shown of the marriage unraveling because of the confined space. The announcer then said, ‘‘The drama will be real, but it won’t save you any money on your car insurance.’’ The spot fooled viewers and critics alike, many of whom praised the execution. ‘‘Why do I love this Tiny House thing so much?’’ wrote Barbara Lippert of Adweek. ‘‘First of all, its meticulous production expertly mimics every squalid detail of the reality-promo genre (the cutting and pacing, the typeface, the music). And there’s a clever, deeper insight here: ‘living concept’ shows like Big Brother are awful precisely because they make the viewer feel claustrophobic.’’
GEICO added a pair of new executions to ‘‘Mini-Campaigns’’ in April 2005. Both of the 30-second spots focused on the ease of buying a GEICO policy online by contrasting it with the difficulty of everyday situations. In one spot the wheels from a set of rolling luggage came off. In another children in a spelling bee were presented with an extremely difficult word to tackle.

‘‘Mini-Campaigns’’ became a useful outlet for a variety of ideas for GEICO television commercials. While it was impossible to determine how much money the campaign added to GEICO’s balance sheet, there was no doubting the role the entire advertising strategy played in the company’s strong growth. Just to keep pace, GEICO would have to continue to advertise aggressively, and ‘‘Mini-Campaigns’’ served a valuable function, acting as a depository for spots outside the ‘‘Gecko’’ and ‘‘Good News’’ formulas as well as providing a breeding ground for potentially popular new formulas. According to Seth Stevenson, writing for the online magazine Slate, GEICO pursued a ‘‘scattershot approach’’ because it had to appeal to such a broad group of people. ‘‘Some ads are straightforward and tame (aimed at older drivers), while some are absurd (the kids seem to like this). All for a single product. Still, it’s not just the range, but the volume of ads that’s so astonishing. It seems like there’s a GEICO spot every time you turn on the TV.’’ Given the heated competition in the auto insurance field, that situation was not likely to change for some time to come, and the ‘‘Mini-Campaigns’’ concept was well suited to providing GEICO with new iterations of time-tested themes.

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