Farmers Insurance's new ads, featuring actor J.K. Simmons as an instructor teaching agents at the University of Farmers how to deal with improbable damages, have been popping up in high-profile programming. The once-quiet insurer also recently acquired naming rights for Los Angeles' prospective downtown football stadium in a deal valued at $600-$700 million. Kevin Kelso, executive VP and CMO, spoke with B&C Business Editor Jon Lafayette about Farmers' new approach.
Why has Farmers become a more aggressive advertiser?
We made a decision a few years ago that the category had changed in terms of marketing, and that there were competitors who were spending quite a bit in the media and on sponsorships. And we had never really been a terribly big advertiser. We have a large network of agents who do most of their marketing within their local communities. But it became clear to us that to succeed in what is a changed category environment, we needed to operate a little bit differently. Our University of Farmers campaign is having good success. We've stepped up to several sponsorship opportunities, including the Farmers Insurance Open golf tournament and now Farmers Field.
What is Farmers' message, and why should it stand out from those of other insurance companies?
Our message is that there are still 70% to 80% of consumers who although they may want to shop online and research online, they want to have a local agent in their service equation. And so we still feel that one of the benefits that we offer is that we have the best agents, people who are going to work personally, who are in your community and who have your interests at heart and know you personally. So that’s really the message of the University of Farmers ad campaign. And that's moving the dial for us in terms of the kinds of ad metrics we look at. But in particular it is moving the dial in terms of people's awareness of the value of the agents that we have to offer. We have a unique asset there in that we have a real live University of Farmers. It's not just an advertising creation. We've had it for several years. In fact, University of Farmers has been honored as the top corporate university in the world.
Who is the target for this particular message?
We actually have a pretty broad target. Our sweet spot tends to be the 25-to-54 segment. That's a pretty big target. Where I think we offer the most value, and that's where we're trying to focus, is for people who need advice, for people who may be starting a family. They have a family, they may have multiple cars, they own a home, they're looking at life insurance. Our agents are well prepared to handle all of those things. And we're also one of the leading insurers of small businesses in the country. So we tend to match up well to consumers who are looking for that personal touch, personal service and advice from our agents.
What is TV's part in your media mix?
TV is the largest element of the media mix. And even though it's very crowded, we have come to see through our analysis that there are a lot of media options out there, but TV is still the broadest way to reach an audience with a message. It's still a strong medium. You have to do other things, so we're in radio, we do a fair amount of direct mail, we have online advertising. And we've moved more into the sponsorship arena, and that has been a little bit of a shift. We hadn't really sponsored too many things before, but in the last five years we've stepped up to a number of sponsorship opportunities, which I think has put us in a little bit of a different light again with consumers.
Are your commercials running mostly during sports?
We've been on some high-profile sporting events recently. But we've been running a mix of network primetime programming, national cable programs, so we have a mix. But you've probably seen us at sporting events a little bit more than in the past, and that does reflect a bit of a recognition from us that sports is relatively TiVo-proof. Nothing's TiVo-proof, but sports is relatively DVR-proof in that a lot of people are not time-shifting it, they're watching it in real time and that's an advantage for both our sponsorships that we've done. We think sports is a passion point for a lot of consumers, and we think it's helpful to be associated with those passion points.
You must get pitched a lot of media and sponsorship opportunities. What are the important factors that make something attractive to Farmers?
A couple of themes have emerged from the things that we do. We like things that are supportive of community in some way or another. We like charitable organizations, [thus] the Farmers Insurance Open that we first did last year. San Diego is a community that we provide a lot of support to. They had some terrible fires there over the last several years. We took a lot of pride in the fact that when San Diego needed us to respond, when customers needed us to respond to the fires, we were the first on the scene and the last to leave. We felt that one of the untold stories of a PGA Tour event is that it is really like a giant bake sale for local charities. It's really designed and operated by a local charitable organization and last year's event, for example, produced about $1.5 million worth of income that went to local charities. We like that kind of event because we feel like it's important to give back to the communities that we serve and you see that thread running through a lot of what we've done in the sponsorship area. In tennis, we sponsored the L.A. Tennis Tournament, which is now the Farmers Classic in Los Angeles and that's also run by a non-profit organization that funds youth tennis programs for kids in southern California. And we felt that was another worthy opportunity for us to step up and do something for the local community.
What attracted you to the Farmers Field sponsorship?
I think that what attracted us to Farmers Field is the fact that it's a great alignment with the NFL. When an NFL franchise comes here, that's certainly a very great thing for our brand. But we also liked that it was going to be providing a mechanism to rebuild the downtown convention center and the city has no way to get that done. So adding back is important to this community because today we are hard pressed to compete for convention business and convention business means tourism and jobs to the city. Also the project itself was going to create jobs and be a sort of mini- stimulus package, if you will, for downtown Los Angeles. And finally this is a facility that is expected to host 30 to 40 events a year, so it's much more than just a few football games. That's going to create permanent jobs in downtown Los Angeles. All of that, we felt, was a great way for us to get involved with a project that's giving back to the city.
With no team in place, it must have taken a leap of faith to invest all that money in a stadium.
You have to make a little bit of a leap to get there, but I would say this: It's hard to build a stadium privately-this is the only city in the country where that effort is currently being made-but we're confident that AEG, our partners in this project, can get that done. And we're confident that once there is a stadium in Los Angeles, it's going to be attractive for some NFL team-I don't know which ones-to make the move here.
How did AEG inspire such confidence in Farmers?
First of all they're the global leader in venues, so they did the reconstruction and redevelopment of what's now known as the O2 in London, which is really the premiere concert location in Europe. They did the Shanghai Center for Mercedes; they run dozens of venues all around the country. But more locally, they've built the Home Depot Center, another very successful venue, and they built and operate the Staples Center and LA Live, both of which are adjacent to this proposed facility. So they not only know how to do it all over the world, but they have done these types of projects in Los Angeles, essentially on this site, so they know what they're dealing with here. It not an easy project and I'm sure a lot of companies couldn't visualize pulling this off, but they know what they're dealing with, they know the exact situation that they're looking at. In fact, their offices overlook the site, so they know what they're working with there.
What's the coolest technology that's been presented to you as a marketing opportunity?
We see a lot of different pitches, a lot of different ideas, and we look at some of them. We recently did a fairly significant deal with Zynga on Farmville. Someone made a pitch to us about utilizing the Farmers Insurance airship. Farmers for the past year has had a branded zeppelin, which has been flying all over the West Coast and is making a barnstorming tour across the mountains and over into the Midwest and the East. And so we took the idea of the airship and moved it onto Farmville in a virtual way and had 7 million people download the Farmers airship to fly around their farm during a 10-day promotion. That's a pretty big response for one of the social media games.
Can you insure properties in Farmville?
No, we did not get into that. We insure the real stuff but we're staying away from virtual insurance.
E-mail comments to jlafayette@nbmedia.com and follow him on Twitter: @jlafayette
