Ads Drive Profit, CEO says
Updated: Nov 9, 2022
Progressive’s ads drove record quotes
Progressive Insurance CEO Tricia Griffith said that using more advertising to lure auto shoppers has generated record-setting application volume and has positively impacted business growth.
Griffith made the report during an investor call following a third-quarter 10-Q filing.
“This combination of lower competitor (advertising) spend and our continued advancement of the science of media planning and buying led to an incredible increase in efficiency in our media spend and has helped propel this quarter's growth,” she said.
Progressive increased personal auto rates in 20 states at an average of about 5% per day during the third quarter for a total countrywide premium impact of plus 2%,” she said, adding year-to-date rate increases are at nearly 12%.
Major personal auto-rate revisions are done so Progressive will be “vigilant and adjust rates as our loss experience develops,” she said.
Griffth said Progressive’s preemptive rate increases helped stay ahead of inflation but also is helping them compete more effectively now. She said advertising made business applications soar by double digits as the insurer eased up on the frequency and amount of price increases.
Consumer shopping and quoting has increased more than 20% at both agency and direct channels, she said, and Progressive had the best third quarter in history for quote volume.
Griffith said Progressive is counting on more media planning and buying to continue growth.
“In fact, in September, we had our lowest cost per sale since 2017. So we're seeing the advantage. Because our competitors aren't advertising as much and are taking rate, we're seeing some really great ambient growth … we're going to try to pull all the levers to do that to grow as fast as we can.”
Progressive advertising investment primarily centers on direct mail, digital, and paid social. TV ads featuring celebrity Flo will continue in select states.
During the call, Personal Lines President Patrick Callahan said Progressive will spend when it can afford to spend based on calendar year targets, spend when it’s efficient relative to lifetime performance on the media, and when there is a need to drive growth. He said spending is “pretty dynamic” at the channel level.
Griffith said that even with higher expense ratios from ad spend, advertising and marketing strategies will help Progressive reach profit goals.
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