Fast Chat: State Farm's Tim Van Hoof

Tim Van Hoof, who manages marketing and communications at State Farm, is on the front lines of the hyper-competitive insurance category, which has experienced significant increases in media spending in the past few years, despite the economic downturn. Competing brands produce multiple campaigns that often feature quirky spokes-characters. In June, State Farm bucked the character trend with the launch of its current “Get to a better state” campaign from DDB Chicago, which focuses on the company’s agents. That effort dovetails with another, from Translation, that plays off of the brand’s “Like a good neighbor” jingle and targets younger drivers. In a Fast Chat this week—just before State Farm unveiled a new logo [1]—Van Hoof discussed category trends, working with Translation’s Steve Stoute, and how the economy has impacted the insurance industry.

Q. You’re six months into “Get to a better state.” How’s that performing for you?

A. The results have been very encouraging. Our brand awareness, our brand favorability—those numbers have been on the rise since we launched the campaign. But even down to the business metrics, our quote volumes, our clicks, the trends that we want to see are heading in the right direction. So, we feel really good about it.

Q. How has the economy impacted your industry?

A. People, instead of having three cars in the household, sometimes they’re downsizing to two or two to one or one to none. We also looked at our life insurance business. Some people were not purchasing life insurance when perhaps they would have (before the downturn). Or they’re purchasing lower dollar amounts because “I can’t handle that premium every month, but I still need to have life insurance.” So, I think it hit across the board of maybe less people buying as well as the volume or range. In other words, the coverages and such were impacted. The good news is that as a value brand or a brand that sells more than on the price side, we were able to weather it better than maybe the average of the industry.

Q. Are consumers shopping around more?

A. Shopping was on the rise a bit prefinancial dip. During the financial dip, it actually slowed a little bit. Now it seems to have picked up again. I don’t know what to make of that. . . . I do think, on the whole, people have been moved to shop more. I don’t know that switch rates are moving to the same degree, but they’re checking out (prices). It has to do with economic factors. It even has to do with category factors. We have some pretty loud folks in the category saying, “Shop, shop, shop. Price is the only thing that matters.”

Q. Why are multiple campaigns a fact of life in the category these days?

A. Probably spend levels has something to do with it—in choice of language as well as media vehicle. In other words, if you’re going to spend a ton of money—$500 million, $600 million, $800 million, a billion dollars—in two or three channels, it almost leads you to say, “We better speak broadly, stay true to what our value proposition is, but do it in a whole bunch of ways, different campaigns,” or you risk burnout. That’s one of the factors. Consumer segmentation (is another). . . . Consumers are more inclined to like campaigns and messages that relate more specifically to them.

Q. What’s it like to work with Steve Stoute?

A. He’s an exciting, dynamic guy, an idea guy. I think he would call himself an entrepreneur—a serial entrepreneur—and I would agree with that. And he’s a smart guy when it comes to cultural cues, what’s happening and bringing pop culture and icons into that. So, he has been a very good shot of new thinking into our brand.

Q. Has the economy impacted insurers in terms of media spending?

A. I believe the category has continued to rise but at a slower pace. . . . We all—the category and all of us who are talking about this business—ask, where is it all going to end? When is it all going to stop?

Q. And the agencies are saying, “Don’t stop.” And the media owners are saying, “Don’t stop.”

A. Well, that’s right. Even the way we work with our agencies—we have been challenging them more around the business metrics and successes. Clients always talk about that, right? You succeed when we succeed. But I think we’ve gotten much closer to that. So, we try to get them to think like we do, which is, if we spend more and it’s beneficial in the long run to the brand and the consumer, then you benefit too.

Q. Do you expect your spending to increase next year?

A. I would say that it will be consistent with this year. I don’t know that we’ll see a dramatic increase or decrease. We’re going to continue to look at—as I think all brands (will), not just in our category—the most affective ways to spend our dollars. So, we’re still working through what the mix will look like—how we reach consumers with those dollars. But on the whole, it will probably look similar from a spending standpoint to this year.

Q. Why do insurers advertise so much during sports programming?

A. It’s not usually time-shifted or recorded later and (then) having people skip through commercials. People tend to want to watch it. That’s not just sports. It’s American Idol or reality shows that are more real time or (that) you’re more engaged (with). . . . (Also), there are a ton of consumers there. They’re very passionate about their sport and their team and their brands. . . .  And for us, we’ve got a long history of relationships with college sports in particular. In collegiate sports we’ve been involved for a long, long time. But even the professional sports we’ve been a part of. And the extensions that can come from that offline are pretty significant. Insurance is not a particularly exciting, fun and interesting category on its own. Sometimes our category tends to want to associate with things that are a little more exciting and fun to tap into something that’s more passionate.