Company Case Allstate: Bringing Mayhem to the Auto InsuranceAdvertising Wars

In the spring of 1950, the teenage daughter of Allstate generalsales manager Davis Ellis was stricken with hepatitis shortlybefore she was to graduate from high school. The worried executivearrived home from work one evening just as his wife returned fromthe hospital where their daughter was admitted. As he met her atthe front door, his wife reported, “The hospital said not to worry. . . we’re in good hands with the doctor.” Later that year, Ellisbecame part of a team charged with developing the first majornational 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 goodit made him feel. The phrase projected security, reassurance, andresponsibility, exactly the traits the team wanted customers toassociate with Allstate. Thus was born the slogan, “You’re in GoodHands with Allstate.” By the early 2000s, a study by NorthwesternUniversity found that the long-standing Allstate catchphrase wasthe most recognized slogan in the United States. For years,Allstate held the position as the second-largest personal linesinsurer, trailing only State Farm. In 2003, Allstate hired actorDennis Haysbert as the brand’s spokesperson. After starring indozens of Allstate commercials—each culminating with the question,“Are you in good hands?—Haysbert’s deep voice became a comfortingfamiliarity to television viewers. Today, the ‘Good Hands’ sloganis the oldest surviving slogan for a paid campaign.

An Advertising Shakeup

Although Allstate’s advertising served it well for decades, bythe late 1990s, the company had fallen into the same routine as therest of its industry. Big auto insurance companies were spendingmodestly on sleepy ad campaigns featuring touchy-feely, reassuringmessages such as Allstate’s “You’re in good hands,” or State Farm’s“Like a good neighbor.” In an industry characterized by low budgetsand even lower-key ads, no brand’s marketing stood out. However,the advertising serenity ended with the first appearance of thenow-iconic GEICO Gecko in 1999, backed by a big budget and pitchingdirect sales and low prices. That single GEICO ad campaign sparkeda frenzy of ad spending and creativity in the insurance industrythat 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 fewhighlights:

• GEICO. GEICO got the auto insuranceadvertising wars rolling when it was acquired by billionaire WarrenBuffett’s Berkshire Hathaway Inc. in 1996 and given a blank checkto aggressively increase market share. That led to an onslaught ofadvertising, the likes of which the auto insurance industry hadnever seen. A string of creative GEICO campaigns featuredeverything from civilized cavemen to cash with googly eyes. But itwas the GEICO Gecko that had the biggest impact. With his signatureEnglish accent, the Gecko made GEICO’s simple message clear—“15minutes can save you 15 percent or more on car insurance.” Morethan any other industry spokesperson, the Gecko lent personalityand pizzazz to the previously sleepy insurance industry and itsstaid brands.

• Progressive. Following GEICO’s lead, in2008 Progressive created its own endearing personality—perky salesclerk Flo. Progressive created the ever-upbeat, ruby-lipped Flo tohelp convince consumers who are already in the market that they canget an even better price deal from Progressive. Flo helped putProgressive hot on the heels of rising GEICO as the fourth largestauto insurer. Flo assists people when they are ready to shop.Progressive later introduced complementary campaigns featuring theMessenger—the mustachioed, leather-jacket-wearing stranger—andBrad—the easy-going, self-assured man with an absurdly funny senseof self-esteem who refers to himself only in the third person. Likethe GEICO Gecko, Flo, the Messenger, and Brad pitch price savingsas their primary appeal.

• State Farm. As GEICO and Progressive shookup the industry with their direct, low-price, high-profile sellingmodels, conventional agent-based auto insurers were forced torespond. Ninety-year-old State Farm, the long-time industry leader,was hardly a stranger to advertising. Like Allstate, State Farm hada long-standing, widely recognized slogan—“Like a good neighbor,State Farm is there”—a jingle written by pop music icon BarryManilow in 1971. Sensing the threat from the rising newcomers,State Farm fought back vigorously with a new campaign centered onits enduring jingle. In its “magic jingle” campaign, State Farmagents magically appear when summoned with the jingle by youngdrivers in trouble—including the likes of LeBron James. Thecampaign’s goal—to convince consumers that they still need theservices of one of State Farm’s 18,000 agents. To help make thepoint 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.Entering 2010, even with Haysbert’s presence as company pitchman,Allstate had lost market share for two years running. The brandneeded its own over-the-top personality. So Allstate brought mayhemto life—literally. With the new creepy Mayhem character played byactor Dean Winters, Allstate created a villainous counterpart toHaysbert’s soothing hero. The campaign’s goal: to convinceconsumers that there is more to buying car insurance than justprice. Put more bluntly, says an ad agency executive involved withthe campaign, “We wanted to kick Flo’s ass.” Mayhem portrays all ofthe unlikely events that can lead to a major auto insurance claim.As a deer, he jumps into the path of a moving car at night,“because that’s what we deer do.” As a torrential downpour, heloves leaky sunroofs. As a malfunctioning GPS, he sends a driverswerving into another car. As snow, he weighs down the roof of agarage until it collapses, smashing the car within. Each quirky adends with the statement and question, “If you have cut-rateinsurance, you could be paying for this yourself. Are you in goodhands?” Through such clever ads, Allstate’s creative andaward-winning “Mayhem. It’s Everywhere.” campaign has put acontemporary, attention-grabbing twist on the company’slong-standing “You’re in good hands with Allstate” slogan, helpingto position the brand as a superior alternative to price-orientedcompetitors. Even with its long-standing “Good Hands” campaign,Allstate needed something unconventional. In fact, mayhem didn’tjust describe the Allstate campaign—it characterized the entireworld of auto insurance advertising. The Mayhem campaign quicklywon many top ad industry awards. But perhaps a bigger indication ofthe campaign’s impact is the extent to which the character hasbecome ingrained in the pop culture. Although Mayhem has only abouta third of Flo’s 5.4 million Facebook fans, he commands anengagement score nearly eight times that of Progressive’s perkyspokeswoman. And when the character’s creator recently saw aMayhem-costumed trick-or-treater walking down her street, shecalled it “a career highlight that gave her chills.” More than justpopular, Mayhem is right on message. At the end of each ad, hewarns, “If you’ve got cut-rate insurance, you could be paying forthis yourself.” Then a reassuring Haysbert provides the solution:“Are you in good hands?” he asks. “Get Allstate. You can save moneyand be better protected from Mayhem.” This“worth-paying-a-little-more” message puts Allstate back at the topin 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 Handsads, Allstate’s unaided brand awareness of 74 percent trailed StateFarm’s by only a slight margin, despite State Farm’s 60 percentgreater ad spending. And for a time, the Mayhem campaign haltedAllstate’s market share slide. According to Allstate CEO ThomasWilson, “It’s working. If you look at our quotes and our newbusiness, it’s way up.” All this prompted Allstate to extend thecampaign, including the introduction of Mayhem’s Hispanic cousin,Mala Suerte (bad luck), aimed at Hispanic consumers. In extendingthe campaign, Allstate took Mayhem to the next level, giving thecharacter his own Twitter account. Seemingly late to the Twitterparty, Allstate executives indicated that the delay wasintentional. “We’ve been very careful about not overdoing Mayhemand not overexposing [him],” said Jennifer Egeland, Allstate’sdirector of advertising. “[We wanted] the right idea for launchinghim in the Twitter space.” The right idea was to conform toMayhem’s persona. At the beginning of the most recent footballseason, Mayhem polled followers about what he should portray in thenext ad—a charcoal grill or a cheap bungee cord. Consumers votedfor the cord. Mayhem disobeyed, tweeting: “Too bad I’m a tailgategrill. Who’s got a light?” He followed that up with Vine videos ofa car set on fire from a grill mishap. Allstate then released twonew Mayhem ads—“Tailgate Grill Fire” and “Cheap Bungee Cord,”making everyone happy. Similar antics ensued for the 2014 MarchMadness kickoff of the NCAA playoffs, helping drive more than61,000 followers to the @Mayhem Twitter account. With all thisactivity and public response, Allstate thought it had a surefireweapon for maintaining its market position. But the all-out autoinsurance advertising war illustrates just how critical it is tostay one step ahead of the competition. For the most recent year,Allstate increased its ad budget to $887 million, outdoing evenmarket leader State Farm’s $802 million effort. However, bothcompanies were eclipsed by GEICO’s eye-popping $1.1 billionadvertising spend. Today, no less than 11 car insurance brands arerunning national TV advertising campaigns. Combined, the autoinsurers now spend more than $6 billion each year to get theirmessages out. That makes things confusing for consumers, whostruggle under the deluge of clever ads for the respective brands.The intense competition, big budgets, and focus on consumeradvertising has kept industry market share dynamic. In fact, aslast year’s numbers rolled in, GEICO had moved to the number twospot behind State Farm with $18.57 billion in earned premiums, in avirtual dead heat with Allstate’s $18.45 billion take. Thatrepresented a 3 percent increase for Allstate, which had continuedto grow in recent years. But GEICO’s growth has been consistentlystronger, increasing 11 percent year-over-year. With thatdevelopment, Allstate was left to reconsider the value it wasgetting out of its advertising investments, and just how it mightslow GEICO down and retake its number two market position.

Questions:

1. Why has Allstate’s “good hands” slogan withstood the test oftime to become advertising’s longest-running slogan?

2. Explain the issues of selecting advertising media for theMayhem campaign. How might this process differ from that ofcampaigns for other companies?

3. How might Allstate measure the effectiveness of the Mayhemcampaign?

4. Has the Mayhem campaign been effective? Support youranswer.

Answer rating: 100% (QA)

1 Why has Allstates good hands slogan withstood the test of time to become advertisings longestrunning slogan Answer Allstates slogans original success can be contributed to the comforting feeling the ... View the full answer