Last year, advertising spending in the insurance industry reached $7 billion. This is an incredible figure as it accounts for about 2.7% of all U.S. advertising spending, which is $240 billion. Overall, the acquisition cost is just about $20 per each person in the U.S. or about $60 for the typical insurance-purchasing single person, couple or family. The ROI on lifetime customer is exponential.
How can they afford such exorbitant ad outlays? Firstly, insurance companies have plenty of cash. And secondly, because it’s a mature category, insurers must steal share from each other to grow. Insurance isn’t a fun product – Millennials aren’t arguing whether Allstate or Progressive is cooler, the way they would for a Nike or an Adidas. It’s also a low-involvement product, one that is continually paid for without much consideration by the consumer. As long as nothing goes wrong retention rates are stay high without switching.
In 2000 GEICO broke with the insurance advertising tradition and introduced a zany campaign which the staid and conservative insurance industry had never seen before – filled with pigs, cavemen, googly eyes and, of course, a little green lizard that was first conceived on the back of a napkin. GEICO’s gambit of injecting humor into the sleepy and conservative category worked, propelling the insurer to yearly market-share gains and forcing competitors to step up their game. Insurer after insurer is now hitting the airwaves with character-driven campaigns, from “Mayhem,” to “Flo,” to “Professor Burke,” to “Emu and Stakeouts.” Some center their campaigns on celebrities, such as football players like Aaron Rodgers or Payton Manning.