Aflac, Inc.

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Aflac, Inc.

THE AFLAC DUCK (2000) CAMPAIGN
THE BROKEN LEG CAMPAIGN

1932 Wynnton Road
Columbus, Georgia 31999
USA
Telephone: (706) 323-3431
Fax: (706) 324-6330
E-mail: [email protected]
Web site: www.aflac.com

THE AFLAC DUCK (2000) CAMPAIGN

OVERVIEW

Aflac, Inc., was a major insurance company based in Columbus, Georgia. In 2000 its top product was its cancer-expense coverage, which the company had invented in 1958. Though profitable, Aflac suffered from poor brand recognition; only 12 percent of consumers remembered the company, in part because it had such an unusual name. In response, Aflac wanted to expand its business by improving consumer's awareness of the brand. It also wanted to target 35- to 54-year-old consumers.

In 1999 the company hired a new advertising agency, the Kaplan Thaler Group, to improve its name recognition. The New York-based agency was known for its "Big Bang" approach to advertising: the belief that campaigns succeeded most when they altered consumers' views about the brand advertised. To accomplish this for Aflac, the agency created a new spokescharacter, the Aflac Duck. Voiced by comedian and actor Gilbert Gottfried, the Duck appeared in spots that featured consumers having trouble remembering the company's name. The Duck attempted to remedy this by "quacking" the answer: "Aflac." The lighthearted spots were broadcast on prime-time network TV and during broadcasts of sporting events such as Major League Baseball games. Aflac spent $35 million on the campaign.

The Duck was a major success. According to USA Today's Ad Track poll, it was one of the most popular spots of 2000. Brand recognition shot up to more than 70 percent and later topped 90 percent. Sales improved 28 percent, a result in part of improved name recognition. The company's accident/disability insurance took off, outselling the company's cancer-expense plans for the first time. The Duck became a cultural icon and continued as the company's advertising focal point through 2004. That year the Duck became one of the first characters to appear on the Advertising Walk of Fame in New York City.

HISTORICAL CONTEXT

The American Family Life Assurance Company (later called Aflac) was founded as an international holding company in 1955 by brothers John, Paul, and Bill Amos. In 1958 it became one of the first companies in the world to offer insurance against cancer. It expanded its offerings significantly in the 1980s, and by the late 1990s it sold a variety of policies, from dental care to short-term disability to hospital-confinement indemnity and life insurance. In 1990 the company adopted the acronym "AFLAC" as its official name.

By 2000 Aflac was insuring more than 40 million people. The company excelled at providing policies that helped pay out-of-pocket expenses not covered by someone's primary insurer. This was also known as "supplemental insurance." Aflac was respected in the industry, and in January 2000 Fortune included it in its list of the 100 best companies to work for in the United States. Because of the Fortune 500 company's solid core business and steady growth, in 1999 the National Association of Investors Corporation named Aflac one of its favorite stocks. Aflac was especially adept at reaching out to small businesses. It tailored certain plans specifically for this market, with a sales force of about 60,000 that helped reach small businesses face-to-face. It was also the largest provider of guaranteed-renewable insurance in the United States. The company thrived overseas as well, becoming the largest provider of individual insurance policies in Japan. Aflac's primary business strategy revolved around expanding its product line and focusing on gaining clients through businesses.

TARGET MARKET

Aflac was especially eager to connect with consumers in the 35- to 54-year-old age group and to boost sales of accident and disability insurance. While the company's cancer-expense insurance had always been the backbone of its sales, there was not much room left for growth in that sector. In order for Aflac to grow, it needed to expand its other businesses. Because accident/liability insurance was a major part of the industry, Aflac felt that that was the area it most needed to expand. The company also wanted to sell more of its supplemental insurance.

The company especially wanted to reach consumers with families. Aflac had a good reputation, but its difficult-to-remember name impeded its efforts to attract new customers. Insurance was a buyer's market. Many companies offered similar coverage policies, and it was important to stand out. Aflac suffered from terrible brand recognition: only about 12 percent of consumers remembered the brand's name. This limited the company's new sales leads.

COMPETITION

Aflac's primary competition came from other accident-and health-insurance brands, such as Citizens Financial Corp., Conseco, Inc., and Amerisafe, Inc. All offered services comparable to Aflac's. There were a number of companies competing in the sector, making Aflac's low brand recognition a serious liability. Aflac issued 98 percent of its coverage on a payroll-deduction basis. This meant that, while the company's sales force and its reputation were able to help it sell its products to cost-conscious corporations, it had a hard time drawing sales leads outside of the corporate sphere. Aflac believed that it needed to change its image with consumers to survive in a tough industry.

MARKETING STRATEGY

Aflac contracted the ad agency Kaplan Thaler Group (KTG), a division of Bcom3 based in New York City, to help the brand break through to consumers. This was the first major campaign conducted by KTG on Aflac's behalf. The company earmarked $35 million for the campaign. KTG was run by cofounders Linda Kaplan Thaler and Robin Koval. They had developed an approach to advertising that they called the "Big Bang." A "Big Bang" campaign altered people's perceptions of a brand or product. Aflac, which suffered from poor brand recognition, decided that this was a good approach for the company.

ONE FUNNY DUCK

When the Kaplan Thaler Group created the Aflac Duck, it chose Gilbert Gottfried to provide the Duck's voice. Gottfried was no stranger to voice-over work, having provided the voice of the parrot Iago in the classic 1992 Disney animated film Aladdin. A longtime stand-up comic, Gottfried first rose to prominence in 1975 when he appeared on the NBC variety show Saturday Night Live. He later acted in a string of diverse films, including Beverly Hills Cop 2, Problem Child, and Look Who's Talking Too.

Never a leading man, Gottfried nonetheless drew a solid fan base with his offbeat humor and distinctive voice. As a stand-up comedian he was often known for his bawdy humor, which was perhaps most evident in his performance of an old vaudeville joke shown in the 2005 documentary The Aristocrats. But his nasal, high-pitched voice also resonated in children's animated films, in which he often voiced comic relief. His character Iago was one of the most popular Disney villains, and the character later popped up in other Disney projects, including the television show House of Mouse.

While trying to develop an idea for the Aflac campaign, some of the KTG personnel had trouble remembering the brand's name themselves. While repeating the name in an effort to memorize it, the ad agency employees noticed that it sounded a little like a duck quacking. That prompted the creation of Aflac's new "spokesman," the Aflac Duck. The new "Duck" campaign began on December 21, 1999. Gilbert Gottfried, a nasal-voiced comedian who was known for his work in films such as Beverly Hills Cop 2, performed the Duck's voice.

One key spot featured two men in a steam room talking about insurance. One man was praising his insurance company, which helped him pay his out-of-pocket expenses following a serious accident. Every time he forgot the company's name, the Aflac Duck popped up to remind him by quacking, "Aflac." As the conversation continued, the Duck grew increasingly impatient with the man, eventually shouting at him. This was the second spot in the campaign, following the Duck's debut in "Park Bench," which featured a similar conversation located on a park bench. Both commercials revolved around people's difficulty in remembering the company's name.

More spots followed. One showed a young couple discussing having their first child. They realized that they needed supplemental insurance and were trying to think of the name of a good insurer. Once again, the Duck appeared to remind them: "Aflac." All of the initial spots played on the theme of consumers' difficulty in remembering the insurer's name. The commercials turned this weakness into a strength by using it as the source of much of the campaign's humor. The Duck himself was a humorous character, especially in the way that he grew increasingly frustrated by consumers' inability to either recall Aflac's name or listen to his prompts.

The spots were mostly aired as a part of what the ad industry called a "prime-time roadblock," a strategy involving running the same commercial on many different stations at about the same time. Aflac ensured a large audience by airing spots during every major network evening news program. The spots were also aired on CNN during Larry King Live and Headline News and on the financial network CNBC throughout the day. In addition, the spots ran during major sporting events, especially college football, professional baseball, and major tennis tournaments such as Wimbledon. As the campaign took off, the company's advertising spread into prime-time programming across the three major networks, ABC, NBC, and CBS. In July 2001 the Duck made his premiere in Japan, where it was just as successful.

OUTCOME

The "Duck" campaign was an unqualified success. USA Today reported that, based on a poll conducted by the newspaper and market-research firm Harris Interactive, it was one of the most popular campaigns of 2000. The company's name recognition among consumers shot up from 12 percent immediately before the campaign to a resounding 71 percent after the Duck's introduction. As the campaign continued, Aflac's brand recognition soared above 90 percent. The "Duck" spots were a key reason. According to the advertising research company Ipsos ASI, the initial "Duck" campaign scored more than double the industry average in brand recall.

Aflac also saw sales improve. In the first two weeks of 2000 the company had more sales leads than in all of 1998 and 1999 combined. It also saw annualized premium sales jump 28.5 percent in the second quarter of 2000, giving the company a record $168 million in sales that quarter. For the first time accident/disability insurance replaced cancer-expense insurance as the company's number-one product. Sales for the year were up a healthy 28 percent, and recruiting was up 22 percent.

The Duck's popularity prompted the company to offer stuffed "talking" Aflac Ducks, which quacked when squeezed, for sale on its website. Proceeds were donated to the Aflac Cancer Center at Children's Healthcare of Atlanta. The company's relationship with the institution dated to 1995, when it funded construction of the cancer unit. Aflac promoted the initiative on CNBC's Power Lunch. Company CEO Dan Amos appeared on the program in July with the Duck. The Duck made return appearances on the program throughout the month, promoting the charity effort. By August the company had raised $75,000.

Aflac's reputation thrived. In 2001 it was named the fifth most admired company in the health and life insurance industry by Fortune. The magazine sighted Aflac's "bold approach to advertising" as one reason for the honor. The Aflac Duck became a cultural icon, and the company began to associate itself with the Duck mascot, placing it on the company's website. In 2004 the Duck was named one of the country's favorite advertising figures, besting such characters as Ronald McDonald to be one of the inaugural members of the Advertising Walk of Fame in New York City.

In subsequent years a number of celebrities appeared in "Duck" spots, including comedian Chevy Chase, retired baseball star Yogi Berra, and singer Wayne Newton. The Duck was also featured on the TV shows The Tonight Show with Jay Leno and Saturday Night Live. The Duck would remain the focus of Aflac's advertising for several years. In an effort to explain the company's services better, however, the company began to de-emphasize the Duck in some of its advertising in 2004.

THE BROKEN LEG CAMPAIGN

OVERVIEW

The primary business of Aflac, Inc., a Fortune 500 company based in Columbus, Georgia, was supplemental insurance. In an effort to make a major push to turn around its poor brand recognition among consumers, the company hired ad agency Kaplan Thaler Group (KTG) to devise a new campaign in 2000. KTG came up with a humorous set of TV commercials that introduced the Aflac Duck, which became an advertising icon. By 2004 Aflac's brand recognition stood at 90 percent, and the Duck was appearing in Hollywood films such as the 2004 hit Lemony Snicket's A Series of Unfortunate Events. The company even integrated the character into its logo. Surveys indicated, however, that many customers were still unsure of what Aflac actually did.

The company decided to initiate a $50 million campaign in December 2004 that would de-emphasize the Duck in favor of explaining supplemental insurance and what it provided consumers. KTG would once again mastermind all of the advertising. The new TV spots kept the Duck but moved him into the background. For example, in "The Broken Leg," the Duck busied himself writing checks to handle an accident victim's out-of-pocket expenses, while the injured man himself explained that Aflac was taking care of all of the expenses that his primary health insurance would not cover. Another new spot featured an on-screen appearance from Gilbert Gottfried, the comedian who had provided the Duck's voice since the character's initial appearance in the 2000 "Park Bench" spot.

The spots were largely successful. Aflac's revenues continued to climb, and its brand recognition held steady. A survey conducted by the Customer Respect Group (a research and consulting firm that focused on how corporations treated their customers online) indicated that the company was also hitting new highs in customer satisfaction. Aflac continued to tweak its use of the Duck in future campaigns.

HISTORICAL CONTEXT

Aflac, Inc., was founded as the American Family Life Assurance Company (also known by its acronym, AFLAC) in 1955 by three brothers, John, Paul, and Bill Amos. The company began as a small insurer and grew significantly after its 1958 creation of the first policy to cover cancer expenses. This policy remained the backbone of the company's business for decades. Until 2000 it had been Aflac's best-selling plan. Aflac grew steadily over the years since its founding, and by 2004 it was large enough to be listed among the Fortune 500. In the first few years of the twenty-first century more than 40 million people were insured by Aflac, and the insurer possessed assets worth more than $50 billion. The company adopted "Aflac" as its official name in 1990.

Aflac's business plan revolved around growing its core business. The company was especially successful in selling supplemental insurance, a type of insurance that helped pay for out-of-pocket expenses not covered by a primary health-insurance policy. These policies had been the focus of the company's most popular advertising campaign, the 2000 introduction of the Aflac Duck. The Duck, voiced by Gilbert Gottfried, first appeared in the spot "Park Bench" on December 31, 1999. The character remained the star of the company's advertising efforts for several years, appearing in more than 20 spots between 2000 and 2004.

The spots were devised by Kaplan Thaler Group (KTG), a part of Bcom3, which was in turn bought by the Publicis Groupe, Europe's largest communications company, in 2002. KTG was known for its "Big Bang" approach to advertising. The theory, which was articulated by agency founders Linda Kaplan Thaler and Robin Koval in their 2003 book Bang!: Getting Your Message Heard in a Noisy World, was based on the idea that advertising campaigns should strive to alter perceptions of the brand.

The Duck was a prime example of this approach in action. Other insurance companies often invoked stability or practicality in their commercials. Aflac's approach was built around humor. The original "Park Bench" spot featured two men on a park bench discussing supplemental insurance. Neither could remember the name of the carrier under discussion, so a duck appeared to "help" them by quacking the answer: "Aflac!" The spot's humor was underscored by the fact that neither man appeared to hear the Duck, who grew louder and more frustrated as the spot continued. The genesis of the character stemmed from a problem that KTG marketers shared with Aflac's pre-Duck customers: an inability to remember the company's unusual name. While trying to memorize the name, KTG members began repeating it to themselves, and one of the noticed that word "Aflac" sounded like a duck quacking. And the Aflac Duck was born.

The Duck boosted the company's profile significantly. Aflac's brand recognition exceeded 90 percent in 2004. In the first two weeks after the campaign began, Aflac garnered more sales leads than it had in all of 1998 and 1999 combined. Sales for the first year jumped about 28 percent. Increased brand recognition was a key contributor. The company began selling stuffed Aflac Ducks on its website, donating the profits from that venture to the Aflac Cancer Center at Children's Healthcare of Atlanta. Finally, in 2004 the company incorporated the Duck into the company's official logo.

The Duck became a celebrity in his own right. Soon he was parodied on television programs such as The Tonight Show and Saturday Night Live. Well-known stars, including retired New York Yankees hall-of-famer Yogi Berra and comedian Chevy Chase, made appearances in Duck spots. In 2004 the Duck made his feature-film debut in Lemony Snicket's A Series of Unfortunate Events. The Jim Carrey vehicle grossed more than $118 million at the box office. The Duck remained successful and popular, but Aflac was concerned that the spokes-character's fame was beginning to draw some focus away from the services that the company offered.

TARGET MARKET

The primary targets for Aflac's products were adults aged 35 to 54, especially those with children. Most of its insurance was sold via employers, because at the time, most Americans received insurance coverage through their jobs. Aflac was especially adept at reaching small-business owners. The company had several plans tailored to these kinds of companies.

Aflac's "Duck" campaign had done an incredible job of boosting the company's brand identification. While only about 13 percent of consumers recognized the brand in 1999, by 2004 that number was higher than 90 percent. The company's spokes-duck was a large reason for this. The character had become an advertising icon. In 2004 the Duck was honored with a place on the Advertising Walk of Fame in New York City. The character beat out more than two dozen other nominees in an online poll. Other characters honored included Kellogg's Tony the Tiger (associated with Frosted Flakes cereal) and Planter's Mr. Peanut.

One problem that Aflac faced was a lack of full awareness of what the company did. An October 2003 survey conducted by the market-intelligence firm the Bantam Group indicated that, while most respondents had heard of the company, 60 percent were unsure about what kind of services Aflac offered.

SO WHAT DOES AFLAC DO?

In December 2004 Aflac began a new drive to inform customers about its core business: supplemental insurance. Supplemental insurance was a form of insurance that worked as a "supplement" to traditional health insurance. It covered the kinds of expenses that traditional health insurance did not. The most obvious benefit was that it covered deductibles and other out-of-pocket expenses. But supplemental insurance also paid for treatment-related travel (if a patient needed to see a specialist in another city, for example) and the daily living expenses that could accrue during an illness, particularly when there was lost income from missed work. The key benefit of supplemental insurance was that it would come into effect immediately, whereas traditional health insurance required a patient to pay a certain initial cost (called a deductible) before covering other expenses.

Aflac's most popular policy for several decades was its cancer-expense insurance. Developed in 1958, this insurance worked as a supplement to a patient's primary health coverage, picking up the costs of deductibles on doctor's visits, hospital stays, and drug therapies. Supplemental accident and disability insurance offered similar benefits. In addition it bridged the gap in earnings until a patient was eligible for long-term disability benefits (which did not come into effect until a patient missed work for a predetermined period of time).

COMPETITION

Beginning in 2000 accident/disability insurance surpassed cancer-expense insurance as Aflac's biggest-selling plan. Unlike in the 1950s through the 1990s, when Aflac's success depended on holding onto a business it had largely invented (cancer-expense insurance), the company now relied on a service other insurers had specialized in for a long period (accident and disability insurance). Competition was provided by companies that offered services similar to those of Aflac, including supplemental insurance and accident/disability insurance. Just a few of its main rivals on this front were Citizens Financial Corp. of Louisville, Kentucky; Conseco, based in Carmel, Indiana; and Amerisafe, a company out of DeRidder, Louisiana. The latter specialized in workers' compensation insurance for those employed in hazardous industries. Aflac offered a variety of plans and needed to make sure to differentiate its plans from those of its competitors.

MARKETING STRATEGY

In an effort to build on its newly strong brand recognition, Aflac decided to close 2004 with a new campaign that would emphasize the company's core business. It retained the Kaplan Thaler Group (KTG), with which it had established a highly successful relationship, to run the new campaign. The company earmarked $50 million for this new campaign, which would focus on television spots aired mostly on network television.

The move carried risks: the Duck was popular with consumers, and it was so identified with the company that Aflac had inserted it into the company logo. The new spots offered a chance for Aflac to explain its services to consumers. One commercial, which aired during college football's year-end bowl games, featured two men sitting down and talking. The spot was titled "The Broken Leg." The setup recalled the "Park Bench" commercial that had kicked off the initial "Duck" campaign. The difference was that in the new spot the two men had no problem remembering the company's name. One of the men was shown wearing a cast as a result of a serious leg injury. His friend was surprised by the injured man's composure. The injured man explained that he was not alarmed by the situation because he had accident insurance from Aflac. Even though the man was missing work, his bills were being paid by Aflac. Aflac's supplemental insurance covered the bills that the man's primary insurance company did not pay.

The Duck was featured in the spot, although he did not speak. He appeared in the background, writing checks to cover the injured man's bills. The Duck even produced cash to pay for the man's Chinese takeout food. While the spot did not revolve around the Duck, Aflac and KTG made sure that he appeared. The company had to move delicately, since the Duck was so intertwined with the company's identity. If the Duck did not appear at all, Aflac reasoned, customers might get confused. This way the Duck's presence reminded consumers that the injured man was praising Aflac, the company whose name sounded like a duck quacking.

Another spot, titled "Pet Store," used humor to forge an independent identity for the brand. It starred none other than comedian Gilbert Gottfried, the man who had provided the Duck's voice since the character's inception. In the spot Gottfried tried to return the Duck to the pet store, complaining that he kept saying the same thing over and over again. The Duck then refused to quack. A helpful parrot chimed in and told the pet-store owner both the company's name and its business. Again, the spot explained supplemental insurance and underscored Aflac's strong and quick performance.

OUTCOME

The campaign was largely successful. Aflac retained its high level of brand recognition. In 2005 Fortune named Aflac number 465 on its Global 500 list, an improvement from its previous year's ranking at 477. The company generated $13.3 billion in revenue in 2004. Customers responded to the company's new tack and named Aflac one of the best companies in customer satisfaction, according to a survey by the Customer Respect Group. This indicated that Aflac's effort to focus attention on its performance paid dividends in customer satisfaction.

In the spring of 2005 Aflac unveiled the next phase in the Duck's evolution. A new spot, titled "Experiment," featured the Duck's brain being switched with that of model Melania Trump. The Duck then proceeded to explain Aflac's business in Melania's voice. The spot brought back the "quack"—only it came from Melania. This was a careful calibration on the company's part. It did not want too many spots to pass without the "quack" for fear of losing its hard-earned gains in brand recognition. But Aflac wanted people to know about its core business, too. It continued to tweak future campaigns in an effort to strike the right balance.

By later in 2005 the Duck was back helping customers directly. In "Pitching In," the Duck watched a couple's baby and engaged in household chores. This marked a decision to go back to the late 2004 phase in which the duck was an active Aflac representative.