Marketing Car Insurance

Learn how some companies successfully market car insurance ...

A serious man driving in a parking lot looks at his phone. He glances back up to the camera.

“I'm a teenage girl. My BFF just texted me that she kissed Johnny. That's a problem, because I like Johnny. Now, I'm emotionally compromised.”

The man slams into a parked car before driving off. “OMG. Becky's not even hot,” the grown man exclaims, barely acknowledging the accident.

The lesson here? Buy Allstate Insurance to better protect yourself from “mayhem” like teenage drivers (even those played on television by grown men). Auto insurance companies constantly compete with each other to create the most over-the-top and unexpected commercials. Even while discussing serious topics like car accidents, car insurance companies must engage their audiences in new and novel ways to distinguish themselves from the competition.

Since the need for car insurance is a serious matter, it’s a wonder that many of the commercials are designed to be humorous and silly. However, there’s a psychology behind the humor and shocking ads. Companies that offer services like car insurance must have strong branding campaigns that stick in the minds of consumers.

Branding concepts and methods are ingrained in an understanding of consumer psychology. By understanding what really captures the minds (and wallets) of their consumers, car insurance companies improve customer retention rates and pull in new business through effective marketing techniques.

The Psychology of Marketing Car Insurance

Brand and CommercialExplanation of AdvertisementPsychological Response Elicited
Geico’s “Gecko feels uncomfortable” The gecko and a Geico worker are at a convention and the worker is explaining all of the “gecko” promotions including gecko bobble head dolls they are giving away. The gecko is uncomfortable about all the attention and doesn’t want to overdo it. The worker says they won’t overdo it as a large inflatable gecko sails into the room. Humor and name recognition: This commercial is part of a large branding effort that uses humor to make people remember Geico. Viewers laugh at all the humorous Geico commercials and may even share with their friends. People remember the commercial and the Geico brand.
Liberty Mutual’s “Humans” A series of car crashes and accidents are shown. A man talks about how accidents are inevitable and Liberty Mutual will help protect you. Fear of an accident: This commercial makes the viewer cautious of texting and driving. Everyone who drives and has a cell phone can relate to the situation. People will remember the fear and the commercial, and want to be prepared with insurance.
Progressive’s “Bill and Tom are amazed by Merry-go-round” The commercial is Progressive’s Flo standing next to “Bill” and “Tom” who are competitors. They are watching a merry-go-round and discussing all of the benefits of getting Progressive insurance. “Bill” and “Tom” are impressed. Saving money and gaining benefits: People learn about all the money they can save with Progressive. Call Progressive if you want a lot of benefits at a low price.

Selling Car Insurance

Selling car insurance is different from selling physical goods. Most people don’t shop for car insurance on a regular basis, which means they aren't knowledgeable about the qualities of the services available. Even still, many of the services insurance companies offer are very similar to each other, meaning companies must distinguish themselves through creative advertising campaigns

Most customers deciding to shop for car insurance start by exploring the short list of brand names they've stored in their memory. According to marketing information services firm J.D. Power and associates, the average shopper can only recall four brand names off the top of his or her head. Companies who wish to be on this list must engage in memorable, effective branding strategies, which is why so many of their commercials present multiple outrageous situations to a viewer.

Consumer Statistics

  • There are approximately 187 million insured privately owned vehicles in the United States.
  • 11% of consumers switch their auto insurance policy every year.
  • 20% of consumers shop for new car insurance, but don’t switch.

Source: J.D. Power and Associates

Tactics used to appeal to customers

The main three tactics used to grab attention are:

  • Humor
  • Fear
  • Saving Money

In the past, humor has provided an excellent way for auto insurance companies to remain in the minds of consumers. Geico has effectively used humor as a way to connect with customers and become a household name. Using a “gecko” in the commercials allowed Geico to build a brand identity with name recognition, since Geico is similar to gecko. The witty and whimsical approach continued with the “so easy a caveman can do it” commercials, that proved to be successful and became a short-lived sitcom.

According to a study conducted by Zhang and Zinkhan at the University of Houston about humor in television advertising, “humor increases ad information recall and positively affects brand attitude.” The cheerful approach works because the comedic aspect is appealing to people. Consumers are bombarded with advertisements and other information on a constant basis, and a campaign that is funny will linger in their minds. This is especially important for companies who provide a service where consumers can’t directly compare physical goods.

When Humor Goes Wrong

Allstate put out a “funny” press release that showed the correlation between a person’s zodiac sign and the amount of car accidents they had. Unfortunately, people took the press release seriously and it created a public relations mess for the company. Allstate was forced to retract their press release and apologize for joking about something as serious as car accidents.

However, other companies like Liberty Mutual seem to find success with a more serious approach. Ace Metrix, a television analytics company, deemed them the “Most Effective Auto Insurer of 2001” based on their recent campaign promoting no texting while driving. Liberty Mutual's initiative shows that even serious car insurance ads can be effective if they deliver a relevant message to a wide audience.

Liberty Mutual also capitalizes on the fears of consumers and auto accidents. Commercials that include an exploding car or a woman saving a man from walking into oncoming traffic exploit people’s fears of accidents. They make consumers want to be protected and prepared in case of emergency.

Other companies like Progressive play on people’s need for saving money. Their advertisements feature “Flo,” a friendly Progressive worker who somewhat humorously shows customers how to save money by switching to Progressive insurance. Advertisements such as these make people feel empowered to choose what they want in a service, while saving money at the same time.

Humor in Advertising: Is it enough?

Humorous ads have long been used by advertisers to gain the attention of the masses. Marketers compete to create the newest and most off-the-wall commercial to wow viewers.

However, studies show that just having a funny ad may not be effective in driving purchases. They may make your product or company seem more likeable, but will not help your bottom line.

According to a study conducted by Ace Metrix, a humorous ad needs to have relevance alongside the funny. Advertisements must have some sort of substance, and use humor as a supplement in order for it to be effective.

The funny ad also needs to be relatable. A commercial featuring a man who likes his bald eagles with wigs is funny, but isn’t highly relatable. Huggie’s ad where the baby wets the whole room is funny and also has broad relevance to many people.

Having a balance between comedy and information is the key to success. Making people laugh about something they can relate to, while also giving them the information they need to purchase is ideal.

The Psychology of Marketing

The study of consumers and their purchasing behavior is ongoing. As marketers adapt to new research and innovations in psychology and marketing, their campaigns will be more successful in meeting the needs of consumers. To learn more about how consumer psychology affects the marketing of different products, click here.

Related Careers in the Field

Consumer Insight Manager
This position is heavily involved with market research and consumer insight. Consumer insight managers are responsible for researching what consumers want and how to communicate that to the entire marketing team. Learn more about consumer insight managers here.

Market Research Analyst
Market research analysts examine existing data and gather new information about customer behavior and overall business trends to aid in the creation of an effective marketing strategy. To learn more about market research analysts, click here.

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