Does Auto Insurance Advertising Hurt Your Choices?

Auto Insurance Advertising

With more auto insurance advertising money spent, it appears consumer now have fewer choices

The amount of auto insurance advertising in the media is mind-boggling. With the frequency of the ads we see on television and online, it’s no surprise that insurance companies are spending big to get the message out. In fact, GEICO will spend over $1B to influence you to buy their auto insurance, and Allstate (including Esurance), will spend over $800M. Our partner Progressive will easily spend over $500M to put Flo in front of consumers annually.

With so much competition for your insurance dollar, insurance companies are making significant investments to get you to buy auto insurance. Many of these companies are getting pretty good too. These are pretty good ads and even make us laugh. Are they working? Maybe, that GEICO gecko is pretty recognizable.

What is true, the insurance companies are letting you know about their brands, but is any of this advertising helping you know what they stand for? Does it help you buy better auto insurance?

Maybe not.

So why is so much spent on auto insurance advertising?

Well, the obvious answer is that auto insurance companies are trying to influence you to buy their auto insurance. That’s pretty easy … that’s the primary goal of auto insurance advertising.

There is a lot of money spent by consumers each year on auto insurance, it’s the single largest insurance market in the United States, estimated at over $160B annually. In fact, Auto insurance is one of the largest business categories in our economy. That makes it a competitive market, and big players are willing to invest big dollars to win new customers.

Another reason for the proliferation in auto insurance advertising is the rise in the popularity of online auto insurance sales. The direct-to-consumer companies are the ones really driving the spend … like GEICO, Esurance, and Progressive.

These companies don’t have insurance agents who represent them, who advocate for them, so the only way to be known is to advertise. Back when we all purchased our auto insurance through a local insurance agent, the advertising was less necessary.

What is the cause for the increase in auto insurance advertising?

In the mid-1990’s in conjunction with the growth in online commerce, there has been an increased push to try to sell auto insurance direct to the consumer… bypass the insurance agent altogether.

It’s a distribution strategy used by many companies, not just insurance companies, if you eliminate the cost of a sales force you can reduce new customer acquisition expense.

Insurance agents get paid commission, and if the insurance company can remove these commission, they can make more money… least in the long run.

Without insurance agents, the direct-to-consumer companies had to advertise to be found.

This change radically altered the auto insurance advertising landscape, even for insurance companies that sell through insurance agents, where compelled to advertise or else be forgotten.

There are many of very good auto insurance companies that have great ratings and claims service, but the consumer likely only knows of a very few, and those would be the insurance companies that advertise.

This is a shame, because the consumer is losing choice

With the increased cost of conventional advertising, and the competitive, and increasing costs of internet marketing, consumers are have fewer choices. Or it would appear that way if you only paid attention to auto insurance advertising.

But the reality is, there is still a place where the consumer have real choice. Where the consumer can get an honest answer about the quality of the insurance products available, and from a real person who cares (not from a talking lizard or a 50’s waitress – what is Flo anyway?).

These people are called independent insurance agents. The only real place for you to get a one-stop shopping experience, get provided choice, consultation, and a helping hand.

Why don’t we hear more about independent insurance agents?

Independent insurance agents are small business owners, most of whom sell in a small local area of your community. They typically don’t have large auto insurance advertising budgets.

But the independent insurance agent is the only place where the consumer can go to get real comparison shopping because they are free to represent several insurance companies. The independent insurance agency is the true retail model for shopping of auto insurance.

The insurance companies who sell through independent insurance agents are some of the oldest, financially sound insurance companies in the market, but they either don’t advertise, or don’t provide support at the individual agent level (beyond some small creative assistance).

The large insurance companies that advertise do so to distract you from the independent insurance agent, because the know that their model is less efficient for the consumer. So they exploit their budgetary advantage, and advertise to gain the attention of the consumer in ways that the independent insurance agent cannot.

Google is even stealing your choices

In some ways, the search engines are working against the independent insurance agent. Search engine algorithms appear to like brands, and brands have greater resources to secure the type of web authority so they can get favorable search engine results.

And search engine marketing for broadly searched terms like “car insurance quote” or “auto insurance” are becoming so expensive, that an online ad can cost you between $32.00 – $52.00 per click. This is well beyond the budget of your local independent insurance agent.

You want choice, you want an independent insurance agent

When you shop you want choice, and you want to have the choice delivered to you in a convenient way. That’s what the independent insurance agent does. Big auto insurance advertising budgets can have the effect of convincing consumer that there are only limited auto insurance choices, but that isn’t true.

Call a local independent insurance agent, and you’ll quickly see the benefits.

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Copyright IronPoint Insurance Services, LLC | California License No. 0G87821 | PO Box 62436, Irvine, CA 92602 | 877.334.7646

IronPoint Insurance Services is an independent insurance agency licensed (#0G87821) with the California Department of Insurance. We are authorized agents for many A+ rated Arizona, California and Utah insurance companies. We provide consumers with online, phone, and in-person insurance services through our insurance company relationships. IronPoint Insurance Services, LLC offers multiple insurance quotes to provide consumers several options for their insurance products. We offer auto insurance through Mercury Insurance Group, Travelers Insurance Companies, The Hartford, MetLife Auto & Home, and Progressive Drive Insurance. We are authorized insurance agents for these companies and do not charge any fees for our services. If an IronPoint insurance agent trys to charge you broker or agency service fees for representing these companies, please contact us immediately.

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