Geico Campaign Review

Jour 8204: Research Project It’s So Easy A Caveman Could Do It Evaluating the Effects and Effectiveness of the GEICO Cavemen Advertising Campaign

Contents Contents...........................................................................................................................2 Appendix Contents.........................................................................................................21 Heather Arntson, Heidi Backer, Terry Blake, Alison Coffey, Tricia Conway 12/4/08 2

Executive Summary As the nation’s third largest insurance provider, GEICO launched its “Cavemen” advertising campaign in 2004. The tagline – “It’s so easy, a caveman can do it” – highlights the ease of use of the GEICO website. The goal of the campaign was to communicate that www.GEICO.com is easy to use and that people should not be afraid to ask for a rate quote. Since launching the campaign in 2004, GEICO’s market share has increased from 5.6 percent to 7.2 percent in 2007 according to Berkshire Hathaway’s annual reports. GEICO’s advertising budget has also increased over this period. GEICO spent $230 million in 2003, more than $500 million in 2005 and $630 million in 2006. It is important to note that the Cavemen campaign runs concurrent with numerous other GEICO advertising campaigns (“Gecko,” “Celebrity Spokespeople,” etc.). As such, the findings of the research may have important implications for these multi-element “super” campaigns. The research conducted addressed three hypotheses specifically related to the latest GEICO Cavemen ads launched in February 2008: • HYPOTHESIS 1: Consumers who have seen and like the ads will be more likely to consider switching or purchasing insurance from GEICO. • HYPOTHESIS 2: Consumers who have seen and like the ads and have a positive attitude toward the GEICO brand will be more likely to consider switching or purchasing insurance from GEICO. • HYPOTHESIS 3: Strong ad awareness will increase the likelihood that consumers will consider switching or purchasing insurance from GEICO. In sum, the research looked primarily at ad awareness and ad/brand likeability and its correlation with behavioral intent. In addition, because the GEICO Cavemen message and argument squarely focused on the self- efficacy portion of the Theory of Planned Behavior (TPB) – "It’s so easy, even a caveman can do it" – the research also assessed whether consumers were comfortable and capable of switching to GEICO. TPB posits that evaluations, behavioral beliefs and perceived behavioral controls 3

combine to affect attitude, intention and possible behavior. An important element of TPB is self- efficacy or very simply (from a consumer perspective): can I do it? Can I do what the ad is advising me to do? Consequently, the research looked at whether consumers trusted and were comfortable with making purchases online. Research Method and Data Analysis Utilizing primary research, data was gathered from more than 400 participants using an online survey with a specific goal of obtaining at least 200 people in the seven-county Minneapolis/Saint Paul metropolitan area. Specifically, the respondents were screened to be auto owners who had paid for their own auto insurance for at least one year. The net result was more than 300 respondents, 206 of whom live in the metropolitan area. As a non-probability sample, survey participants were recruited through pre-existing email contacts, online networks (Facebook, mySpace, Twitter), and academic listservs from the University of Minnesota. The data analysis consisted of using SPSS data analysis software and Zoomerang survey reporting. Based on the information gathered from the survey, SPSS was used to conduct univariate, multivariate and correlation analyses on the data set. 4

SECTION 1: Background information on the communication campaign Since its debut in 2004, the GEICO caveman advertising campaign has been judged a success. In fact, it recently entered the Madison Avenue Advertising Walk of Fame. However, apart from being funny, clever, unique and popular, has the campaign been truly effective with auto insurance consumers? That is, has it influenced their behavior to switch or buy insurance from GEICO? The study assessed the overall effects and effectiveness of the Cavemen campaign using a quantitative research method. In particular focusing on the latest series of caveman ads, which premiered in February 2008 during Super Bowl XLII. A description of ads – numbers 11-16 in the overall campaign – is as follows: • The 11th ad shows two cavemen who are watching the caveman television show and ridicule the (failed) cavemen television series. • The 12th and 13th ads feature a caveman dancing in various styles in a rather ridiculous manner and remarking how hard it is to dance in such a style, exclaiming phrases such as, "GEICO probably thinks this is easy, too!" • The 14th ad focuses on GEICO's sports marketing efforts with a Caveman facing Billie Jean King in a tennis match. The caveman, who is losing 0-6, 0-6, 0-5, quits when he discovers the tournament is sponsored by GEICO. • The 15th finds a caveman and his girlfriend alone on a beach. As the lady begins to remove her shirt, a plane flies by pulling a GEICO banner. The disappointed caveman says, "I'll be in the car." • The 16th shows two cavemen riding up to a sort of outdoor bar on motorcycles where they see two typically beautiful girls who are clearly impressed by the two bikers. The cavemen then notice the same billboard from the fourth GEICO commercial and suddenly no longer have any interest in the woman, who seem to be confused by the cavemen’s sudden change in demeanor. Who is GEICO? GEICO Insurance Company was established in 1936. It began insuring government employees and currently has 8.5 million policyholders insuring more than 14 million vehicles. In 2007 5

GEICO had a growth rate of 8.8 percent. It is owned by parent company Berkshire Hathaway and billionaire Warren Buffett, who is known for his wry sense of humor. It is the third largest auto insurer in the United States. According to GEICO.com, “Fortune magazine has named Berkshire's property-casualty insurance operation the most admired in the country.” In 2004 GEICO launched the Caveman campaign, done by the Martin Agency. The tagline – “It’s so easy, a caveman can do it” highlights the ease of use of the GEICO website. The goal of the campaign is to communicate that GEICO.com is easy to use, and that people shouldn't be scared to get a rate quote. According to Berkshire Hathaway’s annual reports, GEICO’s market share has increased from 5.6 percent in 2004 to 7.2 percent in 2007. GEICO’s advertising budget also increased over this period. GEICO spent $230 million in 2003, over $500 million in 2005 and $630 million by 2006. GEICO continuously spends more than any of its competitors (State Farm, Allstate, Progressive, Nationwide, and USAA). GEICO AD SPENDING 2003 2004 2005 2006 2007 2008 $184MM $286MM $403MM $499MM $556MM $265MM Source: TNS Media Intelligence SECTION 2: Theoretical framework The research addressed three hypotheses specifically related to the latest GEICO Cavemen ads launched in February 2008: • HYPOTHESIS 1: Consumers who have seen and like the ads will be more likely to consider switching or purchasing insurance from GEICO. • HYPOTHESIS 2: Consumers who have seen and like the ads and have a positive attitude 6

toward the GEICO brand will be more likely to consider switching or purchasing insurance from GEICO. • HYPOTHESIS 3: Strong ad awareness will increase the likelihood that consumers will consider switching or purchasing insurance from GEICO. In sum, our research looked primarily at ad awareness and ad/brand likeability and its correlation with behavioral intent. In addition, because the GEICO Cavemen message and argument squarely focused on the self- efficacy portion of the Theory of Planned Behavior (TPB) – "It’s so easy, even a caveman can do it" – the research also assessed whether consumers were comfortable and capable of switching to GEICO. TPB posits that evaluations, behavioral beliefs and perceived behavioral controls combine to affect attitude, intention and possible behavior. An important element of TPB is self- efficacy or very simply (from a consumer perspective): can I do it? Can I do what the ad is advising me to do? Consequently, the research looked at whether consumers trusted and were comfortable with making purchases online. . Evaluation framework Theory of Planned Behavior is the behavioral framework used to evaluate the campaign [Ajzen, I. (1985). From intentions to actions: A theory of planned behavior. In J. Kuhl & J. Beckman (Eds.), Action-control: From cognition to behavior (pp. 11- 39). Heidelberg, Germany: Springer.] TPB indicates that evaluations, behavioral beliefs and perceived behavioral controls combine to affect attitude, intention and possible behavior. As applied to this study, TPB posits that one should expect the independent variables of advertising exposure to influence the dependent variable of consumer attitude toward purchasing or switching to GEICO. A variation of TPB includes self-efficacy in place of Perceived Behavioral Control, as shown in the model below. The concept of self-efficacy is a modification to the TPB, which in turn is a modification of the Theory of Reasoned Action (TRA). The TRA maintains that a person’s intention to act is a function of their attitude toward the action and their beliefs (Subjective 7

Norm) about what others expectations are in reference to that action. According to social cognitive theorist Albert Bandura 1977, “Self-efficacy refers to one’s belief in his or her abilities to achieve certain outcomes.” [Bandura, Self-efficacy: The exercise of control, Freeman, New York, p. 3, 1997] Very simply, TPB poses three questions a consumer would ask in determining whether to take action such as changing car insurance providers: • Do I like it? • What will others think of me if I do it? • Can I do it? TPB – including self-efficacy – can be modeled as follows: Within this framework, we measured consumer views of GEICO along three dimensions: • Affective – liking and preference for the ads and for GEICO (LIKEABILITY AND POSITIVE VIEW OF GEICO) • Cognitive – awareness and knowledge of the ads and GEICO (AWARENESS) • Conative – intention to purchase or switch to GEICO, including self-efficacy (BEHAVIORAL INTENT AND SELF-EFFICACY) SECTION 3: Methodology used To measure consumer views within the behavioral framework, a quantitative research approach to gather data was used. An online survey – as opposed to a personal, mail or telephone survey – 8

was deemed best because it would: • be accurate • require fewer manual resources and processes • be relatively quick and easy to do • be comparatively low cost • provide robust, “higher level” data that allow for sophisticated analysis more quickly than other methods. For the purpose of the study, these advantages outweighed the cautions and limitations often noted with online surveys, which include: • opt-in survey respondents • online only recruiting • an unknown population. SECTION 4: Survey tool Due to time and financial constraints, a non-probability convenient sample was used for the survey. Because of this decision, it is not possible to calculate the sample error. However, characteristics were identifiable within the sample method. The project goal was to have at least 200 people in the seven-county Minneapolis/Saint Paul metropolitan area participate in the online survey. Specifically, the respondents were screened to be auto owners who had paid for their own auto insurance for at least one year. Respondents were recruited through pre-existing email contacts, online networks (Facebook, mySpace, Twitter) and listservs. The online survey was made available to respondents through the website service Zoomerang, an online survey tool. Limited pretesting was conducted primarily to validate how long it would take to complete the survey. In addition, the questions focused on the three dimensions being measured: 9

• Affective – liking and preference for the ads and for GEICO • Cognitive – awareness and knowledge of the ads and GEICO • Conative – intention to purchase or switch to GEICO (including self-efficacy) The survey began with a screening question to ensure the respondent’s relevance to the survey. Here are the beginning questions to the survey. The full survey can be found in the appendix. • Do you pay for auto insurance (yours or someone else's)? (If the respondent answered no, he/she was thanked and the survey ended at that point. If the person answered yes, the survey continued.) • How many cars do you pay auto insurance on? 1__ 2__ 3 or more__ SECTION 5: Data analysis The data analysis consisted of using SPSS data analysis software and Zoomerang survey reporting. Based on the information gathered from the survey, SPSS was used to conduct univariate, multivariate and correlation analyses on the data set. Based on the information these two tools provided, several calculations were done to analyze the data. Central tendency was used to pinpoint various averages, mode, median and mean within the responses. Dispersion was used to look at relative frequency, range and standard deviation to find correlation within the answers of the survey. Using correlation analysis, the group identified if there was a significant relationship between the exposure to the GEICO Cavemen campaign and intention toward behavior. Results The online survey elicited 435 respondents. Through the use of the filter question, “Do you currently pay car insurance” 309 respondents completed the whole survey. The original research plan was to test those within the Twin Cities metro area. However, because the survey was conducted online, people outside of this area were able to participate. It was a convenient sample that had a snowball effect and of the 309 respondents, 206 responded that they live in the Twin Cities metro area. All 309 respondents were included in the analysis. 10

The first step in the analysis process was to determine respondents’ demographic compositions in SPSS. Looking at age, 51% (mode) of respondents were 25-34 years old and 87.8% of respondents were between the ages of 18-44. There was a disproportionate gender response rate with 65% (mode) of the respondents as female and 35% male. The mode for race was white at 90%. The remaining sample of 10% was African-American, Asian, Hispanic or nonwhite. The mode for education was college graduates at 38%, but 80% of respondents had graduated from college or more; 29% of the respondents had an annual household income of $90,000 or more. Finally, 62% of respondents paid insurance on only 1 car. AWARENESS One specific goal was to understand the level of awareness (ad recall) among respondents regarding the Cavemen campaign. Of the 309 survey respondents, 93% were aware of the campaign. Respondents were then given descriptions of ads and asked which ones they recalled. The most frequently recalled ads were: “Tennis” (47%), “Beach” (40%), and “Motorcycles” (39%). The least frequently recalled was “Dancing” with 22% recall;. 21% of the respondents were unable to recall any of the GEICO Cavemen commercials from the last 12 months. AD LIKEABILITY/POSITIVE VIEW OF GEICO Within the sample, the mode for likeability of the ads was 3 (neither agree or disagree) and the mean was 2.96, slightly below the neutral point. Dispersion is shown in the following table. 11

Cavemen Ads -- Likeability Frequency Percent Valid Percent Cumulative Percent Valid Strongly disagree (don't like) 34 7.8 11.7 11.7 2 64 14.7 22.1 33.8 3 91 20.9 31.4 65.2 4 81 18.6 27.9 93.1 Strongly agree (like) 20 4.6 6.9 100.0 Total 290 66.7 100.0 Missing System 145 33.3 Total 435 100.0 Within the sample, the mode for positive view of GEICO was 3 (neither agree or disagree) and the mean was 2.81, slightly below the neutral point. Dispersion is shown in the following table. Positive View of Geico Frequency Percent Valid Percent Cumulative Percent Valid Strongly disagree (negative) 26 6.0 9.0 9.0 2 66 15.2 22.9 31.9 3 137 31.5 47.6 79.5 4 55 12.6 19.1 98.6 Strongly agree (positive) 4 .9 1.4 100.0 Total 288 66.2 100.0 Missing System 147 33.8 Total 435 100.0 SELF-EFFICACY The GEICO Cavemen campaign directs viewers to go online to save money on their car insurance. Because of this prompt, a second goal was to measure self-efficacy of respondents’ online abilities, including their trust and usage of online services, their views of auto insurance, and their online purchasing behavior. Of the respondents, 49% agreed that they trust information they read online, 1% strongly agreed, and 44% neither agreed nor disagreed. Within the sample, 60% agreed that their current car insurance was fairly priced and 68% of respondents were not currently looking to change auto insurance providers. In addition, 87% agreed and strongly 12

agreed that they wanted to be in charge of their own decisions. When asked about changing auto insurance providers, the respondents were split, 31% (disagreed and strongly disagreed) did not think it was easy to change and 38% (agreed and strongly agreed) believed it was easy to change. Despite the polarized response for ease of changing insurance providers, 82% knew how to change their providers and 34% of respondents believed that auto insurance is confusing. The majority of respondents, 91% had not changed insurance in the last 12 months. In the same vein of uncovering how respondents felt about trust of the internet, the group wanted to know how respondents were using the internet overall, to see if there was any correlation between frequent internet use and buying car insurance online. Of the respondents, 91% use the internet for research or for work. At least 80% of all respondents use the internet for purchases, research, networking, work or entertainment. 96% of respondents have made a purchase online. 66% trust online financial services and 58% said they feel comfortable using online services. BEHAVIORAL INTENT Five specific factors were identified as areas to learn more about: behavioral intention to learn more about GEICO after seeing the Cavemen ads, behavioral intention to visit the GEICO website after seeing the cavemen ads, awareness of the cavemen ads, likeability of the cavemen ads, and if the Cavemen ads produced a positive view to GEICO. Each factor was analyzed against respondents’ demographics to see if there was any significance. Age According to the Chi-Square tests, there was no significance between age and behavior to learn more about GEICO, behavior to visit the GEICO website, awareness of the cavemen campaign, likeability of the campaign, or positive view of GEICO. Gender After comparing gender, behavior, and desire to learn more about GEICO, it was found there was no significance nor any significance for likeability toward the caveman campaign or 13

awareness of the campaign. The results showed that there was a significant difference among gender and behavior to visit the site and having a positive view of GEICO. Females were less likely to visit the site after being exposed to the ads and have a less positive view of GEICO than their male counterparts. Race Race did not show any significance between behavior to learn more, intent to visit the GEICO site, like the cavemen ads, or positive view of GEICO because of the ads. The results showed there was a significant difference among awareness; both African Americans and Asians had a lower awareness of the GEICO caveman campaign than White, Hispanic and Nonwhite respondents. Metro area Comparing the same variables, there was no statistical significance between household income or education levels. Furthermore, there was no significance between respondents that live in the Twin Cities compared to those that do not and their intention to want to learn more about GEICO after seeing the ads. Respondents that live outside of the Twin Cities area are significantly more likely to visit the GEICO website after being exposed to the cavemen campaign. There was no difference between respondents that live in the Twin Cities and those that do not for awareness of the campaign. The results show there was a significant difference in likeability of the campaign compared to those that do not live in the area. Twin Cities respondents are less likely to like the campaign. There was a statistical significance between respondents living in the twin cities versus those that do not. Respondents living outside of the Twin Cities area had a more positive view of the Cavemen campaign than those living with in the Twin Cities area. Correlation and Anova analysis Age: Overall for age, the data showed there are no significant relationships between age and: • trust of online information (P-value = .774) 14

• trust of online financial services comfort buying online (P-value = .478) • comfort online (P-value = .064) • comfort buying online (P-value = .153) • positive view of GEICO comfort buying online (P-value = .650) • Cavemen campaign likeability (P-value = .776) Trust of online financial services, comfort with online services and positive views of GEICO showed weak negative correlations with: • cc = -.042 for trust • cc= -.109 for comfort • cc = -.027 for positive view of GEICO There was a very weak positive correlation in: • likeability of the ads cc = .017 • comfort buying online cc = .084 Household Income: Data showed that for household income, there was a significant relationship between Household income and: • trust of online services (P-value = .014) • comfort buying online (P-value = .000) There was not a strong positive or negative correlations of note. As income increased there was a weak positive correlation for: • positive view of GEICO cc = .059 • likeability of the ads cc = .084 Education: In education, the data showed that there was a significant relationship with education and: • comfort buying online (P-value = .006.) 15

There was no significant relationship between Education and: • trust of information (P-value = .563) • trust of online financial services (P-value = .066) • comfort with online services (P-value = .150) • positive view of GEICO (P-value = .825) • education and Caveman campaign likeability (P-value = .525) GEICO showed a weak negative correlations with education and: • trust of information on line cc = -.034 • positive views of GEICO cc = -.013 Data for education reflected a weak positive correlation for: • likeability cc = .038 of the ads • comfort buying online cc = .164 Likeability and Behavioral Intent: The correlations for ad likeability and behavioral intent to learn more about GEICO reflected: • no significant relationship between behavioral intent to visit the GEICO website (P-value = .508) • nor for likeability of the ads (P-value = .145) They have a weak but positive correlation: • likeability cc=. 087 • behavioral intent cc= .040 Positive View of GEICO and Behavioral Intent: The correlations for positive view of GEICO and behavioral intent to learn more about GEICO reflected: • no significant relationship between behavioral intent to visit the GEICO website (P-value = .508) • no significant relationship between behavioral intent and positive view of GEICO (P- value = .447) They had a weak but positive correlation for: 16

• positive view of GEICO cc=. 247 • behavioral intent cc= .040 Gender: The data on gender showed no significant relationship between gender and: • trust of information online (P-value = .512) • comfort buying on line (P-value = .893) • comfort (P-value = .670) • trust in financial services (P-value = .732) However, a significant relationship between gender and: • Caveman ads likeability (P-value = .004) • Caveman ads and a positive view of GEICO (P-value = .000) It is notable that males responded more favorably to the GEICO Cavemen ads than women. Race: The data on race demonstrates no significant relationship between race and: • trust of information online (P-value = .904) • comfort with online services (P-value = .237) • trust with financial services (P-value = .657) • positive view of GEICO (P-value = .823) • likeability of ads (P-value = .222) However, a significant relationship between race and comfort buying on line (P-value = .001) was evident. Metro: The data from living in the metro area reflects no significant relationship between being a metro resident and: • trust of information online (P-value = .683) • comfort with online services (P-value = .231) • comfort buying online (P-value= .137) However, a significant relationship between metro residency and: 17

• trust in online financial services (P-value = .049) • positive view of GEICO (P-value = .007) • likeability of ads (P-value = .007) Key Findings The research addressed three hypotheses specifically related to the latest GEICO Cavemen ads launched in February 2008: • HYPOTHESIS 1: Consumers who have seen and like the ads will be more likely to consider switching or purchasing insurance from GEICO. Finding: H1 was not proven. There was an overall tepid response to the ads with minimal positive effect on behavior. • HYPOTHESIS 2: Consumers who have seen and like the ads and have a positive attitude toward the GEICO brand will be more likely to consider switching or purchasing insurance from GEICO. Finding: H2 was unproven. There was an overall tepid response to GEICO with minimal positive effect on behavior. • HYPOTHESIS 3: Strong ad awareness will increase the likelihood that consumers will consider switching or purchasing insurance from GEICO. Finding: H3 was unproven. Despite strong awareness of the ads, there was not positive impact on behavioral intent. • SELF-EFFICACY: Finding: Respondents indicated strong trust, comfort and usage of online services and purchases over the internet. Self-efficacy therefore was not an obstacle for consumers to consider switching to GEICO. SECTION 6: Recommendations, implications & summary Due to time and resource constraints it was not feasible to test the hypotheses in a full manner. The restrictions do not allow for the best possible data collection and further recommendations include more in-depth research proposal. Given more time and resources, it is still recommended to conduct an online survey because of the nature of GEICO and its strong online presence, in addition to the advantages previously stated. For this project, the online survey format was successful given a limited timeframe since subjects were able to quickly respond. The online survey format is cost effective and easy to manage. Another significant recommendation is to 18

utilize probability sampling versus non-probability sampling. By using probability sampling one can determine the likelihood that a given element of the will be included in the sample (Huh, 2008). In addition to being able to estimate the likelihood that a sample will represent the population, one can also calculate the sampling error. To further define the sampling process, a systematic random sample will likely be more random than a simple random sample and systematic random sampling can be especially useful when working from a database. By using a probability sample one can accurately calculate the appropriate sample size necessary to reduce sampling error to acceptable levels. If using a known database the response rate can be determined as well as the non-response error. It is clear that additional resources and time would allow for more accurate data collection and using databases with a known population enables researchers to have a better understanding of the data. Given greater resources and time, this group would have opted for more pre-testing of the survey, and to test all GEICO campaigns instead of just the Cavemen campaign to understand their cumulative interaction. Ideally, the group would have used a mixed method research incorporating qualitative analysis such as laddering for deeper insights to the campaigns on individuals. Implications: GEICO has run the Caveman campaign as part of a multi-pronged advertising campaign consisting of five separate themes run in concert across TV, online, Out of Home and radio including the GEICO Gecko, Bland Salesman, "I've got good news...", and parodies such as "Tiny House", and "Why haven't you called?", which eventually spun off the Cavemen campaign. It is evident that to study the GEICO approach thoroughly, one needs to study each of the distinct campaigns and their combined effects in concert with one another. Each of the messages run simultaneously, but they each reinforce a different product offering. One message may stress brand-awareness, another credibility, affordability or ease of use. In order to accurately state if the GEICO advertising campaigns are working, all of the creative messages need to be analyzed instead of only one. Summary 19

The goal of this research project was to explore three hypotheses regarding the GEICO Cavemen campaign. Through a quantitative research study, using online surveys and a convenient sample, it was demonstrated that exposure to the GEICO Caveman Ad Campaign does not produce an attitude shift in behavioral intention of the viewer to learn more about or switch to the GEICO brand of car insurance. This research in itself is not enough to establish if the campaign is effective as it is part of a multi platform campaign with five creative campaigns running simultaneously. The research project was able to establish a high level of awareness of the GEICO Cavemen campaign, but ultimately that the campaign alone does not translate to viewers switching their auto insurance to GEICO. This does not conclude that the campaign is ineffective, but that further research needs to be conducted to evaluate the how and why drivers switch their insurance to GEICO. Based on the research that was conducted, the three hypotheses were unable to be substantiated based on the data collected. It was concluded that self efficacy was not a prohibitive factor, as a majority of respondents use and trust the internet for a variety of services. 20

Appendix Contents 1. Contents...........................................................................................................................2 Appendix Contents.........................................................................................................21 21

Geico Campaign Review

by Alison Coffey on Mar 22, 2010

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