Advertising strategy
UV6942 Rev. Sept. 6, 2016
This case was prepared by Sylvie Thompson, Case Writer; Paul W. Farris, Landmark Communications Professor of Business Administration; and Thomas J. Steenburgh, John L. Colley Professor of Business Administration. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation. Copyright 2014 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies, send an e-mail to sales@dardenbusinesspublishing.com. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School Foundation.
Progressive Insurance: Making Pay As You Drive a Snap for Consumers
It was fall 2013, and Heather Day, marketing director for the Progressive Corporation’s Snapshot program, was sitting in her office in Mayfield, Ohio, evaluating her options for the next Snapshot advertising campaign. Her budget was almost exhausted and she needed one more campaign to take the program into 2014. Day knew that the Progressive executives viewed Snapshot as a strategic tool with which to maintain the company’s competitive pricing edge within the industry. It was her job to convince consumers that the new Snapshot technology was attractive. She was struggling to decide which campaign to recommend.
Should Day recommend leveraging Snapshot with Flo? The always perky Flo, with her classic navy headband and matching sneakers along with her tricked-out name tag, had turned Progressive Insurance into a household name. Flo first appeared in television commercials in 2008 as the upbeat Progressive store clerk. She quickly gained a following on various social media sites such as Twitter. By 2013, some would argue, she had reached iconic status—she had almost 5 million fans on Facebook alone. Could Flo do it again and turn Snapshot into a household program, or were there limits to how far Progressive could push the character?
Alternatively, Day could opt for different advertising campaigns already in use, such as Rate Sucker. The Rate Sucker campaign focused on how bad drivers hurt good drivers’ rates. It made the point by portraying a bad driver as a “Rate Sucker,” someone who paid less than the risk he or she actually presented, resulting in good drivers paying more. Snapshot was presented as an antidote to this problem by allowing good drivers to prove that they were good drivers. Progressive knew it could offer better rates to these drivers because past driving behavior was the best predictor of future driving behavior (see Exhibit 1).
Day was wondering how best to position Snapshot. She wanted it to appear as a cool, fun-to-use technology that also offered an innovative personalized insurance rate to drivers based on their actual driving habits.
The Progressive Corporation
Joseph Lewis and Jack Green, two young lawyers who would consistently challenge the norms of the insurance industry, founded Progressive in 1937. One of their first innovations was to allow drivers to pay their insurance premium through a payment plan. Prior to this, the norm was to set premiums based on noncompetitive rate tables and to require drivers to prepay their insurance. Many other new ideas would follow.
In the early 1950s, leading insurance companies began segmenting customers based on age and driving record. The statistically best drivers became known as “standard-risk” drivers, and the leading insurance companies would only issue insurance to these drivers. In contrast, Progressive focused on “high-risk” or
For the exclusive use of A. Weiner, 2018.
This document is authorized for use only by Allison Weiner in Advertising Strategy-Spring 2018 taught by David Basch, SUNY - New Paltz from January 2018 to July 2018.
Page 2 UV6942
“nonstandard” drivers. Progressive turned this segment into a highly profitable business through advanced actuarial standards. Throughout the 1950s and 1960s, the company invested heavily in data collection and analytical tools. By mapping specific data trends, Progressive was able to derive more accurate pricing policies that matched key risk factors. For example, the company discovered that individuals arrested for drunk driving were far less likely to drive impaired again if they had children.
Progressive developed a unique marketing strategy to reach the nonstandard customer segment. Unlike traditional insurance companies, which established dedicated agency channels, Progressive opted to exclusively sell through an independent agent network. By 1992, Progressive had become the nation’s largest provider of automobile insurance through this channel, leveraging a base of roughly 30,000 agents. Even more impressive was the fact that Progressive had achieved this growth with no advertising, which it did not do until 1994. Company officials often joked that they were the fifth-largest U.S. auto insurer, yet no one had heard of them.
Progressive’s growth in the nonstandard insurance market would be virtually unchallenged until the late 1980s. From 1970 to 1992, Progressive consistently outperformed the industry, averaging a 3% annual profit margin on underwriting. During the same period, its competitors averaged a 7% annual loss. Traditionally, the industry did not make money selling insurance but from profitable returns on investment of reserves.
Troubling Times
A few events in 1988 caused turmoil in the industry and set the groundwork for a significant transformation at Progressive. The first crisis was regulatory. In response to growing consumer anger, California—which at that time accounted for 28% of Progressive’s business—passed Proposition 103. This law mandated a 20% cut in 1987 auto insurance premiums and refunds to many customers after its 1988 adoption. This took a big toll on Progressive’s business. By 1993, Progressive’s revenues in California had been reduced from their high of $305 million to only $50 million.
More important, Proposition 103 sent a message to the industry. The magazine Fast Company quoted Progressive president and CEO Peter Lewis (son of founder Joseph Lewis) as saying “Remember the line from the movie Network? ‘I’m mad as hell and I’m not going to take it anymore.’ That’s what voters were saying. It was a wake-up call. I decided that from then on, anything we did had to be good for the consumer or we weren’t going to do it.”1
The second crisis was the emergence of competition in what had become Progressive’s bread and butter— the nonstandard policyholder. Allstate decided to lower its premiums for nonstandard drivers in an attempt to become the largest provider of insurance. Once Allstate adjusted its rates, several other companies followed suit.
Innovations at Progressive
Rather than viewing these challenges as a threat, Lewis saw them as an opportunity to grow and made a number of strategic changes in the direction of the company. In 1992, Progressive launched Express Quote in San Diego, California. For $25, consumers received a printout of the rates from 10 of the largest auto insurers in California with a money-back guarantee if the customer was not satisfied with the result or if the chosen insurance company did not honor the rate provided. The notion of an auto insurance company offering comparison rate services quickly attracted media attention. On October 4, 1992, Ralph Nader wrote “Wake-
1 Clark Salter, “Progressive Makes Big Claims,” Fast Company, October 1998.
For the exclusive use of A. Weiner, 2018.
This document is authorized for use only by Allison Weiner in Advertising Strategy-Spring 2018 taught by David Basch, SUNY - New Paltz from January 2018 to July 2018.
Page 3 UV6942
Up Call for Insurance Concerns” for the New York Times. The op-ed featured Peter Lewis talking about Proposition 103 and Progressive’s response. Lewis highlighted their new auto insurance comparison rate service.
Lewis also recognized that Progressive would need to expand its customer base to include standard drivers in order to make its growth targets. In 1993, the company established pilot programs to sell standard insurance policies in Texas, Florida, Virginia, Ohio, and Illinois. These programs focused on writing standard lower-risk policies, which at the time constituted only 4.5% of the company’s written premiums. In 1997, Progressive would launch its standard-risk program into the California market.
In 1994, Progressive launched its Immediate Response Vehicles (IRV) program to settle claims at the scene of an accident. This unique service reduced the stress associated with the claims experience and helped put the policyholder’s life back in order as quickly as possible. Progressive equipped each IRV with a laptop and two powerful computer programs: Estimatics and Claims Workbench. Through these onboard systems, claims representatives were able to access customer accounts, locate tow trucks, and arrange for rental cars on the spot. More important, claims representatives could quickly and accurately estimate the parts and labor needed to repair the vehicle and then write a check for the damage where the accident occurred. The white SUVs became prominent symbols of the company and were featured in its advertisements. The service’s later claim to fame was related to an accident wherein the claims representative had arrived at the accident before the police had.
In 1995, Progressive would again lead the industry, becoming the first to launch a website. The site evolved over time, and by 1997, consumers could not only compare prices but also purchase insurance online. The site would continue to expand into the early 2000s to include online claims reporting, repair-appointment scheduling, and tracking. Between 1999 and 2005—a period roughly congruent with the broader use of the Internet—Progressive saw a compound annual growth rate (CAGR) of about 18% per year in written premiums, significantly outpacing its competition while still maintaining profitable underwriting practices.2 (See Exhibit 2 for Direct and Agency channel revenue.)
From the consumer’s perspective, the new website informed them of the advantages that an independent agent could provide over a dedicated one. (Other insurance companies, such as State Farm, used dedicated agents who represented only one company.) The website allowed consumers to search for up to 10 local independent Progressive agents. Consumers could also receive a quote and have their referral information sent electronically to an agent of their choice to complete the sale. In addition, the site provided consumers with the ability to manage their policies, pay their premiums, view and print documents, and make simple policy changes.
For the agent, the site provided marketing materials including print-ad templates, tools to identify publications in which to advertise their agency, thank-you and referral e-mail templates, postcards and high- quality banners, and a source of leads.
Independent Agents versus Direct-to-Consumer Sales
Even though adding a direct channel created significant challenges, Progressive realized it needed to expand its coverage to serve a broader and more diverse customer base. Progressive management saw its use of multiple channels as being consistent with its desire to please its customers. Said one company official, “We want to
2 Presentation provided by Progressive, 2006.
For the exclusive use of A. Weiner, 2018.
This document is authorized for use only by Allison Weiner in Advertising Strategy-Spring 2018 taught by David Basch, SUNY - New Paltz from January 2018 to July 2018.
Page 4 UV6942
provide the information the customers need and to provide it on their terms. We don’t care if the service is in person, over the phone, or on-line.”3
Given the different buying experiences and services provided, Progressive treated the policies sold through the direct and agent channels as different products. Indeed, different pricing algorithms were used for quoting policies sold directly versus those sold through agents. As a result, a customer could receive a different price for the same coverage quoted by an agent versus directly. The reason for having separate pricing algorithms was the difference in the complexity of their insurance needs. Customers with simple insurance needs such as single-car insurance, regardless of being standard or nonstandard, tended to shop directly. By default, these customers also tended to be younger and single. Customers who had more complex needs, such as bundling of car, home, and umbrella insurance, tended to work directly with an agent. These customers also tended to be older and married. Their insurance needs were a natural reflection of their changing lifestyle.
Progressive had come to realize that the acquisition costs of the two channels were different too. Direct- to-consumer sales required significant ongoing cost in marketing and customer-support services. The acquisition cost of the independent agent channel was primarily due to the commission fee.
The direct channel experienced rapid growth. In 1998, about 10% to 15% of the company’s business was generated through the direct channel. By 2004, direct-channel activities continued to outpace independent agent sales and accounted for roughly 31% of the company’s revenues. By 2012, Progressive was number two in the direct channel behind GEICO. (See Table 1 and Figure 1 for more detail.)
Table 1. Progressive insurance sales channels—features and characteristics.
Agency Direct
#1 in the independent agency channel 15% share of independent agency business >35,000 licensed agencies Low cost: 20.3 expense ratio, vs. 26.0 for all
independent agency companies
#2 in the channel, behind GEICO Ranked #1 website Mobile devices offer a new channel to communicate
with consumers Solicit business via: Media: TV, radio, print, outdoor E-marketing: Search engines, portals, affiliates Direct mail: Higher acquisition costs, but
incremental business Data source: Progressive Insurance Analysis, based on 2012 data.
Inevitably, the growth in the direct-to-consumer channel created conflict with independent agents. Independent agents had long complained about Progressive’s relatively low commissions. The industry average for independent agents was in the 15%-to-20% range of the annual policy value.4 Progressive’s commission rates ranged from 8% to 10%. Agents were now worried that they would be entirely cut out of the business. “Over the years, many independent agents have grumbled about Progressive’s commitment to the independent agency distribution channel,” the online Insurance Journal wrote in a September 2004 article. “And now some have speculated on Insurance-Journal.com’s comment pages and elsewhere whether the company is moving to cut independent agents out of the lucrative Progressive brand loop altogether.”5
3 Clark Salter, “Progressive Makes Big Claims,” Fast Company, October 1998. 4 Leslie Scism, “Insurance Fees, Revealed,” Wall Street Journal, March 30, 2012. 5 Kevin O’Reilly and Andrew Simpson, “Progressive Weighs Rebranding for Independent Agency Force,” Insurance Journal, September 20, 2004.
For the exclusive use of A. Weiner, 2018.
This document is authorized for use only by Allison Weiner in Advertising Strategy-Spring 2018 taught by David Basch, SUNY - New Paltz from January 2018 to July 2018.
Page 5 UV6942
Figure 1. Percentage of revenue by channel in the Personal product line, 1999 to 2012.
Data source: Progressive Insurance analysis, based on 2012 data.
Yet, independent agents remained central to Progressive’s marketing strategy, as they were still the exclusive sales channel for Progressive’s other customer segments (see Table 2).
Table 2. Insurance customer segments and sales channel.
Personal Commercial Other Indemnity Private Insurance for automobiles, motorcycles, boats, and recreational vehicles
Corporate insurance for company-owned automobiles and trucks
Professional Liability Insurance
Sales Channel: 1. Independent Agents 2. Direct to Consumers
Sales Channel: 1. Independent Agents
Sales Channel: 1. Independent Agents
Data source: Progressive Corporation company records.
Usage-Based Insurance
Usage-based insurance (UBI) was a program that allowed consumers to share information about when, how much, and how their cars were driven. UBI data were a far superior method of determining driver risk because they provided real-time information about the behavior of particular drivers. This personalized data was a better predictor than data commonly used within the industry, such as vehicle type, driving history, marital status, age, gender, or credit history. Progressive had put significant effort toward implementing the UBI program on a large-scale basis.
Consumer knowledge about UBI programs had grown significantly, but they were still a relatively new concept for many consumers. Awareness had more than tripled from 10% in 2010 to 36% in 2013. 64% of consumers were either unaware of UBI or were confused about what it meant. Market penetration remained
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1 9 9 9
2 0 0 0
2 0 0 1
2 0 0 2
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
2 0 1 2
Agency
Direct
For the exclusive use of A. Weiner, 2018.
This document is authorized for use only by Allison Weiner in Advertising Strategy-Spring 2018 taught by David Basch, SUNY - New Paltz from January 2018 to July 2018.
Page 6 UV6942
low, as only 3% of consumers used UBI products. The factors that drove UBI enrollment can be seen in Table 3.
Table 3. Adoption factors.
Factor Number-One Ranking Top-Three Ranking Receive discount 34% 56% Opt out without penalty 10% 41% Control over what you pay 14% 38% Choose information provided 10% 25% Child driving information 9% 22%
Data source: LexisNexis, “Consumers & Usage Based Insurance, 2013 Consumer Research Results,” March 2013.
Consumers were becoming more comfortable with the idea of insurance companies using actual driving data to determine rates. Concerns that companies had access to too much information dropped from 77% in 2010 to 70% in 2013. Still, consumers felt more comfortable if companies used traditional factors to determine rates (see Figure 2).
Figure 2. Factors that should be used to determine rates.
Source: LexisNexis, “Consumers & Usage Based Insurance, 2013 Consumer Research Results,” March 2013.
Furthermore, significant differences were found across customer segments. Segments could be found depending both on the consumers’ ages (Exhibit 3) and their willingness to accept risk (Exhibit 4).
Product Development History
Progressive made a number of attempts to introduce UBI, and the technology improved with each generation (see Figure 3). The first UBI program, which took place in Texas over a three-year period from 1998 to 2001, required retrofitting global positioning system (GPS) equipment into a user’s vehicle to measure
> 75% of Consumers
Driving record
Number of accidents past 3 years
Number of claims filed
>50% of Consumers
Age of driver
Driving over speed limit ‐ city
Actual driving data past 3 months
Type of vehicle
Driving over speed limit ‐ hwy
Age of vehicle
>25% of Consumers
Miles driven per year Driving under speed limit – hwy Sudden stops/hard braking Rapid acceleration Driving under speed limit ‐ city Type of roads ‐ city vs. highway Time of day driving
<25% of Consumers
Gender of driver
Bold denotes data that could be collectible under an UBI Program
Factor should be used for determining premium rates less more
For the exclusive use of A. Weiner, 2018.
This document is authorized for use only by Allison Weiner in Advertising Strategy-Spring 2018 taught by David Basch, SUNY - New Paltz from January 2018 to July 2018.
Page 7 UV6942
how much, when, and where the vehicle was driven. Customers liked the program because enrollment could save them money. Progressive discontinued it, however, because of the high cost and complex logistics of installing and maintaining the GPS devices. The device was roughly the size of a car battery.
Figure 3. Progressive Pay As You Drive devices.
Original Device—1999 TripSensor Device—2004 MyRate Device—2007
Source: Progressive Corporation.
Progressive would again attempt a UBI program in Minnesota in 2004 through a program called TripSense. Progressive had learned from its first attempt: the technology that supported the TripSense program was considerably simpler. TripSense leveraged technology already built into the vehicle—rather than requiring a full retrofit of the new technology into the vehicle—and did not include GPS technology.
TripSense used a device called a TripSensor to collect information about the duration of use, speed, time of day, and aggressive acceleration or hard-braking events. Customers inserted the TripSensor into an onboard diagnostic (OBDII) port that was available in most vehicles built after 1996. Toward the end of the policy period, a customer had the option of downloading his or her driving data from the TripSensor into a personal computer using software provided by Progressive. The software would use the driving data to calculate the amount of the customer’s discount, and the customer could then choose whether to send the data to Progressive or not.
Progressive made TripSense available to the first 5,000 Minnesota drivers to sign up for the program. Progressive offered customers an automatic 5% discount just for participating, and participants had the potential for an additional 20% discount. Progressive believed there was no downside to TripSense for its customers. After nine months, however, only 3,000 drivers had signed up. Progressive responded with a press release, “Minnesota Drivers Leaving Money on the Table When it Comes to Auto Insurance.” The piece pointed out that TripSense users were saving an average of 12% to 15% on their premiums. By the end of 2006, roughly 6,000 drivers had signed up and were saving an average of 11%.
A revised program under the trademark “MyRate” was launched in 2008. The new technology would require even less driver effort. MyRate used a telemetric device to gather driver data and a wireless transmitter to send data over a cell phone network. Progressive would continue to track information about how hard and how often drivers braked as well as miles driven. Progressive clearly stated, however, that it did not intend to track driver locations. Discounts under the MyRate program would range up to 60% depending on the state, and surcharges could reach 9%. The surcharge would be calculated for driving an excessive number of miles, driving at high speeds, and/or hard braking. The new program would be available in a total of 9 states and also sold for the first time through agents. Later, the program would expand to include 15 states.
By this time, Progressive had trademarked the term “Pay As You Drive” (PAYD) and had obtained a patent on its PAYD technology. The concept of PAYD was simply that how much one drove and how one drove should be reflected in one’s rate. Those who benefited most were low-mileage, defensive drivers who traveled mostly during the daytime hours. The MyRate device had evolved and was now about the size of a garage-door opener.
For the exclusive use of A. Weiner, 2018.
This document is authorized for use only by Allison Weiner in Advertising Strategy-Spring 2018 taught by David Basch, SUNY - New Paltz from January 2018 to July 2018.
Page 8 UV6942
In 2011, Progressive launched Snapshot (see Figure 4 and Exhibit 5). The program allowed drivers to share information about the time of day that they drove, the distance they traveled, and how hard they braked. One key design feature was that Snapshot did not include a GPS. Furthermore, enrollment was voluntary and drivers could receive up to a 30% discount based on their driving habits. The program was designed to provide drivers with an incentive for safe driving rather than to penalize bad driving habits. Progressive stressed that the data collected would not be used to increase rates and that its use was optional.
After enrolling in the Snapshot program, drivers would receive a Snapshot device within 10 days. The device would include installation instructions. Once installed, data would be transmitted to Progressive using Snapshot’s internal wireless modem.
Prior to its launch, the program had been further refined. The surcharge introduced under MyRate no longer applied. After the first 30 days under the program, customers could log into their policy and see how much of the initial discount they had earned. They could also see what changes they could make to their driving to save even more. At the end of the six-month term of the program, the customer returned the Snapshot device and their final discount was calculated. The initial 30-day discount applied to the first six-month policy term and the final discount applied to the policy going forward.
Advertising History at Progressive
Progressive began introducing its brand using television and radio advertising in Texas, Florida, and Ohio in 1994. It would expand its advertising reach to five other states a year later. Progressive’s advertising spend grew rapidly, from $23 million in 1997 to $124 million in 1999. The cornerstone of its advertising program in was its sponsorship of the 1999 Super Bowl Halftime Show. During halftime, the company introduced E.T., the character from the Stephen Spielberg movie. Unfortunately, the campaign did not get the response company officials were hoping for, and it was later abandoned.
Progressive would continue to refine its advertising approach throughout the early 2000s. By 2004, the company was advertising both nationally and locally in more than 100 designated markets. However, the company found that even as it increased advertising spending, so too did its competition; in fact, it did so at an even greater pace. The company noted in its 2006 annual filings “…our competitors’ stepped-up advertising increased the potential for our customers to search for lower prices in the marketplace.”6 In 2013, Progressive was the fourth-largest advertiser (Table 4).
6 Progressive Corporation form 10-K, 2006.
Figure 4. Progressive Snapshot device, 2011.
Source: Progressive Corporation.
For the exclusive use of A. Weiner, 2018.
This document is authorized for use only by Allison Weiner in Advertising Strategy-Spring 2018 taught by David Basch, SUNY - New Paltz from January 2018 to July 2018.
Page 9 UV6942
The fictional character Flo would begin appearing in commercials for Progressive in the fall of 2008. Flo was the extremely enthusiastic clerk who worked in the Progressive Superstore. In a December 15, 2008, article in Advertising Age, Flo was described as “a weirdly sincere, post-modern Josephine the Plumber who just really wants to help. She has: the brand is flourishing.”7 By 2013, Flo had become an iconic advertising figure, turning Progressive into a household brand. She had appeared not only in Progressive commercials but also in radio, print, and web banners. Fans could purchase their own Flo outfit. She quickly had her own Facebook page, and her fans dedicated multiple other websites to her.
Table 4. Top U.S. property and casualty insurance advertisers in 2013.
Advertising expense ($M) Personal lines direct premium
written Rank Insurer 2013 2012 Dollars in Millions
1 GEICO Corp. 1,175.3 1,117.5 18,564.6 2 Allstate Insurance Group 886.5 828.8 25,509.4 3 State Farm Mutual Automobile Insurance Co. 802.8 777.9 50,917.1 4 Progressive Insurance Group 595.4 526.0 15,407.4 5 Liberty Mutual Insurance Co. 423.2* 394.2 14,369.7* 6 Nationwide Mutual Insurance Co. 353.2 309.6 10,731.7 7 Farmers Insurance Group of Cos. 304.3 386.3 14,917.1 8 American Family Mutual Insurance Co. 144.2 153.3 4,912.0 9 Travelers Cos. Inc. 120.4 161.9 6,714.8 10 American International Group 120.3 151.2 (221.4)** 11 United Services Automobile Association 117.0 103.8 13,495.2 Total 5,041.6 4,910.4 175,317.7 Industry 6,044.8* 5,869.8 266,066.6*
Data compiled June 26, 2014.
Data source: Adapted from Terry Leone, “Progressive Ad Spend Keeps Flo-ing in 2013, Q1’14,” SNL Financial LC Data Dispatch, July 1, 2014.
Moving Forward
Since the launch of the Snapshot program, Progressive’s marketing had focused on discounts, while competitors were putting more emphasis on value-added services or teen driving and safety. Given the increased competitive activity and the various brand positionings of similar products, Day was beginning to question whether Progressive should promote specific product features or alternate messaging in future advertising. A couple of key talking points she had developed promoted the success of the program, such as the fact that 70% of drivers who enrolled obtained a lower rate and that the program was based on controllable behaviors.8
By early 2013, Progressive’s advertising campaign seemed to be paying dividends (see Figure 5). An internal study showed that consumer awareness of Snapshot was growing and that consumers were attributing Snapshot to Progressive. This latter finding corroborated the findings of a LexisNexis study that showed that consumers were more likely to attribute UBI to Progressive (78%) than to its competitors, such as Allstate (8%) and State Farm (6%).
Nevertheless, competition in UBI was growing. Allstate’s Drivewise program leveraged a device similar to Progressive’s to track mileage, braking, and speeds over 80 miles per hour—but the program was limited to
7 Bob Garfield, “The Bobby Awards,” Advertising Age, December 15, 2008. 8 Progressive Corporation company records.
For the exclusive use of A. Weiner, 2018.
This document is authorized for use only by Allison Weiner in Advertising Strategy-Spring 2018 taught by David Basch, SUNY - New Paltz from January 2018 to July 2018.
Page 10 UV6942
Illinois. State Farm had opted to go with a less technical approach, launching a self-reporting program. GMAC had launched a “Low-Mileage Discount Program with OnStar,” which recorded odometer readings in order to offer drivers discounts. Nine of the top 10 auto insurers were now running programs. The window to leverage Snapshot as a clear product differential and capture new customers would be closing fast.
Figure 5. Progressive Snapshot awareness (Q1 2013).
Source: Progressive Corporation.
Day’s immediate concern was to decide on which advertisement to spend her remaining marketing budget. She had three options from which to choose. (See scripts in Exhibit 6, Exhibit 7, and Exhibit 8.) Two of the spots used Flo to promote Snapshot. “World Gone Flo” promoted the idea that many other people have already switched to Snapshot. “Testimonials 2.0” showed that people who had switched to Snapshot were thrilled with their decision. Alternatively, Day could choose the “Leeches,” a spot based on the Rate Sucker theme. Copy testing showed that the spots had different strengths and weaknesses. Exhibit 9 shows the spots’ reach, breakthrough potential, and linkage to the brand message. Exhibit 10 shows the main ideas communicated in the spots. Exhibit 11 shows the spots’ performance against a number of specific evaluation measures.
Day was both excited and nervous about what lay ahead. She was pleased that Progressive was taking a leadership position in the emerging UBI market. But she wondered if and how the Snapshot program would affect the company’s relationship with its independent agents. She also recognized that the competition was moving fast and wondered how Progressive could best build upon its lead. The company’s history of innovations was well documented (see Exhibit 12), but the future of UBI was not assured.
For the exclusive use of A. Weiner, 2018.
This document is authorized for use only by Allison Weiner in Advertising Strategy-Spring 2018 taught by David Basch, SUNY - New Paltz from January 2018 to July 2018.
Page 11 UV6942
Exhibit 1
Progressive Insurance: Making Pay As You Drive a Snap for Consumers
Driving Behavior Is Progressive’s Most Predictive Rating Variable
Source: Progressive Corporation.
Exhibit 2
Progressive Insurance: Making Pay As You Drive a Snap for Consumers
Progressive Insurance Revenue from Personal Lines, 1999 to 2012 (in thousands of dollars)
Total Y/Y Change Agency Y/Y Change Direct Y/Y Change 2012 14,368 7% 8,104 6% 6,264 8% 2011 13,431 5% 7,627 3% 5,804 7% 2010 12,827 4% 7,420 0% 5,407 9% 2009 12,366 4% 7,415 1% 4,951 10% 2008 11,848 −1% 7,362 −4% 4,486 3% 2007 12,009 −2% 7,636 −3% 4,373 1% 2006 12,241 1% 7,904 −1% 4,337 6% 2005 12,069 4% 7,993 1% 4,076 10% 2004 11,612 16% 7,894 14% 3,718 20% 2003 10,051 27% 6,948 25% 3,103 31% 2002 7,908 22% 5,543 18% 2,365 32% 2001 6,494 11% 4,707 1% 1,787 46% 2000 5,864 11% 4,643 2% 1,221 64% 1999 5,294 16% 4,549 9% 745 85%
Data source: Progressive Insurance analysis, based on 2012 data.
0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60
For the exclusive use of A. Weiner, 2018.
This document is authorized for use only by Allison Weiner in Advertising Strategy-Spring 2018 taught by David Basch, SUNY - New Paltz from January 2018 to July 2018.
Page 12 UV6942
Exhibit 3
Progressive Insurance: Making Pay As You Drive a Snap for Consumers
Best Initial Targets Based on Age
Younger Middle Older 21 to 25 26 to 34 35 to 44 45 to 54 55 to 64 65+ Telematics Acceptable/Recognition Accept additional factors into rates Higher awareness of telematics Higher appeal of telematics Enrolled currently in telematics Likelihood to enroll at 10% discount Proclivity Toward Telematics Sharing of personal information Accident Driving See benefits of lowering rates/having more control
Persuadable Toward Telematics Interest in UBI benefits to drive participation
Three-month trial/six-month discount increases interest
Mobile Receptive Smartphone owner Interest in mobile telematics feature Likelihood to enroll in mobile at 10% discount
Data source: LexisNexis, “Consumers & Usage Based Insurance, 2013 Consumer Research Results,” March 2013.
For the exclusive use of A. Weiner, 2018.
This document is authorized for use only by Allison Weiner in Advertising Strategy-Spring 2018 taught by David Basch, SUNY - New Paltz from January 2018 to July 2018.
Page 13 UV6942
Exhibit 4
Progressive Insurance: Making Pay As You Drive a Snap for Consumers
Best Initial Targets Based on Willingness to Accept Risk
Avoider Evaluator Acceptor Telematics Acceptable/Recognition Accept additional factors into rates Higher awareness of telematics Higher appeal of telematics Enrolled currently in telematics Likelihood to enroll at 10% discount Proclivity Toward Telematics Sharing of personal information See benefits of lowering rates/having more control
Persuadable Toward Telematics Interest in UBI benefits to drive participation
Three-month trial/six-month discount increases interest
Mobile Receptive Smartphone owner Interest in mobile telematics feature Likelihood to enroll in mobile at 10% discount
Avoiders want full coverage regardless of age or value of vehicle.
Evaluators’ coverage depends on age and value of vehicle.
Acceptors want only minimal coverage regardless of age or value of vehicle.
Data source: LexisNexis, “Consumers & Usage Based Insurance, 2013 Consumer Research Results,” March 2013.
For the exclusive use of A. Weiner, 2018.
This document is authorized for use only by Allison Weiner in Advertising Strategy-Spring 2018 taught by David Basch, SUNY - New Paltz from January 2018 to July 2018.
Page 14 UV6942
Exhibit 5
Progressive Insurance: Making Pay As You Drive a Snap for Consumers
Screenshots of Online Service User Experience
Source: Progressive Corporation.
For the exclusive use of A. Weiner, 2018.
This document is authorized for use only by Allison Weiner in Advertising Strategy-Spring 2018 taught by David Basch, SUNY - New Paltz from January 2018 to July 2018.
Page 15 UV6942
Exhibit 6
Progressive Insurance: Making Pay As You Drive a Snap for Consumers
TV Copy Script: Flo Campaign
Title: “World Gone Flo” Length: :30 SECONDS
VIDEO: OPEN ON A WOMAN GETTING INTO HER CAR AND INSTALLING THE SNAPSHOT DEVICE. ZOOM OUT TO SEE FLO SITTING IN THE PASSENGER SEAT SMILING. THE WOMAN DOES A DOUBLE-TAKE WHEN SHE REALIZES FLO HAS APPEARED IN THE CAR.
VO: More and more folks are trying out Snapshot from Progressive. DISCLAIMER: Snapshot Discount (R) not available in all states. Progressive Casualty Ins. Co & affiliates. VIDEO: A MAN INSTALLS SNAPSHOT IN HIS CAR. FLO APPEARS IN HIS PASSENGER
SEAT, AGAIN SMILING. VO: A totally different way to save on car insurance. VIDEO: SEVERAL PEOPLE INSTALL THE SNAPSHOT DEVICE IN THEIR CAR. EACH
TIME, FLO APPEARS IN THE CAR AND INTERACTS IN A FUN WAY WITH THE DRIVER: E.G. NODDING ALONG TO A SONG,
VO: The better you drive, the more you can save. VIDEO: SEVERAL CARS PASS THROUGH A BUSY INTERSECTION. EACH CAR HAS FLO
IN THE PASSENGER’S SEAT. VO: The better you drive, the more you can save. No wonder Snapshot’s catching on. DISCLAIMER: Discounts up to 30%. VIDEO: TWO CARS PULL UP SIDE BY SIDE TO A STOPLIGHT. FLO IS IN THE
PASSENGER SEAT OF BOTH. BOTH CARS STOP CAREFULLY AT THE LIGHT. THE TWO FLOS EXCHANGE A GLANCE, ONE MOUTHS “CALL ME” WITH A HAND GESTURE.
VIDEO: SNAPSHOT DEVICE PLUGS INTO PROGRESSIVE LOGO. VO: Plug into the savings you deserve. With Snapshot from Progressive. DISCLOSURE: Prices vary based on how you buy.
Source: Progressive Corporation.
For the exclusive use of A. Weiner, 2018.
This document is authorized for use only by Allison Weiner in Advertising Strategy-Spring 2018 taught by David Basch, SUNY - New Paltz from January 2018 to July 2018.
Page 16 UV6942
Exhibit 7
Progressive Insurance: Making Pay As You Drive a Snap for Consumers
TV Copy Script: Testimonial Campaign
Title: “Testimonials 2.0” Length: :30 SECONDS
VIDEO: OPEN ON FLO IN THE SUPERSTORE TALKING TO CAMERA. FLO: People really love Snapshot from Progressive! But don’t just listen to me; listen to these
happy Progressive customers!
DISCLAIMER: Snapshot® not available in all states. VIDEO: A MAN STANDS IN FRONT OF HIS CAR IN HIS DRIVEWAY. MAN: I plugged in Snapshot and 30 days later I was saving big on car insurance!
DISCLOSURE: Paid Actors. VIDEO: CUT TO ANOTHER WOMAN PLUGGING THE DEVICE INTO HER CAR. WOMAN 1: With Snapshot, I knew what I could save before I switched to Progressive.
VIDEO: CUT TO BILL AND TOM STANDING IN FRONT OF ANOTHER CAR, SMILING EAR TO EAR.
BILL: The better I drive, the more I save.
DISCLOSURE: Savings up to 30% TOM: I wish our company had something this cool.
TOM: You’re not filming this are you?
VIDEO: BILL AND TOM REALIZE THEY SHOULDN’T BE ON FILM PROMOTING SNAPSHOT. TOM FIRST COVERS HIS FACE WITH HIS BLAZER LIKE A CELEBRITY WOULD THEN TRIES TO COVER THE LENS OF THE CAMERA WITH HIS HAND.
THE RIVALS RUN OFF, AND DIVE INTO NEARBY BUSHES. CUT BACK TO FLO IN THE STORE WITH A SLIGHTLY PUZZLED LOOK.
FLO: Aw, camera shy. Snapshot from Progressive.
DISCLOSURE: Progressive Casualty Ins. Co & affiliates. VIDEO: SNAPSHOT DEVICE PLUGS INTO PROGRESSIVE LOGO. VO: Test drive Snapshot before your switch. Visit Progressive.com today. LOGO: Progressive - Local Agent/Progressive.com DISCLOSURE: Prices vary based on how you buy.
Source: Progressive Corporation.
For the exclusive use of A. Weiner, 2018.
This document is authorized for use only by Allison Weiner in Advertising Strategy-Spring 2018 taught by David Basch, SUNY - New Paltz from January 2018 to July 2018.
Page 17 UV6942
Exhibit 8
Progressive Insurance: Making Pay As You Drive a Snap for Consumers
TV Copy Script: Rate Sucker Campaign
Title: “Leeches” Length: :30 SECONDS
VIDEO: WE OPEN ON CARLOS, A CAUTIOUS, MIDDLE-AGED MOTORIST DRIVING CAREFULLY. SITTING SHOTGUN IS HIS SON; CARLOS JR. MUSIC IS PLAYING FROM THE RADIO. AS THEY DRIVE DOWN THE STREET, WE SEE A FIGURE APPEAR IN THE PASSENGER SIDE WINDOW. A MAN DRESSED IN JEANS AND A SWEATSHIRT IS RUNNING FULL SPEED TOWARD THE CAR. HE LEAPS ONTO THE HOOD AND ATTACHES HIS MOUTH TO THE WINDSHIELD. ALL GUMS AND TEETH. SUDDENLY, A WOMAN JUMPS ONTO THE WINDSHIELD, FOLLOWED BY ANOTHER MAN, THEN A TEENAGER, THEN A TRUCK DRIVER - ALL ATTACHING THEIR MOUTHS TO THE GLASS. THIS HAPPENS UNTIL THE WINDSHIELD IS COVERED WITH MOUTHS. FATHER AND SON START SCREAMING AND COME TO A STOP.
THEY LOOK AT EACH OTHER SCREAMING UNTIL THEY HEAR A KNOCK ON THE WINDOW. THEY TURN, AND IT'S A PROGRESSIVE REPRESENTATIVE. CARLOS ROLLS DOWN THE WINDOW.
DISCLAIMER: Progressive Casualty Ins. Co. & affiliates, Professional stunts. Do Not Attempt. CARLOS Jr: Ah! Ahhhh! There’s a guy on the window! Do something…dad! Ahhhh!
CARLOS: What. Is. Happening?
PGR REP: They’re rate suckers. Their bad driving makes car insurance more expensive for the rest of us.
PGR REP: Good thing there’s Snapshot from Progressive.
VIDEO: PGR REP HOLDS UP THE SNAPSHOT DEVICE PROMINENTLY. PGR REP: Snap it in and get a discount based on your good driving.
VIDEO: UPON CLICK, THE RATE SUCKERS RELEASE THEIR MOUTHS FROM THE WINDSHIELD. THEY ALL SLIDE OFF THE HOOD AND ONTO THE STREET. THEY ALL LOOK AROUND AND, LIKE ZOMBIES, RUN FOR ANOTHER CAR.
VO: Stop paying for Rate Suckers DISCLAIMER: Snapshot not available in all states VO: Stop paying for rate suckers. Try Snapshot free at Progressive.com END CARD: Progressive Logo - progressive.com/ratesuckers & Local Agent DISCLOSURE: Prices vary based on how you buy.
Source: Progressive Corporation.
For the exclusive use of A. Weiner, 2018.
This document is authorized for use only by Allison Weiner in Advertising Strategy-Spring 2018 taught by David Basch, SUNY - New Paltz from January 2018 to July 2018.
Page 18 UV6942
Exhibit 9
Progressive Insurance: Making Pay As You Drive a Snap for Consumers
Copy Script Testing Results
Note 1: Progressive commercials typically outperform the results of IPSOS database of all 30-second commercials that show Reach, Breakthrough, and Linkage at Average.
Note 2: Evaluation of Reach, Breakthrough, and Linkage is based on an overall industry-defined scale.
Source: Progressive Corporation and IPSOS ASI Advertising Research (2010–2013).
World Gone Flo Testimonials Leeches
Reach Potential An ad’s potential to breakthrough the clutter & leave viewers with a
branded message
Average Average Above Average
Breakthrough The extent is your ad’s storyline is expected to get noticed & engage
viewers
Sig. Below Average Sig. Above Average
Above Average
Brand Linkage To what extent is your ad expected to get recognized for the brand
Average Average Average
Main Idea Communication Consumer playback of message
Saves you money (18%); Safe driver discounts (14%)
You save money (30%); The better you drive the more you
save (11%)
Shapshot/record of driving habits
(19%); Stop paying for
bad drivers (13%)
For the exclusive use of A. Weiner, 2018.
This document is authorized for use only by Allison Weiner in Advertising Strategy-Spring 2018 taught by David Basch, SUNY - New Paltz from January 2018 to July 2018.
Page 19 UV6942
Exhibit 10
Progressive Insurance: Making Pay As You Drive a Snap for Consumers
Main Idea
Top-of-mind playback of 40%+ indicates strong takeaway of a single-minded message
Top-of-mind playback within ranges of 25–40% can occur when the message is not single-minded, but split across different ideas—ideally connected ideas.
Playback <25% can also occur with a less focused message or when a specific message is not clearly communicated.
Source: Progressive Corporation.
For the exclusive use of A. Weiner, 2018.
This document is authorized for use only by Allison Weiner in Advertising Strategy-Spring 2018 taught by David Basch, SUNY - New Paltz from January 2018 to July 2018.
Page 20 UV6942
Exhibit 11
Progressive Insurance: Making Pay As You Drive a Snap for Consumers
Copy Script Testing Results (Change from Control)
Source: Progressive Corporation.
Significantly Above Benchmark
At Benchmark
Significantly Below Benchmark
For the exclusive use of A. Weiner, 2018.
This document is authorized for use only by Allison Weiner in Advertising Strategy-Spring 2018 taught by David Basch, SUNY - New Paltz from January 2018 to July 2018.
P ag
e 21
U V
69 42
E xh
ib it
1 2
P ro
g re
ss iv
e I
n su
ra n
ce :
M a
k in
g P
a y
A s
Y o
u D
ri ve
a S
n a
p f
o r
C o
n su
m e
rs
M aj
o r
M ile
st o
n es
( 19
87 –2
01 3)
So ur
ce : P
ro gr
es si
ve C
o rp
o ra
ti o
n .
1 9 8 7
1 9 8 9
1 9 9 1
1 9 9 3
1 9 9 5
1 9 9 7
1 9 9 9
1 9 9 9
P ro g re ss iv e W
e b si te
2 4 /7 S e rv ic e
S ta n d a rd In su ra n ce
P ro g ra m L a u n ch e d
E x p re ss Q u o te
C o n su m e r C re d it
H is to ry
Im m e d ia te R e sp o n se
C la im
S e rv ic e
P ro p o si ti o n 1 0 3
P ro g re ss iv e L is te d
o n N Y S E ( P G R )
2 4 /7 C u st o m e r S e rv ic e v ia
1 8 0 0 ‐P ro g re ss iv e
Im m e d ia te R e sp o n se
V e h ic le s
F ir st M a rk e ti n g C a m p a ig n
O n li n e A u to In su ra n ce
C o m p a ri so n
O n li n e P u rc h a se o f
A u to In su ra n ce
O n li n e Q u o te s & P u rc h a se
o f M o to rc y cl e , B o a t a n d
W a te rc ra ft In su ra n ce
1 9 9 7
1 9 9 7
1 9 9 9
2 0 1 3
1 9 9 9
2 0 0 0
2 0 0 1
2 0 0 2
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 2
P ro g re ss iv e
M o b il e A p p
" F lo "
is B o rn
S n a p sh o t
La u n ch e d
P ro g re ss iv e
D ri v e L a u n ch e d
M y R a te
La u n ch e d
D ri v e In su ra n ce
In tr o d u ce d
T ri p S e n se
La u n ch e d
U sa g e B a se P ro g ra m
La u n ch e d ( T e x a s)
S u p e r B o w l
H a lf ti m e S h o w
2 0 1 1
2 0 1 0
2 0 1 3
F lo T e a m s
U p w it h t h e
M in io n s
For the exclusive use of A. Weiner, 2018.
This document is authorized for use only by Allison Weiner in Advertising Strategy-Spring 2018 taught by David Basch, SUNY - New Paltz from January 2018 to July 2018.