Sunday, June 24, 2007

Geico's Big Spending Pays Off

Ad Age reports Geico getting ahead with big advertisement spending. The auto insurer with the multiple spokescharacters has increased its ad spending a whopping 75% since 2004. Geico, with its cavemen and gecko, has been the main driver of this skyrocketing spending. The category's next-biggest spender is Progressive, which spent $265 million in 2006, up from $201 million in 2004, according to TNS Media Intelligence.

As for brand image, the study says, "Geico occupies unique terrain in the auto-insurance space as a relatively inexpensive carrier that is fun. State Farm and Allstate, on the other hand, occupy more traditional territory (expensive and serious)." I find this strategy similar to WAMU (Washington Mutual). It is trying the shed the image of being a stodgy bank.

The trend graph below shows buzz levels for Geico, State Farm and Progressive in the blogosphere. Overall, Geico receives the most buzz followed by state farm. Geico receives the most discussion due to consumers frequently mentioning its commercials featuring the gecko and caveman.

Personally, I have experience with State Farm, Progressive and Geico. I was with State Farm during my teens and early twenties. I was involved in one accident (not my fault) but found myself covering the deductible since the person who rear-ended me was uninsured. I had to contact a local news station to report on the issue before I getting my deductible back from State Farm. Afterwards, I switched to Progressive. I feel their rates are very competitive. Additionally, I am able to contact them 24-7. My wife and I thought about switching car insurance companies recently. And of course, Geico to was "top of mind." Unfortunately, we did not go with them since they could not save us any money. I am still with Progressive.

I feel Geico's advertising is effective. As I mentioned, they were "top of mind" when I first decided to switch car insurance companies. I would have went with them had their rates been more competitive.

I would really advise Geico to make sure it really can save each consumer hundreds of dollars before getting them to inquire. Otherwise, Geico may end up with more people complaining about them online rather than blogging and posting messages about its commercials.

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