How Geico Wastes $90MM a Year on Search Engine Marketing

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Stop Wasting Your Money on Google AdWords: Invest in Some Good Content

Lately, I’ve engaged in the exact same conversation about buying search terms. The conversation goes something like this:

Them: “We spent $1MM buying keywords last year and Google’s our top referrer. We’re planning on spending the same amount of money this year buying keywords.”

Me: “Why?”

Them:“Well… ummm… because Google’s our number one referrer.”

Me: “If you don’t buy any keywords, who’s your number one referrer?”

Them:“Well… Google.”

Me: “Exactly.”

The more and more people I talk to, the more often I find myself taking a militant stance against gigantic search engine marketing (SEM) spending. My position is simple: if you create relevant, frequently generated content that’s high-quality and of a significant volume, you don’t need AdWords. That’s it.

My friend Bernie, who runs a successful Search Engine Optimization firm, might actually agree with me on this one. Let’s take a look at a quick example.

(If you haven’t heard of it, SpyFu is a great resource for search engine marketing insight.) Scott Loring, our Managing Director, recently sent me SpyFu’s Top 100 SEM Spenders link.

SpyFus Top 100 SEM Spenders (Snapshot)
SpyFu's Top 100 SEM Spenders (Snapshot)

The largest spender? Geico. I relied on SpyFu’s keyword search to show me what AdWords Geico is investing in. Their list shows “auto insurance” and “auto insurance quotes” as two of the top AdWords in their arsenal. Now, let’s do a quick search for the term “auto insurance” or “auto insurance quotes” on Google. Here’s a few screen shots of the results:

Search for: Auto Insurance
Search for: "Auto Insurance"
Search for: Auto Insurance Quotes
Search for: "Auto Insurance Quotes"

Geico spends $90MM (average) a year purchasing search engine marketing terms. I’d imagine they’re not spending it all at Google, but let’s just stick with the world’s most popular search engine. Based on these results alone, I’d say Geico is wasting their money. In both searches Geico appears on the first page of the organic search results. They appear above the fold (on most screens) and they’re ‘ranked’ second in both organic searches. Stop buying those two keyword phrases!

I don’t know about you, but when I hear the word “Geico” I immediately think of the Geico Caveman commercials. It’s been reported that Geico spent more than $483MM on their advertising budget for the gecko and caveman spots in 2007. They also created a Flash-driven microsite for the Caveman character and he became so well known ABC created a pilot for a television series. That’s great brand marketing (even if the show got panned.)

What Geico failed to do was capitalize on the campaign online. They should OWN the caveman search results. So do they?

Search results: Caveman
Search results: Caveman

Let’s review these results: there’s a nice image of the Geico Caveman in the image results (but there’s only one,) the first three search result entries seem to have NOTHING to do with the Geico Caveman, as is the case with all of the organic results on the first page, there are NO Geico paid advertisements for the keyword. I’d say that, in and of itself is a huge FAIL!

Of course, if you know anything about their campaign the second search result, Caveman’s Crib,  is actually the microsite for the Geico Caveman. Maybe that’s where they connect the dots between auto insurance and the caveman? Nope. There’s nothing useful about the content at Caveman’s Crib.

Let’s take a look at Caveman’s crib traffic, courtesy of Google Trends:

CavemansCrib.com Traffic Source: Google Trends
CavemansCrib.com Traffic Source: Google Trends

There you have it. A huge spike and then nothing after it’s initial hit. Microsites like this are a waste of money. Now, let’s compare the organic search results for the phrases “caveman” and “auto insurance quotes.”

Google Trends analysis: caveman vs. auto insurance quotes
Google Trends analysis: "caveman" vs. "auto insurance quotes"

Take a minute to digest this chart. The HUGE blue spikes (caveman searches) in the last two quarters of 2007 are a direct result of the Geico Caveman advertising spots. In those quarters five times as many people were searching for “caveman” than “auto insurance quotes.” The search queries for “auto insurance quotes” are almost exactly the same every single day. That means Geico better OWN those search results every single day.

Remember my SEM friend Bernie? Now, Bernie will immediately be able to tell you that Geico never capitalized on the Caveman brand because they chose the wrong technology (Flash) for their microsite. Traditionaly, Flash has not been ‘search-friendly’ and it’s still difficult to index. I completely agree. However, they also chose the wrong type of content.

Takeaway Message

If you want to win the SEM battle: stop over-spending on AdWords and start creating valuable content. Valuable content found through an organic search or a social sharing opportunity out-perform AdWords consistently. Stop working with ‘dabblers‘ like Advertising agencies and PR firms that claim to understand the online world and start trusting expert story-tellers, who completely understand online content marketing.

Keep in mind, that if you’re sending your potential customers to a ‘landing-page’ that has irrelevant, low-quality, ineffective content using your AdWord buy you’re just pissing money away. (That’s right I said ‘pissing.’)

AdWords is a brilliant business model: pit marketer’s against eachother in a bidding word for the words THEY believe are the most valuable and drive up the cost for everyone. That’s genius. However, search is becoming more and more irrelevant. If you don’t start investing in quality content today, you’ll quickly lose the battle.

The Geico Challenge

I know what you’re saying: “Andrew, if you’re so confident, prove it.” Alright, I will. I believe I can cut Geico’s SEM budget in half (to 45MM a year) with great ease. The team here at Tippingpoint Labs is so good, that with 1/10th of their current SEM budget, and a year’s worth of perpetual content creation, Geico can own the organic search for the keywords they are currently invested in. That’s right: “Own It.” Geico, I’m waiting by the phone for your call. But I won’t hold my breath.

My Questions to You

What do you spend on SEM? What are you really getting for your money? How does your content perform?

27 Responses to “How Geico Wastes $90MM a Year on Search Engine Marketing”

  1. Bernie Borges

    Andrew – I agree with you 100%. A quick check of Geico’s website shows they only have about 100 pages of content: http://www.geico.com/about/sitemap/. That’s not much, and not nearly enough to compete organically for the keywords they need for organic search engine ranking.

    I have previously suggested that SEO should become SO (search optimization). By producing great content with a broad content footprint on the web, Geico would improve their website rankings, and as you point out, reduce their overall costs. It would require a focus on producing great content in many different forms and getting more social on the web. They don’t even have a Twitter account. It appears they are taking the path of least resistance through paid advertising through SEM. That’s very shortsighted.

    It’s always mind boggling when I see large brands put all their eggs in the SEM basket. If these large brand CEOs only understood how much opportunity cost there is by ignoring an organic, content marketing strategy, he/she would direct their staff differently. The result could impact share price which directly affects CEO’s pocket.

    Let me know if the phone rings. I’d love to listen in to that conversation. :)

    • Andrew Davis

      Bernie,
      Thanks for taking the time to comment on the post. I love your idea of re-positioning SEO and SEM as Search Optimization. The two concepts are too tightly linked anymore to differentiate.
      As soon as Geico calls – I’ll let you know. I’m not expecting them to call, because as you noted, they’re not really listening or participating online.
      Thanks again!

  2. Josh

    The point of advertising isn’t always to get the sale right then and there, but sometimes just to keep yourself on top of the customers mind. It’s hard to be there when 3 of your competitors are ahead of you (paid or natural).

    At the very least they’ve probably done some testing and tracking to make sure they’re getting a worthwhile return on their 90 million dollars a year. It’s hard to justify spending that much money on something that doesn’t work. Progressive is spending ~$60 million a year as well…so it definitely can’t be hurting right? Being #1 in the natural results isn’t always all you need.

    You’re dead on with them not capitalizing as well as they they should have on the caveman gimmick and general SEO though. The cavemen were an excellent ad campaign but only half utilized. Who wasn’t talking about them or didn’t associate them with Geico? (The Amish?)

    • Andrew Davis

      Josh,
      Thanks so much for your comment. I too hope they’re doing some real testing and tracking to make sure they’re seeing a big ROI. Too often I’ve seen agencies hand deliver reports to clients that are ‘stretching’ at best. All the client cares about is that they’re performing ‘better than the benchmark.’ As long as that’s the case, they don’t dive much deeper.
      I personally believe that being number one through ten in the natural results is far more powerful than just buying AdWords and hoping for the best.
      Thanks again!

  3. Walter Caldwll

    Andrew -

    First off, I would like to say that I love reading blog posts that site very polar beliefs. I find it refreshing to hear extreme ideas and different visions on a situation.
    After reading your piece, I think you are right as well as wrong w/ your assessment of Geico. To agree with you, content (to be cliché) is king and “owning” a SERP result that correspond to that content is key. However, what is wrong w/ your statement is that full ownership of a listing is impossible in today’s search space and is made even worse with the ever increasing muddying of the search engine waters that Google does as a result of their decreasing bottom line (they aren’t recession proof). Based on your first example, how many advertisers (paid and organic) appear before Geico’s organic add? In total I see four. With that said, Google takes very close notice to eye sensory reaction within a SERPs. This area where we are seeing the first four listings (three paid and one organic) is known as the “golden triangle.” Through Google’s eye sensory research, they have concluded that 100% of people view this triangle while 85% of clicks are generated from a listing that falls within this triangle. This is precisely why we are seeing three paid ads before any organic listing.
    Now I don’t like that I’m forced into buying (what is now) a public resource to capture the interest of an already expressed potential lead, but the fact is, if I don’t, I will lose out on this valuable traffic to my competitor. Going back to your original example, the query “auto insurance quotes” presents a user who is so quite far down the lead gen funnel. Assuming Geico is conducting a well sound paid search campaign and their overall competitive prices and services messaging on their landing page reinforces that they are within the upper echelon of the auto insurance market, they are going to easily convert that click (not to mention that a brand name like Geico has reached the heights of Coke or Nike within its respective vertical). This translates into easy ROI on their paid search investment. Yes, they will still achieve an insane ROI if they were only to rely on the organic listing, but the fact is there is more easy revenue if they diversify their listings to incorporate paid listings. On a side note, I don’t have the numbers in front of me, but there have been studies that have connected negative brand perceptions w/ the lack of predominate placements within both organic and paid search listings. Additionally, and I hope Geico is testing this, many times you receive a boost in efficiency with both your paid and organic listing when you are strong in both for a keyword.
    With your second example, you are correct. It is ass backwards that they don’t cover all basis w/ terms oriented on “caveman.” However, unfortunately b/c of today’s economic climate, using fiscal resources on brand based terms, like a caveman, through paid and unpaid search isn’t the best use of those resources. However, they are most likely not doing this now is b/c their offline creative focus has been changed to feature the “money your missing out on for not switching to Geico,” which is most likely due to the outside climate.

    The reason as to why they aren’t focusing more (and its shame they took the cheap way out) on further branding the micro site you bring up is either (a) they are done w/ that promotion, or (b) it is b/c this site doesn’t translate into easily measurable ROI and their resources are better served elsewhere. Yes I know you can overlay all this crap w/ Dynamic Logic studies, blah blah blah. However, the fact is there will always be a need for auto insurance, and Geico is cashing in on this fact by throwing around their already existing brand equity for the lowest hanging fruit.
    I apologize for my mini-rant, but the point is, for terms that have a strong CPL it is imperative for them to have a dual presence in both organic and paid listings.

    • Andrew Davis

      Walter,
      That was great! Thanks so much for taking the time to write such a great ‘mini-rant.’ Your insight is really great. I’ll dive deeper into the Magic Triangle.
      Thanks again.

  4. Walter Caldwll

    Also forgot to mention, spyfu data is frequently BS.

    • Andrew Davis

      Fair enough. It may be inaccurate, but it’s giving us some visibility. Thanks again for participating in the conversation. Really valuable perspective!

    • Andrew Davis

      Great article Sam! Really. Thanks for sharing it with us.

  5. Brad

    Very insightful research Drew. I feel like there’s one necessary caveat to consider in your commentary. In this example, I’m not convinced that Geico needs to “own” the search term “caveman.” I think with their focus on buying “auto insurance quotes” they’re making an effort to win a quality click, someone with a distinct intention: research car insurance. I wonder how many users searching on “caveman” – even in relation to the Geico campaign – are seeking to switch their car insurance plan.

    Now, the argument against would be that any good content would win that battle anyway and that is where your hypothesis is definitely sound. But it’s a stretch to imagine that a campaign so far removed from the notion of car insurance to begin with can be THAT effective in conversion. I think we’d just need to compare conversion rates on a click-through via their paid terms versus an organic one to “Caveman’s Crib” to understand why Geico’s putting their eggs in the paid search basket.

    So, I’d posit that a hyperfocus on organic search optimization – seeking a quality, motivated by strong messaging, click – is Geico’s better bet. The cost savings alone would likely make a huge difference on the bottom line. Now, knowing your ideas regarding Blendtec and the long tail value of high quality content would potentially change this thinking. But I think the ratings and rapid cancellation of ABC’s Cavemen prove that Geico’s not quite there yet.

    • Andrew Davis

      Glad you like the research. Appreciate your feedback. To be clear, when I say they could ‘own’ the caveman search term I don’t mean they should purchase the keywords. That being said, all the ‘caveman’ advertising is about brand recognition and keeping Geico ‘top-of-mind.’ If that’s the case, they never connected the dots for consumers who need auto insurance and remember the caveman. What’s wonderful about people searching for caveman – whether they’re looking for Geico or not – is that Geico has an opportunity to KEEP their brand in your face if you’re looking for caveman. Which is searched for FAR more often than insurance quotes.

      Thanks again for all your feedback. Really insightful.

  6. Amelia Search Engine Optimisation

    Content is absolutely the most important part of seo – without good quality content you may as well give up! But, content is the hard part. Writing content can be incredibly difficult and I’ve found that many customers seem to believe that it magically appears out of thin air! I’ve found in the past that the content is the last thing they think of, the last thing they write and they don’t necessarily want to spend money on it. I guess this is just the way it is, I’m just saying its a shame.

    • Andrew Davis

      Amelia,
      You are absolutely right! Thanks for contributing! Really appreciate it.

  7. Rhishja Larson

    Much appreciation for the testicular fortitude :) Thank you, thank you, thank you for saying “it” out loud: “My position is simple: if you create relevant, frequently generated content that’s high-quality and of a significant volume, you don’t need AdWords. That’s it.”

  8. michael

    First, thanks for pointing out spyfu. Have not heard of that.

    Excellent breakdown with a well known example how ad words can be a bad thing.

    Content is always king and there is no way around it.

    • Andrew Davis

      Michael,
      Thanks so much for reading the post. Great to see it’s still being read and resonating.
      A quick word about SpyFu. Spyfu doesn’t have the most credible data, however, I’ve found it to be a good guesstimate of what a company is spending and buying as far as search goes.
      Thanks again!

      • Andrew Davis

        A couple of days after I wrote this comment I got a really great email from the folks at SpyFu.

        They directed me to this link http://university.spyfu.com/spyfu-1-2-3/the-confidence-to-be-this-bold about how they gather and estimate the costs associated with paid search.

        Thanks Sidra from Spyfu! Wonderful way to interact with us – without hijacking the conversation. Your email was much appreciated!

  9. John Sternal

    Andrew, what a great post. Very informative. I’m now wondering what this picture looks like for other large companies, especially bigger companies that haven’t traditionally embraced SEO and/or are in industries that don’t normally have a heavy hand in online marketing but know they need to be there. Industries like building, industrial and remodeling come to mind. My point is, it’s already difficult enough to know if you’re doing the right thing – even with good resources. But there are very large companies out there that could be spending lots and lots and doing all the wrong things – and not even realizing.

  10. Vic Abrugar

    A very comprehensive article. Thanks for sharing it. I beeive that Search Engine Marketing still should focus in contents. That is helpful and quality contents. Marketing is not just promotion and spending a lot money to present your product or services. Traffic should also be relevant. Not all visitors provided by giant search engines stay a while in your site. It’s the quality of the site and how it will help them that will make them returning visitors. Relying on search engine is not a great idea. We must make sure that our site will attract loyal visitors even if they will not come through search engines.

  11. Derek Lackey

    Your point of view is solid for someone who has embraced the true potential of the Internet for marketing. After years of ingrained training to get better at the SPEND, HUNT and HOPE business model associated with mass media marketing, it is difficult to make the mindshift to learn to be hunted by consumers when they need us. Most marketers are struggling with it – especially those with the large TV budgets. But the facts are that the consumer has changed the way they buy and marketers have not yet adjusted their advertising and promotional spend.

    When I see your estimated 483M spent in 07 on TV, I can only be astounded at Mr Caldwill comment about not being able to track an ROI on the microsite! Please tell me you’re kidding. You can justify 483M on a medium we have never been able to measure or justify instead of a couple of hundred thousand optimizing and working the hell out of a well positioned microsite.

    There are 2 trends that concern me as a professional marketer. One is the sheer number of my peers who are just burying their head in traditional tactics hoping the Web will go away and the other is those who embrace this new medium using the old mentality. A mass marketing mentality applied to a medium that insists on individual (one-to-one) communication is a recipe for disaster. We are already seeing Corporations being sent home with their hat in their hand when they attempt an online campaign.

    We are obviously not yelling loud enough Andrew. If marketers do not learn to be found when they are needed, competition will run them out of business. Natural selection is at work yet again. The strong and wise will survive.

  12. media buying

    I think that Geico, like several other companies. Have not studied marketing online properly and instead have just thrown money at advertisers hoping that it will work.

  13. Victorino

    Where is the viral and guerilla marketing in there? Although these marketing techniques are suited for small businesses. This can be also apply by big companies to save on marketing costs. Advertising a product or a business is useless without th quality of the thing it advertised.

  14. Allen

    No comment, just learned alot.
    1) Pick a dead zone for logo so searchs do not bring up other stuff. I.E. “Flo” from progressive.
    2) Tie the logo (mascot, phrase, etc) to the company and results (sales, persuation, recruitment, etc).
    3) Create a commercial that people like. I.e. Cavemen or the new FEMA sarcastic prep commercial ” I’ll pack the dead batteries” .
    4) do not tie commercial to a TV show like “Cavemen” or “Mad men” The show, and then commecial, will be out of your hands & control.

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