Tuesday, August 11, 2009

What Does This Have To Do With Selling Insurance?

In church Sunday School, we're studying the Book (or Epistle) of James. If you're familiar with James, it contains the well-known passages about faith and works. An undercurrent of James is theme of doing the right thing.

During our discussion, one member of the class said she was reminded of the television commercials that focused on doing the right thing. She couldn't remember which company was reponsible for the ads. She thought it might be an insurance company. No one else could remember. Someone suggest All-State, but that was quickly rejected.

In the class of 20 odd people, three of us are marketing professionals. The immediate and near unison reaction of the marketers was, "Well, they aren't very good ads if no one can remember the company."

After a second or two, a couple of us announced the company with conviction. We KNEW it was Northwestern Mutual.

The clear purpose of the ads was to imply that the employees of Northwestern Mutual to do the right thing for us as customers by association with ads where people are doing the right thing.

Only it wasn't Northwestern Mutual. It was Liberty Mutual.

Here are two ads from the campaign...

The ads are beautiful. They make you feel good. I'm sure the writer, director, and producer of the spots are all proud of their work. Of course, as a former youth soccer coach, I've got to wonder where the heck the coach was in the second spot.

Yup, it's all good... except for Liberty Mutual.

The company is spending a fortune and the competitor benefits? I would rather run an obnoxious commercial that makes the phone ring than a CLIO winner, which fails to drive sales.

In an interview at BusinessWeek, Stephen Sullivan, Liberty's senior vice-president of communications services said the company's past approach to advertising was to, "interview hundreds of customers and find out what they wanted in an insurance company."

Makes sense to me. Find out what the customer wants or needs and provide it. But that straight forward, traditional approach to advertising is passé for Liberty and it's new agency, Hill Holliday.

Hill Holiday rejected the notion of talking with people who might buy insurance. According to Sullivan, the agency people said, "Wait a minute here. Why don’t we start inside and find out what is core to your company’s values from your employees' point of view."

What does this have to do with selling insurance? Nothing. But it has everything to do with selling advertising to an insurance company.

From an agency's perspective, it's a beautiful thing. Get inside the company. Talk with lots of people. Build relationships. Bond. Make it harder to ever get rid of the agency. Then, build an ad campaign that makes company employees feel better about themselves.

Sullivan said the positioning line selected was, "We will celebrate our customers’ responsibility and relentlessly prove our own."

What does this have to do with selling insurance? And not just insurance, but auto insurance specifically? You see, Liberty Mutual already had a problem with consumers confusing the auto insurer with a life insurance company. The responsibility theme is likely to add to the confusion since it's more in line with a life insurance theme (i.e., responsibility for your survivors).

According to Sullivan, people will think, "Liberty mutual is a company that shares my values. I’m going to get my insurance from them."

Really? Is that how you buy car insurance? Do you look for a company that shares your sense of personal responsibility? Is that the key motivation for selecting one insurance company over another?

Lesley Bielby, the chief strategy officer for Hill Holliday was also interviewed by BusinessWeek about the Liberty campaign. She starts talking about "cultural and social shifts," "ideas that transcend advertising," and creating "something much bigger than the ad it was launched with."

How about something that sells insurance?

Bielby notes that the company's goal was to become one of the top five in its category and notes with pride, "They managed to achieve that goal essentially in less than three short years," before acknowledging the success was, "largely through acquisitions."

Acquisitions? Liberty Mutual turned into an insurance consolidator and in classic fashion paid stupid premiums for the companies it acquired, like the 51% premium to buy Safeco. This acquisition alone bumped the sales volume by 29%. But what did it do for the shareholders?

According to Report Buyer:

The [Liberty Mutual] group recorded revenues of $25,961 million in the financial year ended December 2007, an increase of 10.4% over 2006. The operating profit of the group was $2,198 million in the financial year 2007, a decrease of 2.7% over 2006. The net profit was $1,518 million in the financial year 2007, a decrease of 6.6% over 2006.

Doesn't sound like the shareholders benefitted. This brings us back to the advertising. How do you measure the impact of an advertising campaign on a company that's growing by acquisition and making less money?

Like any good agency executive, Bielby's got a ready reply and it doesn't include increased sales, marketing research validating increased awareness, or other outdated approaches. "Results can come in many different forms," she notes.

"In the case of liberty mutual the most gratifying thing for them and also for us as an agency are some of the letters and emails that we’ve been reading around how people are using responsibility."

Huh? I think she said everyone can feel good because they got some nice mail about how responsible they are being responsible. How about the agency's responsibility to the client?

"We’ve had letters from schools and colleges about how they’ve used the ad to provoke a discussion about responsibility and what it means in our society," she beams.

Excellent! And how many policies were written because of collegiate discussions about the role of responsibility in our society?

It gets even better for Liberty Mutual. Using client money, Hill Holliday has launched The Responsibility Project to showcase films and mini-films about responsibility. Check them out. They're entertaining. They're well done. But they don't sell insurance.

Note how the discussion below each film is filled with comments like the following...

Because of your film about a guy who would rather play the trumpet than basketball, I'm going to buy my car insurance from Liberty Mutual. Good job!

Forget the best deal. Any company that will pay for the production of a film about an irresponsible Brit and his dog driving irresponsibly through British city streets is reason enough to pick you over the Gecko.

Forget accident protection, I want to buy my insurance from a company with a film about a guy who keeps his blind date from stealing from a dinner party host.


This is the perfect example of an ad agency that's self-actualizing on the client's dime. As consumers we may be entertained, but we aren't given much of a reason to buy (and that's being generous).

Meanwhile, the competition is focused on buyer benefits...

  • Geico: save money; easy to buy

  • AllState: accident forgiveness

  • Progressive: save money; easy comparisons

Ad great David Ogilvy once said, "A good advertisement is one which sells the product without drawing attention to itself."

As a business owner you should demand no less.

(c) 2009 Matt Michel

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