20 years of challenger brand lessons with Auto & General CMO, Jonathan Kerr

0:00Jonathan Kerr:Hey everyone. Now, if you want to know the secret to more impactful creator ads, then this is good news. Stop obsessing over engagement rates and start pulling the three levers that really make a difference to your brand. Now, what are they? They are creative quality, creator fame, and brand fit. And they're revealed in a brand new report from WPP Media, System One, and TikTok called the Creator Effectiveness Playbook. This is your guide to making fantastic creator advertising that works for your brand. Now, to get a hold of it, all you have to do is go over to systemonegroup.com and download the report today.

0:38Jonathan Kerr:All right, without further ado, let's go on with the show. Ladies and gentlemen, welcome back to OnCenter's CMO. Now, in this episode, I'm meeting who Mark Ritson describes as the best CMO in Australia. And Mark doesn't give praise easily. So what's this CMO done? Well, he has spent 20 years disrupting the insurance category in Australia, taking a brand from nothing to 14 % market share. How did he do it? Well, in this episode, I find out from Jonathan exactly how he did it. And what does it take for a challenger brand to cut through a duopoly in a market? There are so many great lessons for anyone out there that's trying to do amazing work on limited budgets.

1:13Jonathan Kerr:Here we go.

1:20Jonathan Kerr:Jonathan, welcome to the show. Good to see you. And welcome to Australia. Yeah, it's good to be here, man. It's a slightly different climate to what I'm used to. Yes. But enjoying it. And here courtesy of Commercial Radio and Audio. So big shout out to them. And we're both doing stuff on the stage this week, which will be a lot of fun. But anyway, we're here to talk about you and your career. So bring us to what you're doing now. Yeah. Because you've been on an amazing journey. For anyone who doesn't know, just talk us through the brands here. And I'm particularly interested to know where you come from and where you come to now, because it's quite a remarkable story, this one.

1:55Yes, I was incredibly lucky to land in Brisbane. And, you know, I kind of thought first I'd be like, well, I've worked with all the online bank divisions around the world. I wonder if I can get a job running an online bank or doing something like that. But there wasn't much interest in me for that. and so I was like a little bit of a loss and then I found out about this business auto in general and did a bit of research which wasn't as easy as it is now yeah and you know realized the significant business they have in the United Kingdom you guys will know us now as compare the market and in South Africa with Teleshore and a bunch of brands over there and Hippo And I realized that this is a significant business, but was very small and on an interesting growth trajectory, but still very small.

2:49But I couldn't believe that they were only on the phone. So a great direct mail business in the directories and really beginning to build the beginnings of what became Budget Direct. and I thought, geez, the timing was incredible because I kind of walked in, met the team and just said, well, you weren't really advertising but I'm here and I think the next phase is to take you online and they were like, yeah, we were just about to do that anyway let's see if we can make this work so we invented a position called general manager of e-commerce and with incredible support I got on with it I love that.

3:32Jonathan Kerr:So did you pitch your own role then? The role didn't exist before? No, I got an introduction to meet the CEO and then the chairman. And, you know, it was just literally the conversation was much more. I can see who you are. I can see what the opportunity is. Have you got anybody to take you on that journey yet? And I can obviously explain what I'd done. and I think it was quite serendipitous that I was there at that moment. And I was very fortunate. The CEO at the time was from the United States and I think that my CV from the US, if it had fallen into the hands maybe of an Australian leader, I think they wouldn't have recognized how big the University of Nebraska was, all of the work that I'd done in marketing, licensing and sales there and realized that, hey, from a young age, I'd been involved in some quite interesting stuff.

4:31And so I think that sparked some interest. And then it was my job to close the gap between opportunity and job. And I guess I managed to do it on the day. But then that started this great journey where, you know, immediately it was like, okay, well, no one's offering online quote. No one's offering online sale for car and home insurance. We only did car insurance back then. and it seemed an obvious platform to put in because I already knew what we were going to do to promote it. Really, no one was advertising on Google. But, you know, if ultimately your main advertising on Google is phone us, that's not really a very aligned proposition.

5:13And, you know, you want to establish new to brand customers. That's critical to what you do. That was self-selecting. So it was fairly lined up. But the one thing I want to mention, though, is that Budget Direct has been the price leader for all time I've been here. So I'm not daft. I like to market things that are great. And Budget Direct's proposition, you know, what the team has done in pricing, underwriting and the delivery of our claims and all of our services to generate, you know, the most award winning cover that's also the price leader. That's quite extraordinary. so I'm standing on the shoulder of giants with anything I've ever done and you know it's a private business which means we have long-term planning long-term strategy and that's turned us from a very small player to you know clearly one of the most successful fastest growing insurers in Australia.

6:10Jonathan Kerr:Yeah there's a couple things I want to pull out in what you just said. The first one is there's an incredible career insight in what you just said earlier which is understand what you are brilliant at identify an organization that needs that and put yourself in the way of luck and that's what i think you've done isn't it yeah um which i think is absolutely brilliant i i do say one of my favorite expressions is hang out with lucky people yeah that seems like a good idea right yeah i know yeah i found that so many times people said oh johnny just got lucky and i'm like well no because the bit you don't see is the amount of unluck that happens yes that's right and the amount of times you know you have to just see the highlight reel exactly yeah it's like that But talking about price, I think that's really interesting.

6:52Jonathan Kerr:I've got a little bit of experience with the insurance market, you know, as a claimant, I suppose. But how do you achieve that mix of incredible value? But also because you'd expect, wouldn't you, as someone who buying insurance, if you're buying it very cheaply, you're not going to get a very good experience on the other side if you ever have to make a claim. So how do you deliver great service and great value from insurance while keeping the price cheap? Well, you have to fundamentally make sure that you set out to be the best insurer. Okay, so you don't set out to be the cheapest insurer. You set out to be the best operational insurer.

7:30So that in pricing is, you know, extraordinary capability in identifying risk and the different subsections of risk. And the reality is the majority of drivers are very good risks and the majority of homeowners are very good risks. And so then if you are very open about how you price and you say, listen, we are actually going to go and reward the people who are the lower risk people, then you don't pollute your pricing by making them pay for other people or higher risks. Now, that proposition has really stood the test of time. And so it is in precision. But the cool thing is that that precision is applicable to a mass market.

8:20So you don't want to spend too much time being the winner of a tiny market. You have to have a vision of where this is going to go. And so that coupled with operational excellence, that is the secret sauce and a wee bit of decent marketing thrown in. Of course, of course.

8:39Jonathan Kerr:That does make sense, doesn't it? Because most people don't need to claim on their insurance, right? That's right. So you've got a few people that are going to be very costly and a lot of people that are not going to be very costly. Yeah, and they should be rewarded for their history of good driving or maintaining a good safe position on what they do in their lives. And I think that the reality is that insurance over time, I kind of look at the marketplace over the years, and I'm talking about a longer term than just my career. but for a long time um you know some of the really big insurers around the world what they did was they they their expertise was taking a huge amount of money in in premium and then doing a very good job of investing it and so they were actually making money out of money and really they were very good at it and they and they provided a reasonable insurance service on the back of that i'm not sure that they were that good at insurance right and so 45 50 years ago our founders came along and they were like no there really is an opportunity to be actually good at insurance and so that focus that always on optimization of all the things that we do but in in in support of the customer so the proposition lines up beautifully is is really the secret source and and you know uh hugo boss said you know style never goes out of fashion and i can tell you you know the same value for less is pretty up there too and so I'm you know I'm trying to make sure that you know in our marketing we honor the platform that was built for us our job is to tell that story better than anybody else and in the same way as we have been fanatical about being the best operating business out there we're just the same about optimizing and doing the marketing we put in market yeah I mean you very humbly said that a little bit of marketing might have helped contribute to the last few years.

10:38Jonathan Kerr:Just for everyone who doesn't know the story, so where have you got to in terms of market share? What has growth been like over the last 10, 15 years? Yeah, so for those tuning in around the world, so Australia is a fan of the duopoly. You'll probably see it in our supermarkets, our airlines, etc, etc. And insurance historically had two very significant groups that basically almost had nearly 40 % each. And so entering that market was often thought unpenetrable, really. And then over the years, you know, we've managed to get up, you know, kind of near 14 % market share, we have millions of customers now.

11:21And, and as a single brand, that's beginning to knock on, you know, being in the top two, three for, for car insurance, We launched home insurance about five years after, and that is also on the same trajectory. So a lot of the brands owned by the two significant players have historically been state-based brands or whatever, whereas we're a national brand. And so on the back of great service and great pricing, we've been very fortunate to grow three or four times system growth over the last 10 years. and we were already going quite well in the first 10 years. So it's been quite significant. But I think a really important thing that should be said is that our goal is not growth.

12:09Our goal is to be the best insurer. We have found that if we're the best insurer, the other stuff comes with it. We've never ever sat out with a growth goal. And my title is Chief Growth Officer. We want to do healthy growth that we can manage a proposition that the market loves. The rest kind of takes care of itself.

12:30Jonathan Kerr:I think that's an exceptional point, actually, because so often when people write marketing plans, they just go, what's our goal? It's to grow at 30%. It's to double the business, right? And then you end up doing the wrong things at the back of that. Whereas if you obsess about who's my customer, what's my proposition, how do I deliver that better than anybody else in the marketplace, guess what? Well, I mean, it comes down, you know, lessons learned over time. but strategy not tactics so you know think about the lessons from Mark Ritson, Byron Sharp, all of these people and thinking about marketing fundamentals.

13:02I want to be a marketing person and I want to be in all of those different levers to make it all work and I think that is a critical thing that our business has given me the opportunity to do. So you know if you set out to have the right to grow because your proposition is so compelling, then that sets up the strategy and then that flows into jobs to be done, maybe on the brand front, the advertising front, the pricing front, the distribution front. So you can have a true north around that that's meaningful. And then it also means something to the CFO and to the chief risk officer and all of these different people because you've got to come with a significant framework that can handle that.

13:52But when you can talk like that, you are talking the language of the commercial realities of growing a business. And I think that helps.

14:00Jonathan Kerr:It does. I did a survey actually recently with TikTok looking at the real job of a CMO. And 90%, now bear in mind, these are CMOs that have been on the podcast in my network we're talking about high caliber right 90 of them only controlled one p i was really shocked i mean i knew it would be i knew that promotion would be the biggest p i wasn't surprised about that but for 90 i thought that's really interesting and they would describe their influence over the other p's as low as well which i thought was fascinating and it just shows that the role of a cmo is to step into those other p's and actually lead the organization so how do you kind of do that because you talk very easily there about the other p's in terms of products and well i think you've got to earn the right and so the thing is that anybody working in a pricing function is very interested in in insight so reporting is one thing insight is everything and so the thing is that uh my team and i have the most incredible in-house marketing team they are leaning in to any signal that's out there but what you find is those signals are also just as interesting and as useful to the pricing team you can't just turn up and and say i don't like the price although they've heard that a few times from me but to actually say i believe this is happening because and then that team turns to you and says i'd like to understand that a bit more because in Australia, for instance, and this might parlay quite well for the US audience, Australia might as well be five countries.

15:40The states, you know, and the metros are so significant that it's really a state-by-state war. So the brands that we compete with in New South Wales can be quite different, the line-up with Victoria, where Melbourne is. and so the thing is that understanding what the others are doing and how they're doing it becomes really interesting so I mean my feeling is I didn't get invited to those meetings at the start but I am very very grateful to be part of the pricing committee and the underwriting committee because I get some face time with the people that are actually going to go and do the the really incredible work they do and it's very respectful and at the same time you know you are you are the canary in the coal mine as well I mean we are at the you know we're optimizing every digital campaign on the hour of course we should be able to tell them what's happening how the pricing is now working and all that kind of stuff so you know I think you've got to earn your stripes but then you can actually become a very valuable member of that part of the business yeah makes a lot of

16:53Jonathan Kerr:sense now going to the the p that most people have control over promotion what is it about insurance that around the world us i mean you've got state farm you got geico uk direct line uh obviously compare the market i mean compare the market is just phenomenal it literally is a kind of case study and I think almost half the markets now and that's just incredibly effective. So what is it about insurance that somehow generates such incredible examples of marketing? Well I think that there's a slightly different story as it relates to actual insurers like Progressive, Geico, Allstate and DirectLine for instance Aviva and brands over here and that is that you know we we have quite a predictable annuity business about how much money we are probably going to be able to write the following year.

17:50And so if you have an understanding of what your base is, now you are going to have to battle for that. You're going to have to retain all of those people. But there is a significant understanding of probably what your investment in the prior years that's going to deliver in the go forward years. Now, you would hope that means a good CMO can build a brand story about future demand. And so you should be able to put the fundamentals of marketing in place. And I think if you think about the Geico Gecko, if you think about, forgive me, I can't remember the name of the progressive lady, but there's a progressive lady.

18:29State Farm have got an amazing character. I think that these people understood that there are some fundamentals in building mental availability that have been basically coined by Byron and Aaron Burr-Bass. And really, if you have the opportunity to play that long-term play, it would be surprising if there's a better way. So I think that some good CMOs and the ability to plan multi-year is one of the beauties of insurance. Now, compare the market in the UK. Now, that's a different type of business because they're a comparator and they won't have that annuity flow apart from the fact that their brand is so fantastic that people will come back to them and they do come back to them.

19:15But really, you can imagine how helpful it was for me when I was putting together some stuff that really was to introduce brand marketing to us. And my friends over in the UK were on that journey at the same time. And so, you know, some of the stuff that we did with people in Australia will know Bouget Bouget, which is a famous campaign here, a long running campaign. and then what they did with meerkats and then, you know, being able to kind of talk to each other and see how this long-term building of fluent characters and devices and things like that, sonic devices that make a massive difference.

19:59Simples is, you know, an incredible thing in the UK. You know, so really, I think that there is some really obvious strong fundamentals there. our business is a private business which means it does give you the opportunity to put long-term plans in place and i wouldn't underestimate how fortunate we are to be in that position with the

20:19Jonathan Kerr:owners that we have your long-term point is so key i mean you said to me last night i think you're saying my current campaign's eight years old the one before that was seven and the one before that was five yeah you know i mean that's a very unusual position to be in and there's some brilliant i I spent seven years working at System 1, and one of my favorite insights is this idea of compounding. We know how compounding works in terms of money, but compounding works in terms of creativity. And what we noticed when we did a study of, I think it was 50 UK brands, the most consistent started out with a slight advantage, but then that advantage gets bigger and bigger and bigger over time.

20:56Jonathan Kerr:Yorkshire Tea. Yeah, Yorkshire Tea. They go, I always talk about Yorkshire Tea. Exactly. It's absolutely amazing. And, you know, it's there in the results. And I think, you know, this is why it's lovely to talk to you because you've been there 20 years, right? Whereas, you know, most brand managers might be there too. And they feel like they've got to change it and make my mark and so on. So you must have a real insight into the power of delivering something consistently over time. Well, I think you certainly should get better with every mistake, right? So, I mean, we have been very lucky to pick up kind of some of these pillars that go together to make what it is.

21:32consistency is really really important but i always say to everybody but if you're consistently rubbish you're still rubbish so you do need to blend the art and the science of that but um every single time um over those three kind of relatively famous campaigns over here the knowledge has compounded massively and also as a brand that was going from a very small base to really breaking into significance here. We're always coming back to the strategy and jobs to be done. So we always had a framework to say, is this the actual best way? Has it run its course? And I always ask myself that every couple of years because if you only ask that question when you're doing badly, you will always change.

22:21So you must make sure you do it every couple of years, even if you're punching the lights out because that gives you kind of the objective position to say, well, how do I decide these things? You go back to your fundamentals. You read how the brands grow again. You ask yourself those questions. And then eventually you go, okay, well, actually, there might be a ceiling to who we're talking to here. And there might be a better way. But then we work with 303 in Australia, our agency here. And we say, well, we are going to brief it, but we want you to do both. We want you to show us how the current could even get better and is there another way?

23:03So it's not a case of we don't look at another way. We just challenge ourselves. But what's happening now is the learnings can keep compounding. And so we are in a, we have built a framework and a platform that gives us the breadth to do what we need to do. And so, yes, it's funny, you know, when we're always talking about how can the cmo handle the boardroom and all this kind of stuff well i mean start talking about compound interest and then change that into compound brand health and devices and things like that right there you've picked up the lingo of the boardroom exactly you don't have to go that far yeah you know it's really interesting because um probably

23:44Jonathan Kerr:one of my favorite examples in uk is audi with their kevin the carrot campaign that's i think is over eight years old now. They do exactly the same as you do. Every January, they rebrief for a new idea up against Kevin. And so they've got this benchmark, and they can never, ever be Kevin because Kevin's got eight years. So I think it started as, I think I'm right in saying, a 3.8 star, got up to 5.9 star. Now, it's not the same ad. It's the idea executed even better every single year. Familiarity in the UK. It's Christmas. It's Kevin. The two things become associated. And now they can't beat it.

24:19Jonathan Kerr:because it's compounded so much that however good they try. I tell you the thing, when I think about those guys and John Lewis, the one thing that we've never done is said there's one ad to judge us on every year. And I'm like, my goodness, that's a high bar. I mean, we've been running the insurance solved Sarge campaign now. We're in year eight. And every ad is supposed to be better than the last one. And not all of them are better, but they maintain and continue the narrative. and what we found is because we have established these characters in a good way it allows us to actually do what I think is better advertising because we don't have to force the brand logo or something into the ad we've got our sonic devices we've got our four visual devices and what we know is if we show Sarge people just say budget direct they don't even say Sarge and so that has been the learning if you look back on our previous campaign captain risky which you know if you want to do a fun campaign that's the one the problem we had was he was so popular that when we showed a picture of him everyone said captain risky and i kind of need them to say budget direct so all of those learnings about where do you pitch it and uh what role does the the character have in the narrative is really really important yeah oh that's such a good observation that reminds me a bit of snickers you know the whole kind of you're not you when you're hungry is you're owning an idea and then you're owning a character and you're owning a sound you know all those things like you don't have to put the brand in yeah you know you just see the scene and you know the detectives turn up in a different scenario it doesn't matter because you know exactly what's going on you know there's gonna be a punchline you know it's gonna be funny you know it's gonna be a disaster and you know it's gonna be budget direct yeah and and if you think about it um another thing that we learned when we did captain risky who was an american stuntman in Australia okay there were some things that were obvious about why we did that so we what we wanted to create an anti-character because he was the living embodiment of people we don't insure budget rate was so well priced that people used to ask how can you be so cheap and so if you think about system one system two type of thinking if you just do an ad and say well we are cheaper because we don't ensure bad drivers it's wallpaper and it's pitching to system one rational you know and that's not how people put you on their shopping list that's not how people remember remember you so having a fairly outrageous stuntman who's not very good at stunts by the way go out there and be the metaphor for the people we don't ensure that was highly highly engaging.

27:06But remember, we learned those lessons. Like, for instance, audio is really important to what we do in this market. Radio is really important to us and emerging into podcasts and other types of areas are really important for us. I deliberately picked an American accent because I couldn't hear any other advertising with it in Australia. And I'm just as interested with people taking our ads in when they're not watching the TV, but they're hearing it. and radio as well and and so we learned a bunch of lessons from that and we had the cut through we wanted and we we leveraged the idea of a heuristic where everybody would understand the gag straight away without us explaining it a terrible stunt man is very risky you don't want to insure him easy then we go into sarge with insurance solved and we wanted to have something that again they could leverage the heuristic and everyone understands what an insurance detective or a detective is there to do to solve the problem find out what is going on here and obviously he can also deliver the fact that budget direct is the solution and that's where insurance solve came from but doing it in such a way that people recognize the characters as budget direct and it doesn't we we were trying to avoid vampiring the brand and captain risky vampired the brand whereas

28:26Jonathan Kerr:sarge is perfect for us to vampire i mean you take the life out of the the brand and it's captain risky absolutely direct okay i see you mean yeah and this is one of those ones you can fall in love with yeah so i fell in love with that with captain risky like i was so proud and he he has a um he had a had a or i think he's still out there doing it by the way um but he had an expression kick it and rip it uh because he um for the americans out there i remember super dave osborne which was this joke stuntman character um and he was always on david letterman when i lived there and i just thought he was brilliant and he was totally useless and he would always you know before he did his big stunt he would say something and so our guy Kateriski said kick it or rip it and that cut across everywhere people in Australia were saying it and all of these things but at the same time I you know that was that moment where I kind of was looking at the brand health the research and stuff like this and I was having to be honest that we'd created an icon But, you know, Budget Direct was definitely second fiddle to the recognition.

29:32But what he did do is explain our proposition. But once you've actually achieved that, that's no longer the job to be done. So your strategy tells you where to go. And then you have to execute brilliantly. And with our delivery partners, we, you know, with 303 and we use good oil productions here, the best in the business. And I think if you get a chance to see some of our ads, I think we'd give Progressive and Geico and DirectLine a wee run for their money.

30:00Jonathan Kerr:You absolutely would. I mean, it's proper Hollywood grade stuff. And it's brilliantly entertaining, very funny, great acting. And yeah, yeah, very memorable. So well done. It's interesting on the audio point. My colleague Orlando has done some amazing work looking at left and right brain features. and in terms of the ability to create emotion and ability to create memory audio is amazing so whether it's jingles music distinctive accents like you're talking about american accent in australia all those things just like create memories for people and that's what you're trying to do in terms of you know be remembered when you think about insurance well i think um so you know our saying is we've got to earn our engagement and that has to be across everything we do and and actually sarge is a scotsman and obviously i'm a bit biased but i don't even have the right accent but um it is a beautiful accent and there's no one else it can be no one else when you hear it see it whatever it's us and um it also has a little twinkle in its eye yeah and you know a brand needs to become a personality in its own right and those and those fluent devices need to sit well with that and so yeah i think audio plays a massive role and if you also think about you know the way fashion plays a big role in marketing well you know jingles went out of fashion and uh and we realized that we'd actually done so well with our audio devices with bouger bouger uh which was a huge hit for us and then uh kick it and rip it was massive and then we wanted to go back and actually do a proper audio identity so we have insurance solved which finishes all of our ads and stuff like that and is relentlessly consistent and then immediately just you know almost you expect it now at the end of the ad people actually know that this is where the ad is done playing and at the same time when you then hear a Scottish accent on radio coming through with the memorable final piece it's very strong i love your boujet thing because it's like a really cultural thing isn't it so whenever we're in america we would always go tarjay rather than target and in the uk primarney rather than primark you know it's like wherever you go the most discount retailer yeah everyone tries to upgrade i don't i always wonder like one thing i don't think you should be is too up yourself or too proud um to ever understand and leverage something great that you've seen before so you know being a a student at the university of nebraska and and not having a lot of money you know the top of the top of the market for me was a new tajay shirt at the time and um and and people just rejoiced in it because we're all in the same boat yeah and so when we were trying to um teach everyone in australia that you know our greatest strength is our name and our greatest weakness at the time was our name because budget has connotations.

32:59And we wanted to say, well, wait a minute, budgeting is also a really positive thing. And we're like, well, we need to kind of readdress this. But again, if we went hyper rational and we just said, okay, we want you to think of our name differently. You should be very proud to be good at budgeting. It would have been, you know, a dead cat bounce. It would have been rubbish. and then a guy called Grev came into a pitch session one day and we were looking at a bunch of options and there was four or five things pitched and they were all I mean with respect they weren't great and then we're like Grev have you got anything else and this guy was one of the great jingle writers in Australia and he just said I have this idea you know and he just mumbled you know bouger bouger and bouger bouger and we were talking about how do you make people think differently about the word and maybe one of the greatest ideas is get people to sing it but at the time he wasn't referencing my experience with target target so i just remember going there's something big in that and then we all got around it and it became uh the famous bouger Bouget campaign.

34:18Jonathan Kerr:I love that. It's a great example of what Orlando says. What's too silly to be said can't be sung. Yeah, that's fantastic. Isn't it good? It's also the role of humour, isn't it? Because you can land a very serious point about the value of your car insurance with humour. And again, you can sing something that might be silly if you said it, but if you sing it, now it sounds amazing. And if anybody gets a chance to check it out, if you go and look at Budget Rakes, it's all on YouTube, all of our old advertising. You look for Bouget bouger you'll see that well how did we do it well we had we we cast a french character female character who would always get our name wrong and say and call and sing bouger bouger and say i i'm with bouger i'm with bouger and then the australian uh counterpart would say it's budget love budget direct and so we found a way to get it in and then as you can imagine it um over the passage of time it ended up with people singing it in the shower and all these type of things and really it gave us an opportunity to say hello to Australia and say hey you know I think it's time to think of us for what we're really good at.