Does Geico's Gecko Sell Insurance?

Geico and its charismatic gecko, with his genteel British accent, stand out in the automobile insurance industry, which until now relied heavily on serious styles to promote price and service. Geico's ads spoofing TV shows, carrying the tagline, "I have good news," and others portraying cavemen in modern society have lent humor to the category, while the gecko himself has become an iconic piece of pop culture. Last month, the gecko tied with Juan Valdez as favorite ad icon during Advertising Week in New York. There's little doubt the company's ads have attracted attention, but have they attracted customers?BackgroundFor nearly 60 years, Geico was an obscure niche marketer of automobile insurance. The company depended almost exclusively on direct mail to a carefully selected group of people with exceptional driving records. When it opened in 1936, its target audience was federal government employees and the top three grades of non-commissioned military officers. The company had 3,700 policyholders at the end of that first year.Little changed over the decades until 1994, when the company decided to expand its client base and hired The Martin Agency, an IPG shop in Richmond, Va., to produce its first national TV, radio and print ads to add to existing direct mail efforts. Marketing efforts increased again in 1996 when billionaire investor Warren Buffett, a Geico investor since 1951, bought the company and made it a subsidiary of Berkshire Hathaway. "He told us to keep doing what we were doing, just do it faster," says Ted Ward, Geico vp of marketing. To meet the mandate, ad spending nearly doubled each year from 1996 through 2000, jumping from $10 million in 1995 to $270 million in 2000. Spending jumped to $290 million in 2004, and the company has spent $210 million through the first seven months of this year, according to TNS Media Intelligence. StrategyMartin was charged with introducing a little-known company with a funny name (an abbreviation for Government Employees Insurance Co.) to a national audience and expanding its consumer base. The shop started by promoting Geico's unusual direct-to-consumer business model and introducing the enduring tagline, "15 minutes can save you 15 percent." The advertising needed to challenge the high level of inertia that people have towards insurance, says Mike Boyd, vp and managing supervisor on Geico at Martin. "They know it's something they should do, but they are hesistant to do that. You tend to want to keep the message simple." To help the ads stand out against competitors and give the company a "personality," the shop chose humor—something no other insurance company was doing at the time. "We wanted to show people that Geico is different," says Boyd. "They are not your parents' insurance company." CreativeIn the 11 years Martin has worked with Geico, the agency has produced more than 130 commercials for the insurance company. The agency began to carve out a unique personality for the brand with back-to-back 15-second commercials that highlighted the company's 24-hour customer service and convenient, quick ease of use. An early execution that stressed its customer service was still on air two years ago and featured a side-by-side comparison of coffee cups, the smaller cup representing the competition and the larger, Geico. Another series emphasized the direct-to-consumer message, such as a spot featuring Will & Grace's Sean Hayes as a man with three heads who can't agree, and a tagline that asked, "Tired of dealing with the middle man?"As the brand grew, Geico realized from consumers who called its 1-800 number and sent letters that people had difficulty pronouncing its name, Ward says. So to address that, Martin introducted the now-famous gecko character in 1999 in a 15-second ad with a press conference setting, during which the gecko asked people to stop calling him. An advertising icon was born, albeit accidentally. "It was a throwaway 15-second spot," Ward says. "It was an odd spot that didn't fit, but we thought it was funny." The gecko could have disappeared after the spot, if professional actors had not gone on strike that year. Because of the absence of talent, Geico asked Martin to produce more spots with the gecko. The company was inundated with calls and letters from people who wanted to see more of the lizard. "Now, he's an integral part of our company," Ward says. In what Martin describes as an effort to reach a wider demographic, it has added several "mini campaigns" in the past two years. The "Good News" spots appear to be about other products or TV programming, such as an execution featuring footage from the cartoon Speed Racer, until the tagline reveals, "I have good news. I just saved a bunch of money on my car insurance by switching to Geico." The company wanted to address the apathy drivers have toward changing car insurance, while continuing the humor and the theme that Geico costs less, says Steve Bassett, creative director for the work. Last year, Geico introduced a spoof of TV shows and a parody of political correctness with the three-part "Caveman" ads. The "Caveman" spots, intended to drive traffic to the Web site and reach younger drivers, promote the ease of ordering from Geico—it says it's "so easy a cave man could do it." The three spots show cavemen being offended by that statement. In the first spot, the soundman for the ad is a caveman who throws down his equipment and leaves the set after the spokesman makes the statement. In the second, two cavemen in a nice apartment see the ad and are outraged. In the final spot, the spokesman takes the cavemen to dinner and apologizes for insulting them. "Seriously, we apologize. We had no idea you guys were still around," he says. "Next time, maybe do a little research," one of them responds. To further the company's reach with young drivers, Geico launched an Internet campaign last month that invites people to produce 15-second ads to post on www.goldengecko.com. The campaign is designed to appeal to people between the ages of 18 and 34. All the short films have to be funny and use the gecko."We've never done anything like this before, but we were looking for new possibilities to reach a young demographic," says Jack Johnson, a business analyst for Geico.ResultsGeico is privately owned and does not release sales numbers, but other sources indicate the company's increase in advertising has produced a substantial rise in sales. Geico was ranked the seventh-largest insurer in 1996; now, it is ranked fourth. In the past five years, it has added more than 2 million policyholders with annual growth rates reaching 24 percent some years. The company's sales have steadily increased: $5.6 billion in 2000, $6.1 billion in 2001, $6.7 billion in 2002 and $7.8 billion in 2003, according to Hoover's. Total sales for 2004 are not available. Since hiring Martin, the number of premiums the company has written has increased annually. In the three years before Martin, Geico wrote about 26,000 premiums annually. That number jumped in 1994 to 39,570 and in 1995 to 69,600. By 2000, Geico wrote 537,900 premiums. Last year, the number had increased to 674,000 premiums, according to A.M. Best reports.Analysts who follow the insurance industry credit Geico with changing the way insurance companies market their products. They advertise more than their competitors and have transformed a traditionally boring category, the analysts say. "Geico is spicing it up, and other companies are having to respond," says Peter van Aartrijk, managing director of The van Aartrijk Group, a consulting firm in Springfield, Va., that helps insurance companies communicate with potential customers. "Geico is exponentially ahead of its competitors in this category."Records from TNS Media Intelligence show that Progressive began increasing its ad budget after Geico did. In 1996, Progressive spent just $3 million on advertising, compared to Geico's $9 million. Progressive increased its spending from $11 million in 1997 to $102 million in 2000. However, Geico has continued to outspend Progressive each year.Robert Hartwig, chief economist for the Insurance Information Institute in Washington, says Geico's ads have accomplished something special in the industry. "When your advertising has become part of the vernacular, you have hit a home run," he says.

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Does Geico's Gecko Sell Insurance?

Jim Lovel

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