Recently I was asked to comment on a few questions from WalletHub about car insurance companies and their use of celebrities. Since this is a question I have thought about (and get asked once in a while), I thought I’d share!

We see insurance ads (car, house, etc.) all the time. For some reason, these are some of the biggest budget and funniest ads on TV! My personal current favorite is Jamie from Progressive: “It’s funny because I’m not management material!” No, wait, it’s the ‘Becoming Your Parents’ campaign (also Progressive I think, they must know their market. It’s me, I’m the market.).

But why all the ad spend? Does using celebrities and humor really work?

It’s likely that car insurance companies need to use celebrities to be memorable and to differentiate themselves. Insurance, as a product, is not terribly interesting to consumers (it’s a sort of ‘unsought’ good; one we don’t necessarily want to shop for). A celebrity, someone familiar and likeable, grabs attention and helps consumers form a memory of the brand which they hopefully remember when they’re ready to shop for insurance. Other features of insurance (e.g., premiums or accident forgiveness) probably don’t stick in people’s memories as much. You’ll notice that humor is used in a lot of these ads for the same reason.

Celebrities also help companies target certain kinds of consumers, therefore differentiating themselves. State Farm uses a lot of athletes, which might reflect the segment of consumers they’re going after (people of a certain demographic who are familiar with these athletes). 

A celebrity can even serve as a kind of stamp of approval; for example, I might not think the General is a good brand until I see Shaq in their ads. Let me rephrase; I DID not think the General was a good brand until I saw Shaq in their ads. How could the IcyHot guy steer us wrong??

Interestingly, using celebrities, humor, or any other attention-getting features in ads may backfire. There’s some evidence that people remember the celebrity or funny part, but then don’t remember the brand they were promoting. 

So, are marketers pulling one over on us by using celebrities in this way?

Unfortunately, marketing and misleading consumers are not always mutually exclusive. However, it’s unlikely that using celebrities is misleading people about anything. Insurance is a ‘high-effort‘ product, meaning people have to spend time and effort thinking about what they need, what they want to pay, etc. Celebrities work mostly under ‘low-effort’; they get your attention and hopefully help form a positive impression of the brand. So in some ways, it’s just a way to get consumers ‘in the door’ (i.e., “remember us when you shop for insurance”). I doubt that many consumers are making their final choices based on who was in the ad. “Gosh, Patrick Mahomes was in that State Farm ad, but I’m not a Chiefs fan so I had better not use them,” is hopefully not something that goes through people’s minds.