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Muscling Past Mayhem: Geico Rides Giant Ad Budget Past Allstate

Consistent Messaging, Relentless Spending Allow Insurer to Move Into No. 2 Position

By Published on . 2

Geico is proving that in advertising, you often get what you pay for. Backed by billionaire Warren Buffett, the company is poised to ride its massive ad budget past Allstate and into second place in the ultra-competitive car-insurance market.

Allstate Mayhem Is Coming
Allstate Mayhem Is Coming

It has already passed Allstate for the first quarter, writing $4.72 billion in auto direct premiums, compared with Allstate's $4.53 billion, according to business-data company SNL Financial. It's the first time Geico has surged ahead of its rival in a single reporting period.

For the year, Allstate is still ahead of Geico -- barely. The insurer, whose advertising includes the "Mayhem" campaign, kept the No. 2 spot in auto insurance for the year ended March 31 by a narrow margin, with $17.65 billion in premiums to Geico's $17.16 billion, according to SNL. State Farm remains the leader, with $8.43 billion in direct premiums in the first quarter.

Geico is waiting for full-year numbers to come in before it celebrates. But if current trends hold, the company expects to stay No. 2, Chief Marketing Officer Ted Ward said. Analysts said they agree. "It's almost inevitable," said Meyer Shields, managing director-equity research in insurance at Keefe, Bruyette & Woods.

The move is a testament to how Geico has used advertising to evolve from a bit player to a behemoth. The key moment came in 1996, when Mr. Buffett made Geico a subsidiary of Berkshire Hathaway. He famously told the company that money was no object when it came to growing the business. At the time, Geico controlled less than 3% of the market; in 2012, the marketer's share stood at more than 9%, according to the Insurance Information Institute.

The rise has been fueled by Geico's ever-expanding and seemingly inexhaustible media budget. In 2012, Geico ranked as the fifth-most-advertised megabrand across all industries, with $921 million in measured-media spending, according to the Ad Age DataCenter. That's a meteoric rise from 87th in 2003.

Geico has not only spent more than everyone else in the category, it has spent wisely, relentlessly pushing a savings message in almost every ad across multiple campaigns, which have starred characters including cavemen, pigs and the gecko. "We're trying to stay ever-present in the consumer's mind but not bore them and have them just tune out yet another Geico ad," Mr. Ward said.

In its latest spots, the insurer even pokes a little fun at itself and its well-worn "15 minutes could save you 15% or more" tagline. Ads in the "Did You Know?" campaign end with the line: "15 minutes could save you ... well, you know." Geico's longtime agency partners are Martin Agency for creative and Horizon Media for media.

The messaging was revolutionary when it hit the airwaves. "It is a simple, clean pitch," said Jeremy Bowler, senior director-global insurance at J.D. Power. "They clearly staked out their position and have maintained that position."

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