Insurance Advertising Inside The Numbers Jon Swallen TNS Media Intelligence November 5, 2009

Insurance AdvertisingInside The Numbers

Jon SwallenTNS Media IntelligenceNovember 5, 2009

My Outline

• Focus on ad expenditures– Category and key segments– Top advertisers– Dollar volume and media allocations

• How ad messaging has evolved

• TV sports advertising

TNS Media Intelligence

• Leading provider of strategic advertising and marketing information toU.S. advertisers, agencies and media properties

• Competitive intelligence across 18 media segments

• Monitoring the industry:– 3.1 million unique products; 400,000 companies– $140+ billion in ad expenditures– over 500,000 ad occurrences collected every day

Media Coverage

Network TV

Cable TV

Syndication

Spot TV

Hispanic TV

National Newspapers

Local Newspapers

Hispanic Newspapers

Network Radio

National Spot Radio

Local Radio

Internet (display)

Outdoor

Consumer Magazines

B-to-B Magazines

Sunday Magazines

Local Magazines

Hispanic Magazines

Handling of 2009 Data

• Actual spending available through August 2009

• 2009 growth rates are based on January-August

• Full year 2009 spending projections made by applying YTD growth rates against 2008 ad dollars

– Notated as “2009 (e)”

Insurance Advertising Trends

Benchmarks

-7.4%

0.7%

-15.2%

-4.1%

-20% -15% -10% -5% 0% 5%

InsuranceCategory

Total AdSpend

% Change in Ad Spending vs. Prior Period

2008

2009 YTD

Source: TNS Media Intelligence

Financial Advertising Down 19% YTDPacing at $11.0 Billion

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

$ B

illio

ns

Total Financl Pdts Insurance Banking Credit Cards

2008 2009 (e)Source: TNS Media Intelligence

-18.7%-7.4%

-22.5%-39.0%

-18.4%

$10.99

$4.49

$3.75$1.72 $1.03

$13.47

$5.52

$4.05$2.21

$1.69

Insurance Ad Spend Growth Rates Slipping

$3.62

$4.01 $4.05$3.75

0.0

1.0

2.0

3.0

4.0

5.0

$ B

illio

ns

2006 2007 2008 2009 (e)

Total Ad Spend

+10.8% +0.7%

Source: TNS Media Intelligence

-7.4%

Insurance Advertising Segments

Auto Private passenger auto; motorcycle; RV, et al

Health Medical; dental; drug; Medicare; disability; et al

Other Insurance Products

Any other specific insurance product, including life; home; property; business; annuities; et al

General Promotion

General promotion of an insurer and its product lines, but no clear focus on any specific product

Ad Expenditures By Product Segment2009 Projected

Source: TNS Media Intelligence

$1,649

$659

$287

$1,150

0

200

400

600800

1,000

1,200

1,400

1,600

1,800

2,000

$ M

illio

ns

Auto Health Other Pdts Gen Promo

2009 (e)

-16.7%

-9.6%

+0.5%

-9.5%

Share of Category Ad Spend

Source: TNS Media Intelligence

2009 YTD

Gen Promo

Health

Other Ins

Auto42.5%

10.1%

21.8%

25.7%

Gen Promo

Health

Other Ins

Auto47.0%

7.6%

15.6%

29.8%

2006

Top Advertisers – 2008

Rank Insurer Ad $ (millions) % Auto % Gen

Promo

1 Geico 622.7 80% 20%

2 State Farm 403.7 53% 45%

3 Allstate 357.2 74% 22%

4 Progressive 293.5 95% 4%

5 Nationwide 222.5 69% 27%

Source: TNS Media Intelligence

Top Advertisers – 2008

Rank Insurer Ad $ (millions) Rank Insurer Ad $

(millions)

1 Geico 622.7 6 AARP 123.1

2 State Farm 403.7 7 AIG 102.3

3 Allstate 357.2 8 Liberty Mutual 100.1

4 Progressive 293.5 9 Farmers 95.8

5 Nationwide 222.5 10 Esurance 94.2

Source: TNS Media Intelligence

% Change In Ad Spend:Jan-Aug 2009

-3.2%-5.5%

5.6%

-29.7% -30.8%

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

Geico St Farm Progrsve Allstate N-wide

Source: TNS Media Intelligence

Auto Insurance

Background

• Fragmentation vs. Concentration

• Short purchase cycle

Background

• Fragmentation vs. Concentration

• Short purchase cycle

• A price-driven marketplace

• Advertising’s role: build/maintain awareness and recognition

Auto Insurance Advertising

Source: TNS Media Intelligence

$1,300

$1,400

$1,500

$1,600

$1,700

$1,800

$1,900

$ M

illio

ns

2006 2007 2008 2009(e)

$1,537

$1,712

$1,822

$1,649

+11.3%

+6.4%

-9.5%

Auto Insurance Spending Is Concentrated

2008 (millions)

2009 e (millions)

2008 % Share

2009 e % Share

TOTAL $1,822 $1,768 100.0% 100.0%

Top 6 Advtsrs $1,504 $1,250 83% 76%

Remainder $318 $518 17% 24%

Source: TNS Media Intelligence

2008 Ad SpendAuto Insurance

$498

$278$266

$215$154

$94

$0

$100

$200

$300

$400

$500

$600

$ M

illio

ns

Geico Prgsve Allstate St Farm N-wide Esurance

Source: TNS Media Intelligence

% Change In Ad Spend:Jan-Aug 2009

-2.4% -2.6%

-41.2%

-25.9%

-70.3%

45.6%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

Geico Prgsve Allstate St Farm N-wide Esurance

Source: TNS Media Intelligence

Ad Spend Growth By Mid-Size Auto Insurers

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$ M

illio

ns

Travelers Farmers Liberty Mutual

Jan-Aug 08 Jan-Aug 09

$23.8

$43.5

$23.3

Source: TNS Media Intelligence

Top Brands Pursue Different Media Mixes

% Share Of Ad Spend: Jan-Aug 2009

Geico Progressive Allstate State Farm

National TV 57% 69% 87% 72%

Local TV 11% 10%

Internet Display 17% 18%

Radio 16%

Magazines 13%

Source: TNS Media Intelligence

Ad Messaging

• Typical message points are price, policy features and customer service

• Have auto insurers changed their ad message in response to shifting consumer attitudes brought on by the recession?

• TNS analysis of TV commercial messages– Big Four auto insurers– Jan 2008 thru June 2009– More than 100 unique commercials analyzed

GEKKO CAVEMEN

CONTINUITY

KASHCELEBRITY STORYTELLER

COMPLEMENTARY

% Of Total TV Ad Spend In QtrCampaign: Storyteller Kash

Message Customer Service Cost Savings

Q1 ‘08 41% ---

Q2 ‘08 25% ---

Q3 ‘08 21% ---

Q4 ‘08 11% 15%

Q1 ‘09 --- 88%

Q2 ‘09 --- 73%

Source: TNS Media Intelligence

Safe Driver Bonus Accident Forgiveness

Coverage Checkup Switch and Save

% Of Total TV Ad Spend Within The Quarter

Message Accident Forgiveness

Coverage Checkup

Safe Driver Bonus

Switch & Save

Q1 ‘08 30% --- 45% ---

Q2 ‘08 31% 6% 50% ---

Q3 ‘08 14% 50% 28% ---

Q4 ‘08 22% 53% 14% ---

Q1 ‘09 3% 5% 8% 72%

Q2 ‘09 6% --- 7% 86%

Source: TNS Media Intelligence

% Of Total TV Ad Spend In Qtr

Message Service & Savings

Savings Teen Driving

Q1 ‘08 58% 26% ---

Q2 ‘08 27% 62% 4%

Q3 ‘08 34% 62% 4%

Q4 ‘08 11% 60% 23%

Q1 ‘09 --- 44% 43%

Q2 ‘09 --- 32% 61%

Source: TNS Media Intelligence

% Of Total TV Ad Spend In Qtr

Message Service & Savings

Savings Teen Driving

Q1 ‘08 58% 26% ---

Q2 ‘08 27% 62% 4%

Q3 ‘08 34% 62% 4%

Q4 ‘08 11% 60% 23%

Q1 ‘09 --- 44% 43%

Q2 ‘09 --- 32% 61%

Source: TNS Media Intelligence

Recap

• Spending growth has (temporarily) abated

• Fierce competition among the large national brands– Puts pressure on other advertisers to increase ad spend

• National TV still the cornerstone of media campaigns

• Ad messaging has moved toward price savings as consumers have become more value-conscious

Health Insurance

Definitions

• “Health Insurance” includes these products:– Medical– Dental– Prescription drug– Medicare supplement– Long-term care– Disability

Background

• Highly competitive industry– 5,000+ companies

• Markets– Employer-sponsored plans– Individual policies

• Advertising primarily targeted to the individual market

Health Insurance Advertising

Source: TNS Media Intelligence

$789 $780

$730 $659

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$ M

illio

ns

2006 2007 2008 2009(e)

-1.2%-6.5% -9.6%

Health Insurance AdvertisingSpend By Product Line

Source: TNS Media Intelligence

51%

$0 $100 $200 $300 $400 $500

Millions

Disability

Medicare

Medical

20082009(e)

-24.8%

+4.5%

-9.9%

Ad Spending Is Fragmented

2008 (millions)

2009 e (millions)

2008 % Share

2009 e % Share

TOTAL $730 $659 100.0% 100.0%

Top 3 Advtsrs $217 $201 30% 31%

Remainder $513 $458 70% 69%

Source: TNS Media Intelligence

600+ Advertisers in 2008

• Network TV: 70-75% of spend

• Sports: Nearly 40% of the TV budget

• 8 new TV spots this year

• New tag line – “Under our wing”

• Small business campaign

• Network TV: 70-75% of spend

• Sports: Nearly 40% of the TV budget

• 8 new TV spots this year

• New tag line – “Under our wing”

• Small business campaign

• TV budget shift to network– Able to clear :60 DR spots

• 25-30% of budget outside of TV

• Targeting their core market

Recap

• Three consecutive years of spending declines

• Smaller-sized budgets and fragmented spending

• Medicare supplement plans accounting

TV Sports

Background

• TV Sports – a $10.5 billion ad marketplace and growing– $600 million from insurance advertisers

• Desirable programming and quality audiences

• Top insurance advertisers use a diversity of approaches– Commercial spots– Sponsored segments in TV broadcasts– Corporate sponsorships with leagues

Growth Rates

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

2007 2008 2009 YTD

% C

ha

ng

e In

Ad

Sp

en

d

Total TV TV Sports TV Sports, Insurance

Source: TNS Media Intelligence

TV Budget Allocation To SportsSept ’08 – Aug ‘09

$0

$50

$100

$150

$200

$250

$300

$350

$400

0% 10% 20% 30% 40% 50% 60% 70%

% Share: TV Sports

TV

Ad

Sp

end

(M

illi

on

s)

Prgsve

Geico

Allstate

St Farm

MetLife

N-wide

Liberty

Hartford

Aflac Travelers

Source: TNS Media Intelligence

Pick Your Field

Auto Racing Golf Pro FootballCollege

BasketballCollege Football

Aflac Met Life Geico Hartford Aflac

Nationwide Nationwide State Farm State Farm Allstate

Travelers Liberty

College Pigskin

All Sports Advertisers

9% of Sports Budgets

Insurance Advertisers

16% of Sports Budgets

Source: TNS Media Intelligence

Tennessee vs. Alabama

October 24, 2009

3:00-7:00pm EDT

CBS Television Network

An Example

Commercial Spots

Auto Allstate (3)Geico (4)Progressive (1)Travelers (1)

Life (Investments)John Hancock (3)NY Life (1)TIAA-Cref (4)

DisabilityAflac (3)

TIAA Cref – PreGame Show

Aflac – Trivia Question

New York Life - Hologram

Geico – Halftime Report

John Hancock – Game Update

Geico – Game Recap

Isn’t This A Lot Of Competitive Clutter?Even For A 4 Hour Telecast?

Wrap Up

Wrap Up

• Insurance category spend pacing at $3.75 billion, down 7.4% from ’08– Nearly one-half spent on auto

• GEICO, Allstate, State Farm & Progressive maintain a spending advantage

• An even greater emphasis on cost savings in auto insurance ads

• Making full use of TV sports programming to reach consumers

Insurance AdvertisingA Look Into The Numbers

Jon SwallenTNS Media IntelligenceNovember 5, 2009