Company Case Allstate: Bringing Mayhem to the Auto Insurance Advertising Wars In the spring of 1950, the teenage daughter of Allstate general sales manager Davis Ellis was stricken with hepatitis shortly before she was to graduate from high school. The worried executive arrived home from work one evening just as his wife returned from the hospital where their daughter was admitted. As he met her at the front door, his wife reported, “The hospital said not to worry . . . we’re in good hands with the doctor.” Later that year, Ellis became part of a team charged with developing the first major national advertising campaign for the Allstate Insurance Company. As the team discussed the message they wanted the brand to convey, Ellis recalled his wife’s “we’re in good hands” remark and how good it made him feel. The phrase projected security, reassurance, and responsibility, exactly the traits the team wanted customers to associate with Allstate. Thus was born the slogan, “You’re in Good Hands with Allstate.” By the early 2000s, a study by Northwestern University found that the long-standing Allstate catchphrase was the most recognized slogan in the United States. For years, Allstate held the position as the second-largest personal lines insurer, trailing only State Farm. In 2003, Allstate hired actor Dennis Haysbert as the brand’s spokesperson. After starring in dozens of Allstate commercials—each culminating with the question, “Are you in good hands?—Haysbert’s deep voice became a comforting familiarity to television viewers. Today, the ‘Good Hands’ slogan is the oldest surviving slogan for a paid campaign. An Advertising Shakeup Although Allstate’s advertising served it well for decades, by the late 1990s, the company had fallen into the same routine as the rest of its industry. Big auto insurance companies were spending modestly on sleepy ad campaigns featuring touchy-feely, reassuring messages such as Allstate’s “You’re in good hands,” or State Farm’s “Like a good neighbor.” In an industry characterized by low budgets and even lower-key ads, no brand’s marketing stood out. However, the advertising serenity ended with the first appearance of the now-iconic GEICO Gecko in 1999, backed by a big budget and pitching direct sales and low prices. That single GEICO ad campaign sparked a frenzy of ad spending and creativity in the insurance industry that quickly escalated into a full-scale advertising war. Once-conservative car insurance ads became creative showstoppers, as edgy and creative as ads found in any industry. Here are a few highlights: • GEICO. GEICO got the auto insurance advertising wars rolling when it was acquired by billionaire Warren Buffett’s Berkshire Hathaway Inc. in 1996 and given a blank check to aggressively increase market share. That led to an onslaught of advertising, the likes of which the auto insurance industry had never seen. A string of creative GEICO campaigns featured everything from civilized cavemen to cash with googly eyes. But it was the GEICO Gecko that had the biggest impact. With his signature English accent, the Gecko made GEICO’s simple message clear—”15 minutes can save you 15 percent or more on car insurance.” More than any other industry spokesperson, the Gecko lent personality and pizzazz to the previously sleepy insurance industry and its staid brands. • Progressive. Following GEICO’s lead, in 2008 Progressive created its own endearing personality—perky sales clerk Flo. Progressive created the ever-upbeat, ruby-lipped Flo to help convince consumers who are already in the market that they can get an even better price deal from Progressive. Flo helped put Progressive hot on the heels of rising GEICO as the fourth largest auto insurer. Flo assists people when they are ready to shop. Progressive later introduced complementary campaigns featuring the Messenger—the mustachioed, leather-jacket-wearing stranger—and Brad—the easy-going, self-assured man with an absurdly funny sense of self-esteem who refers to himself only in the third person. Like the GEICO Gecko, Flo, the Messenger, and Brad pitch price savings as their primary appeal. • State Farm. As GEICO and Progressive shook up the industry with their direct, low-price, high-profile selling models, conventional agent-based auto insurers were forced to respond. Ninety-year-old State Farm, the long-time industry leader, was hardly a stranger to advertising. Like Allstate, State Farm had a long-standing, widely recognized slogan—”Like a good neighbor, State Farm is there”—a jingle written by pop music icon Barry Manilow in 1971. Sensing the threat from the rising newcomers, State Farm fought back vigorously with a new campaign centered on its enduring jingle. In its “magic jingle” campaign, State Farm agents magically appear when summoned with the jingle by young drivers in trouble—including the likes of LeBron James. The campaign’s goal—to convince consumers that they still need the services of one of State Farm’s 18,000 agents. To help make the point more forcefully, State Farm doubled its ad budget. ‘Good Hands’ Meets Mayhem Amid this surge in competition and advertising creativity, Allstate struggled just to hold its own, let alone to grow. Entering 2010, even with Haysbert’s presence as company pitchman, Allstate had lost market share for two years running. The brand needed its own over-the-top personality. So Allstate brought mayhem to life—literally. With the new creepy Mayhem character played by actor Dean Winters, Allstate created a villainous counterpart to Haysbert’s soothing hero. The campaign’s goal: to convince consumers that there is more to buying car insurance than just price. Put more bluntly, says an ad agency executive involved with the campaign, “We wanted to kick Flo’s ass.” Mayhem portrays all of the unlikely events that can lead to a major auto insurance claim. As a deer, he jumps into the path of a moving car at night, “because that’s what we deer do.” As a torrential downpour, he loves leaky sunroofs. As a malfunctioning GPS, he sends a driver swerving into another car. As snow, he weighs down the roof of a garage until it collapses, smashing the car within. Each quirky ad ends with the statement and question, “If you have cut-rate insurance, you could be paying for this yourself. Are you in good hands?” Through such clever ads, Allstate’s creative and award-winning “Mayhem. It’s Everywhere.” campaign has put a contemporary, attention-grabbing twist on the company’s long-standing “You’re in good hands with Allstate” slogan, helping to position the brand as a superior alternative to price-oriented competitors. Even with its long-standing “Good Hands” campaign, Allstate needed something unconventional. In fact, mayhem didn’t just describe the Allstate campaign—it characterized the entire world of auto insurance advertising. The Mayhem campaign quickly won many top ad industry awards. But perhaps a bigger indication of the campaign’s impact is the extent to which the character has become ingrained in the pop culture. Although Mayhem has only about a third of Flo’s 5.4 million Facebook fans, he commands an engagement score nearly eight times that of Progressive’s perky spokeswoman. And when the character’s creator recently saw a Mayhem-costumed trick-or-treater walking down her street, she called it “a career highlight that gave her chills.” More than just popular, Mayhem is right on message. At the end of each ad, he warns, “If you’ve got cut-rate insurance, you could be paying for this yourself.” Then a reassuring Haysbert provides the solution: “Are you in good hands?” he asks. “Get Allstate. You can save money and be better protected from Mayhem.” This “worth-paying-a-little-more” message puts Allstate back at the top in terms of customer value. Mayhem Redux Allstate’s ads were not only creative, they were effective. After a few years of Mayhem ads complementing Haysbert’s Good Hands ads, Allstate’s unaided brand awareness of 74 percent trailed State Farm’s by only a slight margin, despite State Farm’s 60 percent greater ad spending. And for a time, the Mayhem campaign halted Allstate’s market share slide. According to Allstate CEO Thomas Wilson, “It’s working. If you look at our quotes and our new business, it’s way up.” All this prompted Allstate to extend the campaign, including the introduction of Mayhem’s Hispanic cousin, Mala Suerte (bad luck), aimed at Hispanic consumers. In extending the campaign, Allstate took Mayhem to the next level, giving the character his own Twitter account. Seemingly late to the Twitter party, Allstate executives indicated that the delay was intentional. “We’ve been very careful about not overdoing Mayhem and not overexposing [him],” said Jennifer Egeland, Allstate’s director of advertising. “[We wanted] the right idea for launching him in the Twitter space.” The right idea was to conform to Mayhem’s persona. At the beginning of the most recent football season, Mayhem polled followers about what he should portray in the next ad—a charcoal grill or a cheap bungee cord. Consumers voted for the cord. Mayhem disobeyed, tweeting: “Too bad I’m a tailgate grill. Who’s got a light?” He followed that up with Vine videos of a car set on fire from a grill mishap. Allstate then released two new Mayhem ads—”Tailgate Grill Fire” and “Cheap Bungee Cord,” making everyone happy. Similar antics ensued for the 2014 March Madness kickoff of the NCAA playoffs, helping drive more than 61,000 followers to the @Mayhem Twitter account. With all this activity and public response, Allstate thought it had a surefire weapon for maintaining its market position. But the all-out auto insurance advertising war illustrates just how critical it is to stay one step ahead of the competition. For the most recent year, Allstate increased its ad budget to $887 million, outdoing even market leader State Farm’s $802 million effort. However, both companies were eclipsed by GEICO’s eye-popping $1.1 billion advertising spend. Today, no less than 11 car insurance brands are running national TV advertising campaigns. Combined, the auto insurers now spend more than $6 billion each year to get their messages out. That makes things confusing for consumers, who struggle under the deluge of clever ads for the respective brands. The intense competition, big budgets, and focus on consumer advertising has kept industry market share dynamic. In fact, as last year’s numbers rolled in, GEICO had moved to the number two spot behind State Farm with $18.57 billion in earned premiums, in a virtual dead heat with Allstate’s $18.45 billion take. That represented a 3 percent increase for Allstate, which had continued to grow in recent years. But GEICO’s growth has been consistently stronger, increasing 11 percent year-over-year. With that development, Allstate was left to reconsider the value it was getting out of its advertising investments, and just how it might slow GEICO down and retake its number two market position. Questions: 1. what is the short term implementation 2. what is the long term implementation from the case 3. What are the specific metrics to be used to track plan performance?? 4. identify correcting the weakest link in the case plan chain of activities?? 5. what is the executive summary
The post Company Case Allstate: Bringing Mayhem to the Auto Insurance Advertising Wars In the spring of 1950, the teenage daughter of Allstate general sales manager Davis Ellis was stricken with hepatitis shortly before she was to graduate from high school. appeared first on Versed Writers.
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