Allstate beefs up its internal agency as more work goes in-house

Allstate, known for putting consumers “in good hands,” is now putting its advertising in those same hands. The insurance giant has formed a 200-person internal creative team–with plans to expand it–as it takes more marketing in-house. The move puts more pressure on its external agencies such as Leo Burnett, which has held the account for 62 years. Leading the in-house drive is longtime agency executive David Hernandez, who recently left Ogilvy to join Allstate as its first-ever chief creative officer, tasked with creating content on a variety of advertising channels that the brand can deliver in real-time. Hernandez, who was Ogilvy's Chicago-based executive creative director, is working alongside Elizabeth Brady, Allstate's chief marketing officer who joined the company last year from kitchen and bath fixtures maker Kohler. Brady, who also spent time at agencies such as Publicis and BBDO, is known for building Kohler's in-house agency into an award-winning shop with a roughly 150-person staff. “Adding David, and the chief creative officer [role] to the team is a huge step forward for us,” Brady says. “We’re able to take the narrative we want to talk about in terms of protection and put it in our own hands and start crafting that story.” But the move by the major advertiser marks yet another setback for the agency industry, whose fees have come under pressure as more big marketers move work in-house. In a report last year, the Association of National Advertisers stated that 78 percent of its members have in-house agencies. In the insurance category, several-big spending brands are relying on in-house teams. Progressive, which has long worked with Arnold, also relies heavily on its in-house agency, Ninety6. Similarly, Liberty Mutual told Business Insider earlier this year that it slashed its agency costs by 30 percent because it took more work in-house. The insurer works with Omnicom Group-owned Goodby Silverstein & Partners. Allstate's relationship with Leo Burnett was already under pressure as the insurance marketer broadened its roster to include other specialty shops. Last year, an Allstate spokeswoman confirmed Leo Burnett was agency-of-record, but noted that the company’s roster also included shops like 72andSunny. Brady says that Allstate is still working with both Leo Burnett and 72andSunny and that the brand works with a lot of outside agencies on a “project basis.” When asked if Allstate still uses the AOR label to describe its relationship with Leo Burnett, Brady said, “I think of our agencies as partners—we have a number of different partners.” She adds: “We’re in a more dynamic marketing, advertising, content-creating market today and we would be smart as all brands are smart to use the strength where you need it.” She says it is too early to specify how much work will be created internally versus externally. Leo Burnett in a statement said: "Throughout our 62-year partnership, Leo Burnett has always supported the changing needs of Allstate. 2019 is no different and we look forward to continuing our work together." The changes come as Allstate is trying to broaden its reputation beyond the home, life and automotive insurance it is known for into a full spectrum of protection options. The company, which already owns digital insurance Esurance, which it acquired in 2011, last year bought InfoArmor, a provider of employee identity insurance. Allstate bought SquareTrade, which offers protection for electronic devices, two years ago. Allstate also created its own car-sharing insurance division, Drift, last year. Editor's Picks Walmart CMO Messing leaves as former Target marketer Francis assumes added duties What Hispanic Americans think when presidential candidates speak in Spanish The Top 5 creative brand ideas you need to know about right now CMO turnover has stabilized but minority hiring still lags “We’re broadening to be a holistic protection company,” says Brady. “That’s why we’re making significant investments in creative, marketing, innovation and communications, ensuring we have the right talent in place to be competitive in a dynamic marketplace.” The internal creative department currently employs 200 people, a number Allstate expects to increase in the coming months. Hernandez says Allstate is currently in discussion on a name for its internal shop, a process he likens to naming a baby. That follows the trend of other marketers, which have sought to give their in-house shops their own identity. New work is expected to debut in the fourth quarter. “We will have a hand in anything consumer-facing,” says Hernandez. Leo Burnett is known for creating the insurer's "Mayhem," campaign, which debuted in 2010 and emerged as a pop-culture force. Allstate runs Mayhem alongside a more staid campaign featuring long-time spokesman Dennis Haysbert, which uses the long-running "good hands" tagline. One recent commercial ends with the question, "Are you in good hands?" Brady declined to comment on how Allstate’s marketing budget for this year compares with last year. In 2018, Allstate spent $397 million on measured media in the U.S. for its namesake brand, a 41 percent increase over 2017, according to Ad Age’s Datacenter. In the second quarter, Allstate generated more than $11.1 billion in revenue, a 10 percent rise over the year-earlier period, along with net income of $821 million, a 21 percent increase from last year. Allstate commanded 8.8 percent share of the property and casualty insurance market last year, a slight drop from the 9.5 percent market share it held five years ago, according to the Insurance Information Institute. By comparison, rival State Farm holds 17.3 percent market share. Contributing: E.J. Schultz

Allstate beefs up its internal agency as more work goes in-house

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