State Farm Sounding Like Its Rivals to Stay on Top of Them

Auto Insurance Market Leader Aims to Show Its Size and Value by Persuading Consumers to Consult Their Friends

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CHICAGO ( -- Geico outguns it by more than double when it comes to auto insurance ad spending. Progressive outspends it by nearly 40%. And Allstate matches its outlays on auto-insurance ads.

DOUBLE-CHECK: State Farm's new campaign attempts to get consumers to compare prices without naming names.
DOUBLE-CHECK: State Farm's new campaign attempts to get consumers to compare prices without naming names.
Yet State Farm -- the country's leading auto insurer -- gained market share last year despite raising its rates and dwelling as a distant third in ad spending in the category. When rival Allstate raised rates, its policy sales declined, but after State Farm did the same, its share actually advanced due to a small increase (less than 1%) in policies sold during a down market.

Now State Farm is moving to emphasize both its size and competitive rates in new advertising that co-opts some smaller rivals' messaging -- and ride the word-of-mouth-marketing benefits its growing scale affords by urging people to talk to their friends and neighbors who are customers.

State Farm has touched on value messages before in its ads, which traditionally have emphasized service under the "Like a Good Neighbor" tagline. But the new work is more directly comparative without naming names. It shows setups like men mistaking lipstick for Chapstick to encourage customers that "it's good to double-check" for discounts. In other new spots, it introduces agents who like telling people they can save up to 40% with discounts, but that they should also check with their neighbors -- who are likely State Farm clients -- first.

Mark Gibson, State Farm's assistant VP-advertising, said the goal is to confront the "sea of sameness" of pricing claims in the category by emphasizing that State Farm has competitive prices and an industry-leading market share for a reason.

Familiar pitch
The new campaign is the first creative effort for the brand from DraftFCB and contains copy such as, "Calling State Farm can get you discounts of up to 40%." If that sounds familiar, you're probably thinking of the Geico gecko's claim that "15 minutes can save you 15% or more on car insurance."

Or maybe the campaign's web-centered effort to impress consumers with an exhaustive list of available discounts reminds you of Progressive's ads in which the company's large-name-tagged spokeswoman "Flo" cheerily runs through ... an exhaustive list of available discounts.

Usually when a category leader starts cribbing rivals' talking points it's a sign that competitors are gaining share at its expense. Not this time.

State Farm's share of personal auto premiums written has grown over the last three years and notched 18.1% last year from 17.5% in 2007, according to the Insurance Information Institute. Geico (8.4%) and Progressive (7.4%) also gained ground during that time, but mostly at the expense of Allstate (which slipped to 10.7% from 11.3% during that period) and an ocean of smaller insurers.

Analysts said State Farm has been able to offer more competitive rates than Allstate because, unlike its rival, it isn't publicly traded and therefore has the luxury of letting its near-term results slip in a bid to hold market share. Allstate's "underwriting results have gotten worse," notes insurance industry analyst Mayer Shields of Baltimore-based Stifel Nicolaus.

Customer service
Their spending, however, has remained equal. Both State Farm and Allstate spent $178 million apiece on pure auto ads in 2009, according to Kantar Media (see chart), compared to $477 million by Geico and $290 million by Progressive. The totals do not include general branding work or ads for the non-auto lines of coverage that State Farm and Allstate offer.

Auto insurance

SHELLING OUT: Auto insurers' ad spending vs. market share.
The campaign -- which has been running in heavy rotation during the NCAA basketball tournament -- tries to emphasize that market share advantage at the same time as the discounts by repeatedly imploring consumers to check with friends and neighbors who have State Farm before they research its discounts -- or anyone else's.

"People are being prompted to shop all the time in our category," said Mr. Gibson. "There has to be affordability, but it's just one component of value, along with service and best-in-class agents."

The "discount double-check" work is the first creative assignment for DraftFCB, which has been handling direct-marketing chores for much of the decade. People familiar with the matter said the idea for the campaign sprung from data-driven insights that came from the direct work.

State Farm was intrigued enough by the idea that it shifted its auto insurance creative to Draft from DDB, which has handled the insurer's creative for 70 years. Auto-specific work accounted for 49% of State Farm's measured media spending in 2009, according to Kantar.

DDB continues to handle branding.

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