Company Case Allstate: Bringing Mayhem to the Auto Insurance Advertising Wars In the spring of 1950,...

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 be- fore 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. Shortly thereafter, 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 com- forting 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, the company eventually fell into the same routine as the rest of the insurance industry. Big auto insurance companies were spending modestly on sleepy ad campaigns featuring touchy-feely, reassur- ing 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 ap- pearance of the now-iconic GEICO Gecko, backed by a big budget, 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:GEICOgottheautoinsuranceadvertisingwarsrollingwhen it was acquired by billionaire Warren Buffet’s Berkshire Hathaway company 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 a stack of 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 previ- ously sleepy insurance industry and its staid brands.
• progressive: Following GEICO’s lead, Progressive created its own perky and endearing personality—Flo. Progressive created the ever-upbeat, ruby-lipped sales clerk 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 as- sists people when they are ready to shop. Progressive later intro- duced a complementary campaign 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 have pitched 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 way back 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 cam- paign’s goal—to convince consumers that they still need the ser- vices of one of State Farms’ 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. In the wake of the Gecko and Flo, Allstate had lost market share for two years run- ning, even with Haysbert’s presence as company pitchman. The brand needed its own over-the-top personality. So Allstate tapped ad agency Leo Burnett to bring mayhem to life—literally. With the new creepy Mayhem character played by actor Dean Winters, All- state 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. “We knew we needed . . . a loud thunderclap to tell people that we cared about them,” said Lisa Cochrane, senior VP of marketing at Allstate. “Mayhem is there to change the conversation, to disrupt the commoditization of insurance, and to provide you with something to think about to make sure that you have the right coverage.” A Leo Burnett executive put it more bluntly—“We wanted to kick Flo’s ass.”
Mayhem portrays all of the unlikely events that can lead to a major auto insurance claim. He first appeared as a tree branch falling on a car, then as an emotionally compromised teenager ramming her pink SUV into an unsuspecting vehicle. According to Cochrane, after only these two early ads, “it made an impres- sion.” The possible situations for Mayhem are endless. As a deer, Mayhem 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 “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 was not only well-received by consum- ers, it earned critical acclaim, winning approximately 80 advertising awards in the first year. But perhaps a bigger indication of the campaign’s impact is the extent to which the character has be- come ingrained in pop culture. Although Mayhem has only a little more than a third of Flo’s 4.9 million Facebook fans, he commands an engagement score roughly five 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 the reassuring voice of 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 cous- in, Mala Suerte (bad luck), aimed at Hispanic consumers. Mayhem has now been causing mayhem in the advertising industry for the past six years via more than 25 TV ads as well as numerous radio spots, billboard placements, and internet banner ads.
To extend 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. As a recent football season dawned, 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. Also driving traffic to its social media sites was the “#MayhemSale” installment, a spot in which unsuspecting football fans Matt and Shannon had their house raided by a so- cial media–savvy burglar. The spot drove significant web traffic and won a gold ADDY.
With all this activity and positive public response, Allstate seems to have found a weapon for maintaining its market posi- tion. 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 spending. Today, no less than 11 car insurance brands are running national TV advertis- ing 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. It also creates mayhem for the insurers.
The intense competition, big budgets, and focus on con- sumer advertising have kept industry market share dynamic. In fact, during the past last year, GEICO moved into the number-two spot behind State Farm and is pulling away with a 10.8 percent share of the auto insurance market to Allstate’s 10.0 percent. Although Allstate has grown its auto insurance business in recent years, GEICO’s growth has been consistently stronger. With that development, Allstate is left to reconsider the value that it is getting out of its advertising in- vestments and just how it might slow down GEICO and retake its number-two market position.
Questions for Discussion
15-18 Why has Allstate’s “good hands” slogan withstood the test of time to become advertising’s longest-running slogan?
15-19 Analyze Allstate’s Mayhem ads based on the process of creating an advertising message as outlined in the text (for the latest Mayhem ads, check mayhem-is-everywhere.aspx).
15-20 Discuss issues of selecting advertising media for the Mayhem campaign. How might this process differ from that of campaigns for other companies?
15-21 Based on the information in this case, how might Allstate measure the effectiveness of the Mayhem campaign?
15-22 Has the Mayhem campaign been effective? Support your answer.

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Sign In INNOVATION Deep Change: How Operational Innovation Can Transform Your Company by Michael Hammer From...
Sign In INNOVATION Deep Change: How Operational Innovation Can Transform Your Company by Michael Hammer From the April 2004 Issue Save Share 8.95 In 1991, Progressive Insurance, an automobile insurer based in Mayfield Village, Ohio, had approximately $1.3 billion in sales. By 2002, that figure had grown to $9.5 billion. What fashionable strategies did Progressive employ to achieve sevenfold growth in just over a decade? Was it positioned in a high-growth industry? Hardly. Auto insurance is a mature, 100-year-old industry...
Case stydy - customers Businesses of all sizes are finding Facebook, Twitter, and other social media...
Case stydy - customers Businesses of all sizes are finding Facebook, Twitter, and other social media to be powerful tools for engaging customers, amplifying product messages, discovering trends and influencers, building brand awareness, and taking action on customer requests and recommendations. Half of all Twitter users recommend products in their tweets. About 1.6 billion people use Facebook, and more than 30 million businesses have active brand pages, enabling users to interact with the brand through blogs, comment pages, contests, and...
Please answer the following Case analysis questions 1-How is New Balance performing compared to its primary...
Please answer the following Case analysis questions 1-How is New Balance performing compared to its primary rivals? How will the acquisition of Reebok by Adidas impact the structure of the athletic shoe industry? Is this likely to be favorable or unfavorable for New Balance? 2- What issues does New Balance management need to address? 3-What recommendations would you make to New Balance Management? What does New Balance need to do to continue to be successful? Should management continue to invest...
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question