When in doubt, increase your advertising

Back in February I posted about the auto insurance industry and their focus on price. Apparently the “waste” I discussed in that article has been transferred to the advertising industry. Over $4B/year is spent on advertising by this industry. And this is over double what the industry spent 10 years ago.

Is this a giant game of “chicken” being played by the industry to the benefit of the advertising agencies? Obviously this is a mature market so growth comes from “stealing share” from your competitors. Additionally, the traditional insurance agent is being replaced by the Web, thus freeing up money previously invested in commissions to be used to attract new customers. However, my question remains, is yelling louder that you are cheaper really the best investment?

Mitch

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