The industry has spent billions on actors and athletes, but it has made little difference for boosting sales.
A recent report by McKinsey & Co. has revealed that while American auto insurance companies spent billions to include professional athletes and famous actors in their ads, but when all was said and done, they had little to show for it.
There appears to have been a virtual race to generate the best marketing over the last ten years.
The auto insurance companies in the country have increased their marketing spending by 15 percent within that time, until it reached $6 billion in 2011. This, according to the data released in the report by the management/consulting firm. Despite this fact, the sales in the sector have been relatively stagnant over that same decade, and over half of the outlay in advertising was from firms that didn’t increase their position in the ranks.
McKinsey said that the auto insurance companies who spent the most still didn’t increase their market share.
The GEICO unit of Berkshire Hathaway, and Progressive Insurance managed to boost their own sales by advertising less expensive auto insurance coverage. Equally, that strategy may not be the most effective for all of the American insurers as they try to take hold of a larger portion of the mature marketplace, according to a McKinsey partner, Tanguy Catlin, from the company’s insurance practice. Catlin was one of the report’s co-authors.
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He explained that “When Nike advertises shoes, people can buy more shoes.” However, he also pointed out that by spending a larger amount on marketing for auto insurance doesn’t necessarily mean that more people will buy coverage, since drivers “don’t buy multiple insurance policies.”
The largest ad spender in 2011 was GEICO. It dropped nearly $1 billion, according to SNL Financial statistics. That auto insurance company’s ads have featured Gallagher, a comedian, and a talking pig. They were used to draw attention to the type of savings that consumers could achieve by switching their coverage.
State Farm came in second with its spending on auto insurance marketing, having shelled out $800 million for that purpose. They used Aaron Rodgers, quarterback for the Green Bay Packers in their ads.