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Ten years ago, a company that needed name recognition decided to take a chance on a duck. The company is Aflac, or American Family Life Assurance Company, and the duck was a risky move. At the time, the supplemental life insurance company had to decide between using the now-famous duck and TV star Ray Romano for its new marketing campaign.
"As you can imagine, insurance, as a general rule, is not very sexy. We had to break through the clutter of TV," Aflac's CEO, Dan Amos, said on a recent visit to Fool HQ. His live duck sat in its caretaker's lap just to the side.
For 10 years, Aflac (NYSE: AFL ) tried its own hand with advertising campaigns. Though the company was able to go from 2% name recognition to 10% over that 10-year period, it could never really climb over the 10% mark. Part of the reason for the low number was because Aflac had been designing its marketing campaigns for both name recognition and business definition. "Finally I said I just want somebody to know our name. I don't care what you've got to do," Amos said. "It was the willingness to limit it, to say, 'OK, just get the name first, and then we'll tack on top of it,' that ultimately drove the decision."
As a result, the company solicited bids from ad agencies for bold ideas. One firm came back with the idea of using comedian-turned-television star Ray Romano -- who was at the top of his popularity -- with children on the floor with building blocks. At the end of the commercial, the blocks formed to spell Aflac.
Another ad agency came to Aflac with the idea of a duck. The members of the agency happened to be in Central Park and saw some ducks quacking. The quacking sounded like Aflac. "They brought us the concept of using the duck, and they bet that we would never do it because it would go counter to anything that a 'traditional' company would do -- the rock with Prudential (NYSE: PRU ) , for instance," Amos said.
The company tested both commercials -- one with the duck and one with Romano. The commercial with Romano scored 18, which was 50% better than Aflac ads had ever performed, but the duck tested 27. "Ironically, we weren't sophisticated enough to know what we were doing, and we didn't test likeability," Amos said. "We weren't sure if the 27 reflected that they hated it or they liked it, or what it was. But we thought they liked it. And I had said I would go with whatever tested the best."
So Amos went with the duck. The first week Aflac ran the commercial, the company had more hits on the Internet than in the entire previous year. "It was just an overnight sensation, but we were ready to pull it if it failed," Amos said.
Indeed, the Aflac duck is Amos' golden goose. In the three years following the launch of the duck marketing campaign, Aflac's sales doubled. "It was a slam dunk," Amos said. "In the early part of the advertising, we were growing at about 12% to 15% a year in new sales."
Today, Aflac has 94% name recognition -- on par with the name recognition of Nike (NYSE: NKE ) or McDonald's (NYSE: MCD ) . "There probably aren't 10 companies in all of America that have 94% name recognition," Amos said.
Aflac insures more than 40 million people worldwide, and the duck advertising campaign has galvanized consumers to learn more about the company's products and services -- the company's next big goal.
Fitting the duck to Japan
Contrary to popular belief, 80% of Aflac's business is done in Japan. One out of every four households in Japan has an Aflac policy. Although Aflac struggled with name recognition domestically before the duck campaign, the company had 90%-plus name recognition in Japan all along. Still, Amos decided he wanted to use the duck in Japan as well. However, because of cultural differences, Aflac had to mold the duck slightly. It didn't use the famous, loud Gilbert Gottfried voice we know in the U.S. because the Japanese don't like loud voices.
The other thing that's different is that in Aflac's commercials in Japan, everyone sees the Aflac duck and talks to him. This compares with commercials in the U.S. where only one person sees the duck or interacts with him. Aflac's research has shown that people feel like other people aren't listening to them, and the idea of the Aflac duck not being listened to in America was very good. But in Japan, that would be considered very rude.
A big change Aflac implemented this year is merging the duck with a popular cat in Asia called Maneki Neko. The concept was introduced in Japan in September and is now the No. 1 commercial in all of Japan of any type. Sales of Aflac's new medical product are up 57% as a result.
"We created a caravan that would go from city to city where we had the Maneki Neko duck, and we had 20,000 people show up at one location," Amos said. "We had 1,200 press show up when we decided to introduce it. It's a phenomenon that I cannot explain to you as Americans."