Geico’s Marketing Strategy Through Advertisements

Geico’s success as an insurance company has come from offering consumers independence and low prices, as well as rolling out effective advertising campaigns that highlight savings. Chief among the forces behind Geico’s success is the insurer’s innovative and user-friendly initiatives. Geico’s advertising is on the light and funny side, standing out in contrast with competitors, netting them a significant portion of the market share of the U.S. insurance market.

The Pre-Roll Advertising Model 

Geico ads are known for their creativity. In addition to traditional advertising on television channels, Geico uses “pre-roll” ads that air directly before user-selected content, such as on Hulu. The ads all begin and end within the five-second time limit someone is required to watch before they can skip to the content. The ads also emphasize the focus on “savings” versus “service.” As Forbes pointed out, Geico’s success has come from offering consumers independence and relatively low prices. Geico’s famous slogan, “Fifteen minutes could save you 15% or more on car insurance,” said by its gecko mascot, is now a part of American culture. In 2020, it announced a switch to a new slogan: “GEICO: Real service, real savings.”

Advertising is critical for the primarily online insurance provider since it lacks the storefront presence of the brick-and-mortar model employed by its competitors such as Allstate and State Farm. The ads have been enormously successful since 2013. Geico’s “Unskippable” ads were named Ad Age’s “2016 Campaign of the Year” and also earned the Film Grand Prix at the Cannes Lions International Festival of Creativity. Geico’s positioning within its target segments – and laser focus on brand management – have helped it to ascend the ranks in the climb to the top spot according to a Bloomberg article titled “Geico’s Silly Ads Are Working.”

Advertising as an Investment

Geico has invested widely in advertising as opposed to other expenditures. In an interview with Ad Age, Geico’s vice president of marketing, Ted Ward stated, “We are better off investing in technology than getting new marble floors and doors.” The thought is that by keeping costs down, Geico can then offer lower prices, which the foundation of their massive advertising. Also according to Ad Age, a large part of Geico’s marketing success is the result of its use of consumer data to dictate its advertising plans.

These enormous advertising budgets have not come without criticism. J. Robert Hunter of the Consumer Federation of America touched on Geico’s expenditures when speaking to Insurance Business. Regarding Geico’s ad budget he stated: “It drives rates up since every penny of the ads is built into the rates. Also, lobbying expenses and other such anti-consumer expenses are in the rates in all states except California.”

In the same article with Insurance Business, Robert Hartwig, president of the property/casualty trade group Insurance Information Institute (III) said that ad spending is only a small portion of a company’s budget. Hunter states that if ad spending rates continue to skyrocket, they will ultimately affect consumers. As Forbes points out, Geico has also stayed loyal to a market segment that values price more than paying for a traditional agent network model, and they will need to keep advertising costs in check to keep premiums in line with their business model.

Competition

Geico began its ambitious climb to become the top insurance giant when it became the second-largest auto insurer in the U.S. in 2014, and the Berkshire Hathaway (BRK.A)-owned auto insurer has continued to grow its market share ever since.

Today, State Farm Mutual still leads the overall insurance market in the U.S. with Berkshire Hathaway coming in second place.

The Bottom Line

Geico secured its place as an insurance juggernaut with its massive advertising campaigns and a focus on strategic target markets, in addition to being backed by one of the most dependable personalities in business, Warren Buffett. By keeping its costs significantly lower than its competitors, Geico has ensured its place among the top companies in the U.S.