state of regret: getting involved in discount wars

In an era of sales, BOGO, and discounts, it’s nice to see someone doing something…different. This is especially refreshing when it comes to car insurance. Geico set the standard for discount auto coverage in 15 minutes or less, and a plethora of companies have emerged to serve the low-end market with minimum coverage.

However, State Farm is doing something different. Instead of joining the discount frenzy with insurance, State Farm is leveraging their human capital to build their brand. In a recent ad called “State of Regret,” former State Farm customer “Jerry” calls his old agent pleading for help after putting his car up a pole. When she can’t help him, he says: “It only took 15 minutes to sign with that new auto insurance company, but it’s taken a lot longer to hear back.”

By refusing to participate in the discount game, State Farm is avoiding the crowded, low-end insurance market coveted by companies like Geico, Progressive, Esurance, The General, and local agencies. However, by pushing service rather than discounted prices, State Farm is able to attract business from the high end of the insurance market. This means State Farm can still bring in new customers without dropping their prices.

In the end, this is a much better branding strategy because they aren’t locked forever into discounted prices and won’t have to keep dropping premiums in order to keep customers. Customers came to State Farm because even with higher premiums than say, Geico, customers know that an agent will be there. So long as State Farm delivers on their promise of service, they’ll keep customers.

Looking at the top 10 insurance companies by market share in 2010, State Farm is at the top, followed by Allstate — another insurance company that has directly attacked the “cut-rate” insurance game in their “Mayhem” campaign.

Brands can take a lesson from State Farm and Allstate: although there is money to be made by dominating the low end of the market, discounting is a trap that keeps your brand locked into low prices. Should you try to raise your prices, you’re likely to lose any sort of customer base you managed to build.

ad humor: go whole-hog, or don’t do it at all

David Ogilvy, arguably the king of Madison Avenue, was no fan of humor in advertisements. He believed purchasing a product was serious business for consumers, and using humor as a technique more times than not undermined the effectiveness of an ad.

He had a point.

Tonight I had the TV on and a 30 sec. new spot for Wheat Thins came on:


(Agency: The Escape Pod)

This is a perfect example of how the humor angle undermines, if not altogether kills, the effectiveness of commercials if not done correctly.

What about that commercial was designed to motivate people to buy Wheat Thins? When the commercial was over, I was more confused than anything. My reaction wasn’t, “Oh, that’s hilarious that Wheat Thins did this. Let me go buy some.” It was, “What is she going to do with a pallet of Wheat Thins.”

Even the "victim's" face said the same thing.

Dropping a pallet of Wheat Thins off on an unsuspecting consumer is hardly a call to action.

I suppose one could make the argument that the commercial was not designed to sell product necessarily, but to increase brand awareness on social media. “So go ahead and tweet, post, blog, upload or text about Wheat Thins...we dare you,” says EP’s site.

But, is paying for a 30 sec. spot just to spark chatter on Twitter worth it? That’s a lot of money to pay for brand awareness on a social networking site that has only a fraction of the use as, say, Facebook.

Secondly, as McDonalds found out, pandering to Twitter is a dangerous game.

Here are a few recent tweets regarding Wheat Thins:

@Princessasuzy21: Have u seen those super fake wheat thins commercials? U can totally tell theu're fake!

@vdaze: I can't even tell you how pissed I'd be if someone just dropped off a pallet of Wheat Thins at my front door and left.

@ImTashaHOE: What the hell is that girl suppose to do with all those Wheat Thins SMH

The concept of the commercial isn’t all bad. It would make a great online campaign. And, it could be done for a fraction of the price not having to pay for ad time.

If Wheat Thins really wanted to do a television commercial, they should have either gone for the gold with humor, or stuck to something more relevant to the product (a wheat thin is a very humorless thing). They could have spent 30 seconds on positioning Wheat Thins as the healthy alternative to chips.

Boring? Yes. Effective? Much more so.

This is not to say that humor can’t work. Allstate is doing a great job with a hilarious series featuring Dean Winters as “Mayhem” (agency: Leo Burnett). Several of the spots are gut-busters, and the copy itself is very good. While making people laugh, the commercials motivate consumers to check their insurance policies to see if they are covered in the featured situation.

The key to the series' success is that Burnett's creative team went whole-hog on making it funny. The Mayhem commercials are a little weird and a little dark. And, it paid off.

And that's the thing: If you’re going to do humor, do it. Get weird. Get original. Don’t sell yourself short or you’re just going to waste a boatload of money on an ad that’s instantly forgettable.