978-0134492513 Chapter 15 Lecture Notes Part 1

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Chapter 15

ADVERTISING AND PUBLIC RELATIONS

MARKETING STARTER: CHAPTER 15

GEICO: From Bit Player to Behemoth through Good Advertising

Synopsis

Through its clever GEICO gecko advertising campaign, GEICO started what became an all-out war in the

previously stolid and serious insurance industry. In 1994, GEICO decided to expand its customer base from

government employees and noncommissioned military officers. While it had no agents, it marketed directly to

customers and passed along savings to customers in the form of lower premiums. With the move toward a broader

market, the company transitioned from a little-known afterthought in the insurance industry to a mover. Warren

Buffet’s “money is no object” edict released a torrent of funding for the company to make its mark. The campaign

began with a gecko with the British accent, but has expanded through a variety of installments and versionsin the

interest of keeping the message fresh. One aspect that has not changed through the years is the message: “15

minutes could save you 15 percent or more on car insurance.” This clarity of message, whether coming from the

gecko, cavemen, Caleb the Camel, Maxwell the talking pig, or Ronny and Jimmy, the banjo players, ensures that the

audience knows what GEICO offers. As one expert noted, “No matter how many GEICO ads you’ve seen over the

years…they never seem to grow stale.” For a company that spent little on advertising for nearly 60 years, GEICO is

now the top spender in measured media by a nearly two-to-one margin, with an advertising budget of over $1.1

billion. The brand now enjoys well over 90 percent awareness among insurance shoppers, higher even than State

Farm and Allstate. It now occupies second place in the ultra-competitive U.S. car-insurance market. GEICO’s

advertising also changed how insurance is marketed. Rather than focusing on telling customers, “You know, you

really should have insurance….in case something happens,” GEICO made it fun to even think about insurance. All

it took was a little lizard to change an industry.

Discussion Objective

A discussion of the chapter-opening “15 minutes or less” campaign from GEICO will make the point that ad

campaigns can make a substantial impact on how customers perceive and respond to a brand. The goal is to compare

and contrast the traditional low-key advertising of the insurance industry with the more recent, high-profile,

unconventional advertising campaigns undertaken by GEICO and its competitors. What makes GEICO’s campaign

successful, and why would consumers respond to it?

Starting the Discussion

Develop the discussion by walking through the ad campaigns discussed in the GEICO story. For a selection of the

best, most recent television commercials by GEICO, visit www.youtube.com/user/GEICO. Viewing several GEICO

commercials should help students to explore the variety of ways GEICO modifies its message to ensure the

campaign stays fresh. How do the commercials resemble yet differ from one another? Students should be familiar

with most of the campaigns, and seeing them should generate useful discussion. The point is that a well-crafted

advertising campaign can grab a market by the collar, change consumer opinions and emotions, and increase sales

and market share. Use the questions below to guide the discussion.

Discussion Questions

1. In your mind, how strong is the GEICO “15 minutes could save you” campaign? How does GEICO

distinguish itself in a crowded field of competitors? (Despite the strength and uniqueness of this campaign,

GEICO essentially started from the bottom in terms of consumer brand awareness. The company knew that

the marketing message had to grab attention with a clear point for consumers. It focused on the ease of

access to information and pricing, as well as the price being less than the competition.)

2. Can GEICO continue with the same focus? Why or why not? Can the variations in the campaign extend its

lifespan? Does the message resonate and create engagement? Does this message actually sell insurance or

do we remember it because it is clever? Can one ad campaign make a difference for GEICO or any of its

competitors? (Bring in details that highlight and illustrate how one campaign certainly can make a

difference. For the past decade, GEICO increased its “cool” factor along with sales and market share as a

result of the “civilized caveman” and “Gecko” campaigns. GEICO now leads Allstate in earned premiums,

and it moved into second place behind State Farm.)

3. How does the GEICO story relate to this chapter on advertising? (This story is purely focused on ad

campaigns. Each campaign in the story was based on a well-designed message that accomplished specific

advertising objectives. The actors [sources] used were perfect for conveying key messages, and each

campaign has generated a certain amount of buzz among television viewers.)

CHAPTER OVERVIEW

Use Power Point Slide 15-1 here

In this chapter, we look at advertising and public relations. Advertising involves communicating

the company’s or brand’s value proposition by using paid media to inform, persuade, and remind

consumers. Public relations involves building good relations with various company publics—

from consumers and the general public to the media, investor, donor, and government publics.

As with all of the promotion mix tools, advertising and public relations must be blended into the

overall IMC program.

CHAPTER OBJECTIVES

Use Power Point Slide 15-2 here

1. Define the role of advertising in the promotion mix.

2. Describe the major decisions involved in developing an advertising program.

3. Define the role of public relations in the promotion mix.

4. Explain how companies use PR to communicate with their publics.

CHAPTER OUTLINE

p. 426 INTRODUCTION

Does advertising really make a difference? Auto insurance

companies think so. All of their advertising spending—plus

ever-more-creative ad campaigns—has created an auto

insurance advertising war.

GEICO helped to start this war with its “15 minutes could

save you 15 percent or more on car insurance” campaign.

The campaign has become ingrained in pop culture and

social media channels. Caleb the Camel even appeared in

the pregame show of Super Bowl XLVIII.

In addition to being popular for its variety of campaign

installments, GEICO is also right on message. For

price-conscious consumers, GEICO consistently ends with

p. 427

Photo: GEICO

its famous tagline.

This message helped move GEICO toward the top in terms

of customer value.

Opening Vignette Questions

1. Through its catchy advertising campaign, which

advertising objectives did GEICO pursue? As

the campaign was modified, did the objectives

change?

2. Can GEICO use the same advertising campaigns

indefinitely? Why or why not?

3. If not, what ideas would you suggest next for the

insurance giant?

p. 428

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Define the role of advertising in the promotion mix.

ADVERTISING

Advertising is any paid form of nonpersonal presentation

and promotion of ideas, goods, or services by an identified

sponsor.

U.S. advertisers now spend in excess of $190 billion yearly

on advertising.

The four decisions to make when developing an advertising

program are (see Figure 15.1):

1. Setting advertising objectives

2. Setting the advertising budget

3. Developing advertising strategy

4. Evaluating advertising campaigns

Review Learning Objective 1: Define the role of

advertising in the promotion mix.

Describe the major decisions involved in developing an

advertising program.

Major Advertising Decisions

Setting Advertising Objectives

Advertising objectives should be based on past decisions

about the target market, positioning, and the marketing

mix, which define the job that advertising must do in the

Learning Objective

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Key Term:

Advertising

p. 429

Figure 15.1: Major

Advertising

Decisions

Learning Objective

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Key Term:

Advertising

objective

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15-10

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total marketing program.

An advertising objective is a specific communication task

to be accomplished with a specific target audience during a

specific period of time.

Advertising objectives can be classified by primary

purpose (Table 15.1):

Informative advertising is used heavily when

introducing a new product category.

Persuasive advertising becomes important as

competition increases. Here, the company’s

objective is to build selective demand.

Comparative advertising involves directly or

indirectly comparing one brand with another.

Reminder advertising is important for mature

products—it helps to maintain customer relation–

ships and keep consumers thinking about the

product.

Setting the Advertising Budget

The advertising budget is the dollars and other resources

allocated to a product or a company advertising program.

Specific factors to consider when setting the budget

include:

Stage of the product life cycle (PLC)

Market share

Developing Advertising Strategy

Advertising strategy consists of two major elements:

Creating advertising messages

Selecting advertising media

Advertisers are orchestrating a closer harmony between

their messages and the media that deliver them.

Creating the Advertising Message and Brand Content

Americans are exposed to a cumulative 5.3 trillion online

ad impressions each year and a daily diet of 500 million

tweets, 4 billion YouTube videos, 58 million photos shared

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Table 15.1: Possible

Advertising

Objectives

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Ad: Pepsi

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Key Term:

Advertising budget

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Key Term:

Advertising

strategy

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Photo: Advertising

Clutter

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on Instagram, 5 million article pins on Pinterest, and 4.75

billion pieces of shared content on Facebook

Breaking Through the Clutter. Ads are sandwiched in

with a clutter of other commercials, announcements, and

network promotions, totaling nearly 20 minutes of

non-program material per primetime hour with commercial

breaks coming every six minutes on average.

Such clutter in television and other ad media has created an

increasingly hostile advertising environment.

Just to gain and hold attention, today’s advertising

messages must be better planned, more imaginative, more

entertaining, and more emotionally engaging to consumers.

Merging Advertising and Entertainment

To break through the clutter, many marketers are now

subscribing to a new merging of advertising and

entertainment, dubbed “Madison & Vine.”

The aim of advertainment is to make ads themselves so

entertaining, or so useful, that people want to watch them.

Branded entertainment (or brand integrations) involves

making the brand an inseparable part of some other form of

entertainment. Product placement is the most common

form of brand integration.

Another form is called native advertising, which is

advertising or other brand-produced online content that

looks in form and function like the other natural content

surrounding it on a web or social media platform.

Message and Content Strategy

The first step in creating effective advertising messages is

to plan a message strategy—the general message will be

communicated to consumers.

Developing an effective message strategy begins with

identifying customer benefits that can be used as

advertising appeals.

The advertiser must next develop a compelling creative

concept—or “big idea”—that will bring the message

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Key Terms:

Madison & Vine

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Photo: Branded

Entertainment

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Key Term:

Native advertising

(sponsored content)

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Key Term: Creative

concept

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Ad: GE

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strategy to life in a distinctive and memorable way.

Advertising appeals should have three characteristics:

1. Appeals should be meaningful.

2. Appeals must be believable.

3. Appeals should be distinctive.

Message Execution. The advertiser has to turn the big idea

into an actual ad execution that will capture the target

market’s attention and interest.

Execution styles include the following:

Slice of life: This style shows one or more “typical”

people using the product in a normal setting.

Lifestyle: This style shows how a product fits in

with a particular lifestyle.

Fantasy: This style creates a fantasy around the

product or its use. For instance, many ads are built

around dream themes.

Mood or image: This style builds a mood or image

around the product or service, such as beauty, love,

or serenity.

Musical: This style shows people or cartoon

characters singing about the product.

Personality symbol: This style creates a character

that represents the product.

Technical expertise: This style shows the

company’s expertise in making the product.

Scientific evidence: This style presents survey or

scientific evidence that the brand is better, or better

liked than one or more other brands.

Testimonial evidence or endorsement: This style

features a highly believable or likable source

endorsing the product.

The advertiser must choose the tone, words, and format for

the ad.

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Key Term:

Execution style

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Ad:

Sherwin-Williams