By Leslie Scism and Erik Holm
What is the cost of being everywhere? About $1 billion a
year.
Geico Corp., the auto insurer whose advertising shows up on
billboards, the Internet and many television shows, spent $993.8
million for marketing in 2011, according to data compiled by SNL
Financial LC. That is the most in a single year by any car insurer,
and is up 10% from the $902.7 million the company spent in
2010.
The increase in spending is part of a multi-year,
still-escalating arms race of insurers who want to be even-bigger
household names than they already are. State Farm Mutual Automobile
Insurance Co., the largest home and auto insurer in the U.S. as
measured by premium, took second place with a dramatic 29% increase
in its marketing expenditures, SNL found.
"It is not stopping, there are no signs of slowing down just
yet," said Patrick Sullivan, a writer with trade publication Auto
Insurance Report. "They are just marching along. It's pretty
crazy."
Geico, owned by Warren Buffett's Berkshire Hathaway Inc. (BRKA,
BRKB), didn't respond to several requests for comment. State Farm,
known for its "Like a Good Neighbor" jingle, confirmed the accuracy
of the SNL figures.
SNL compiled the list of big spenders from reports filed with
state-insurance departments earlier this year. The data firm
examined the reports of property-casualty insurers, whatever their
business lines. The insurers are required to tally marketing
expenditures for newspaper, billboard and television advertising,
as well as expenses for public-relations firms, medals and plaques
for agents, mailing lists and a wide range of other things.
Robert Hartwig, president of trade group Insurance Information
Institute, said auto insurance "is the largest of all
property-casualty insurance lines, accounting for more than
one-third of all premiums written, and it accounts for a much
higher proportion of the advertising dollar." He estimated more
than half of all advertising in property casualty is associated
with auto insurance.
Insurers keep close track of the effectiveness of their ads.
Allstate Corp. (ALL), the third biggest spender at $745.3 million
in 2011, noted in an internal presentation last October that it had
lost ground during the year among consumers in terms of awareness
of its television ads. The presentation also said that call volume
at Allstate's call centers had fallen by 30% last July after the
insurer cut back on direct-mail solicitations. In response, the
company said it launched a new spending initiative designed to
boost sales near the end of the year.
Television ads are at the heart of many of the carriers' media
campaigns, though Internet advertising also is extensive, analysts
said. Geico's Gecko campaign competes with State Farm's
good-neighbor pitch, and Allstate's series of "Mayhem" ads, among
many other familiar campaigns.
In 2011, Geico was responsible for roughly one out of every six
dollars spent on marketing in the property-and-casualty industry,
SNL said. Geico's 10% increase in 2011 was below the industry
growth rate of about 15%, according to SNL.
Write to Erik Holm at erik.holm@dowjones.com and Leslie Scism at
leslie.scism@wsj.com.