$1.4 billion in 22 days. That’s the amount NBC will receive in advertising revenue from the Olympics and the super bowl. This is an impressive amount of money. Earning that much money in 22 days, wow!
At ValChoice, we call this a gold medal performance by NBC. Ad Week reported the news of this gold medal performance on January 28. Now the question is, what’s the return on investment for the advertisers?
Super Bowl vs. Olympics Advertising
The $1.4 billion NBC receives consists of $900 million spent by Olympics advertisers and $500 million spent by super bowl advertisers. The $900 million figure is a record for the Winter Olympics. Previously, the record was $800 million, set during the Sochi Olympics in 2014.
Olympic enthusiasm will build to an apex over the next couple weeks. Therefore, at ValChoice we’re starting another Gold Medal competition. The ValChoice competition is for the insurance company with the best advertisement.
The Gold Medal for Insurance Advertising Goes to…
“The envelope please.” Surprise, it’s a tie. A tie is unusual in any competition. However, we have a multi-way tie for the best advertisements by insurance companies. Instead of a single winner, the ValChoice gold medal goes to every insurance company that did not advertise.
The ValChoice gold medal recognizes the fiscal responsibility demonstrated by all the companies that did not advertise. We congratulate these companies for closely watching their costs. Instead of spending money to create a perception of good performance, these companies locked up their check books. In an era of big budget sound bites, our gold medal winners are protecting the money their customers pay them to provide protection for a rainy day.
Why we Care About The Money Spent on Advertising
Money spent on advertising by insurance companies is money wasted. Here’s why. Similar to how the Olympics judging works to measure of the best performance by an athlete, insurance company performance is also measurable. In fact, measuring insurance company performance is more reliable than measuring Olympic performances. For insurance the measurement system is quantitative. No matter how hard the Olympics works to create a quantitative grading system, many events still include some level of subjectivity.
Advertising is a poor use of money for products and services for which performance can be quantitatively measured. A less expensive way to win business is with transparency. Embracing transparency is a reliable and inexpensive way for insurance companies to show they’re the best.
Companies that embrace transparency win more business. These companies also have more loyal customers. Importantly, it costs less to both keep more customers and win more new customers with transparency than with advertising.
When Advertising Makes Sense
There are situations where advertising makes sense for a business. Here are a couple examples. One, a product or service where performance is subjective. Second, a product or service that is new. Clearly, neither of these scenarios applies to insurance. The reason advertising makes sense in these situations is outlined below.
First, food and drink are good examples because liking or disliking the product is subjective. Some people will prefer one product. Other people will prefer a different product. Take cookies and chips as an example. Which is better? Frankly, people have different opinions. Also, it doesn’t matter. Nothing important depends on which tastes better.
Contrast the cookie and chips example with insurance. Insurance companies are very different. Which one a person likes depends on getting a fair price and getting claims paid. In this case, which company a buyer selects matters. Buying from the right company could be the difference between a comfortable life and being bankrupt.
Another product well suited to advertising is something new. For example, DNA test kits. Advertising is a great way to let people know these are available. Again, who you buy the kit from really doesn’t matter. Therefore, there’s no risk in making a poor decision based on watching an ad.
The Type of Advertising That Consumers Should Reject
Excessive advertising to sell insurance should set off alarm bells with consumers. Unfortunately, advertising to sell insurance works. Insurance companies with good advertising campaigns and big advertising budgets are gaining market share.
Instead, consumers deserve to know how good the protection is for the price paid. Instead of providing this important information, advertising confuses the issue. Insurers want consumers to feel good about buying their products. However, not many people feel good about buying insurance. Let’s not confuse the issues. Forget the sex appeal or the entertainment value of advertisements. Only buy insurance based on product quality and value.
Why is Insurance Transparency New?
There are a a few reasons transparency is new to insurance.
- First, consumers haven’t had the ability to demand transparency. Because consumers are required to buy insurance, what choice did they have?
- Second, the billions of dollars spent on advertising by insurance companies leads many consumers to trust these companies. Instead, consumers should be asking why these companies don’t spend the billions of dollars to provide better protection for their customers?
- Third, how companies behave is largely hidden from consumers.Lawsuits are frequently settled in arbitration or mediation. These settlements include agreements that prevents the insurance companies behavior from becoming public information. Additionally, data collected in market conduct studies is considered to be confidential information.
Until now, the performance of companies that people rely on to protect everything they have has been a secret. This is a travesty. People cannot make good decisions on how to protect their assets and their families when important information is withheld.
What You Need to do Next
Finally, information is now available on how insurance companies operate. Click the buttons below and order your reports. If you own both an auto and home, be sure to get both reports. Many companies score differently for each type of insurance.
Note: ValChoice does not receive any form of compensation from insurance companies for presenting them as a good option in our car and home insurance reports.
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