Car-Insurance Brands Create Less Churn


U.S. auto insurance brands spent $5.7 billion on marketing last year in the U.S., nearly double what they spent just five years earlier. But they’re not getting as much bang for their buck as they did a couple of years ago.

Allstate, State Farm, Nationwide, Esurance, Farmers Insurance, Progressive and Geico are among the many car insurance brands that have mounted notable marketing campaigns over the last few years, almost all of them emphasizing the availability of deep discounts as an integral part of their positioning.

But except for Progressive and the charismatic Flo, and Geiko and its geeky gekko, which have picked up market share, car-insurance brands are becoming jaded entities to American consumers, according to J.D. Power & Associates.

“We didn’t see a commensurate increase in [market] churn” to match the industry’s advertising expenses last year, said JPD senior director Jeremy Bowler.[more]

Industry-wide, advertising expenditures increased by 12 percent in 2011 compared with 2010, Power said. But the auto-insurance shopping rate reached the lowest level in the last five years, with only 25 percent of insurance customers indicating they shopped for a new insurer in the past 12 months, down 8 percentage points from 2011.

Two things are to blame: Many consumers have squeezed all the discount they’re going to get out of their auto-insurance premiums by now, Bowler told brandchannel. And car insurance is a category that many shoppers like to forget about once they’re basically satisfied with their premium levels.

One way brands are fighting back is to tout “bundling” of car insurance with other types of coverage, such as State Farm’s current ad starring magician David Copperfield, and to diversify, such as in the recent Geico ads that have pitched other kinds of vehicle insurance, such as for motorcycles.

And the answer by Esurance, now owned by Allstate, has been to re-emphasize its low-cost roots as a carrier born online. Or, as the latest campaign (featuring a voice-over by actor John Krasinski) goes, “Esurance: Built to cost less.”