You are here:HomeNews CenterInsurance News2012GEICO Spent $994 Million in Advertising in 2011

GEICO Spent $994 Million in Advertising in 2011

Ever wonder how much money billionaire owner Warren Buffet spends on all that GEICO advertising
June 26, 2012

Ever wonder how much money billionaire owner Warren Buffet spends on all that GEICO advertising? Would you believe $994 million in a year? The National Underwriter reports that data provider SNL Financial found GEICO’s 2011 ad spending of $994 million was 22 percent more than next-largest spender State Farm, even though State Farm’s ad spending grew at nearly three times the rate GEICO’s did.

Among U.S. auto insurers, GEICO has a market share of about 8.5 percent, third behind Allstate Corp’s 10.2 percent and State Farm’s 18.7 percent, according to the Insurance Information Institute.

What It Means to Agents: The sheer magnitude of GEICO’s spending, combined with that of other direct writers and captives, puts in perspective a lot of what independent agents are up against: a continuous, non-stop barrage of ads trying to get customers to “go direct.”

It is a testament to the value that independent agents provide that, despite this onslaught, they are still competitive in personal lines and dominant in commercial lines. It also demonstrates that efforts by independent agents to counter such national carpet-bombing in advertising must focus on local marketing. The PIA Branding Program provides Main Street agents with local ads they can target to their market. And now, the program includes Agoragate, an internet marketing system for local agents (see next item).

Surveys have shown that while people may start their search for insurance online, they want to buy their insurance from a local insurance professional in their community. Customers want what agents have to offer: expert advice and counseling, personalized attention and interaction, the ability to offer comprehensive protection to meet individual needs and excellent “relationship based” customer service. That’s what we’re selling, which also happens to be what customers want – despite all that direct writer advertising. Attempting to compete on price alone undercuts our advantage and plays into the hands of our competitors.

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