Whether it’s Nike using Michael Jordan to inspire consumers to “Just Do It” or William Shatner telling you to negotiate a better hotel rate, companies across the globe turn to celebrities to build their brands and the reverse mortgage business is no different.
People like Robert Wagner and James Garner helped to build some of the largest lenders in the industry and American Advisors Group is taking the same approach with a bit of a twist.
After raising $4 million from JAM Equity Partners, the company released a new marketing campaign featuring Peter Graves, the former Mission Impossible star in October 2009 and things seemed to be looking up for the Irvine, California based lender. But even with the celebrity endorsement, origination volume remained near previous levels until March 2010 and just as things seemed to be improving, AAG was hit with a big setback.
Only six months after signing Graves, the actor passed away from a heart attack at his home in Pacific Palisades, Calif. at the age of 83. Faced with a difficult decision, the company pulled the ads out of respect for the actor and his family.
AAG tells RMD it considered moving forward without a celebrity to promote the company but tests found commercials with a well known spokesperson performed better than those without. After two months of extensive market research and focus groups, the company settled on Fred Thompson, the former Republican Senator and Presidential hopeful that also acted in shows like Law and Order and the Hunt for Red October.
While other political figures like Jack Kemp — spokesperson for Generation Mortgage before he passed away — have been involved in the reverse mortgage business, Thompson brings both experience in DC and a background in Hollywood. It’s that combination that lead AAG to choose the former Senator from Tennessee and do something different than others in the industry.
“We quickly realized that there was more credibility and trustworthiness to be gained by using someone with real financial knowledge,” says Reza Jahangiri, CEO of AAG. “You have to remember, at one point, Senator Thompson was a member of the Finance Committee and Chairman of the Senate Governmental Affairs Committee.”
From the start of the new campaign, AAG says it saw a new type of borrower and more valuable lead responding to the commercials featuring Thompson. “We are attracting a more sophisticated borrower with higher home values and one that is more interested in investment and lifestyle opportunities,” says Jahangiri. “We feel these leads may launch our entry into originating the HECM Saver.”
AAG tells RMD part of the success also comes from playing to audiences that respond well to the former Republican Senator. Specifically, the commercials run frequently on stations like Fox News and because of this, they’ve received some special attention from politically driven media outlets.
Mother Jones — a liberal leaning media outlet — ran a lengthy article about AAG and Thompson, pointing to some problems the company ran into with direct mail as well as other companies that advertise on Fox News.
Days later conservative media responded through American Spector, calling the article an “attack” against AAG and an attempt to use the summer media reports to push for congressional activity. American Spector alleges that “leftist” groups with ties to George Soros and other big-money donors are pressuring Democrat House committee aides and legislators to demand Congressional hearings on the reverse mortgage industry.
The attention didn’t end with politically driven media. Even Gawker took a shot at the Thompson commercials by pointing out the irony of a former Republican Senator promoting a government backed mortgage product. While the snarky article may offend some people, the reality is that Gawker — which gets more traffic than all newspapers except for the New York Times — could be evidence the company has reached the mainstream and should be seen as a positive.
When asked about the coverage, Jahangiri says it comes with the territory of picking a political figure as your spokesperson, but remains happy with the decision. “Senator Thompson has had a significant positive impact on our business,” he says. “In contrast to a traditional spokesperson, he provides a unique level of credibility and trustworthiness in the marketplace.”
It’s that credibility that Jahangiri believes won’t limit the company’s success to only one group of older Americans. “Fred is not so far right as to alienate Democrats,” he says. “He is well considered amongst all seniors and they see him as a fair and reasonable person.”
One can debate whether a celebrity spokesperson is the correct way to promote a company’s brand to seniors, but they can’t deny that the Thompson commercials are working. While the number of HECM endorsements from AAG dropped off after the loss of Graves, volume has rebounded with Thompson and is up 25 percent from 2009 according to data from the Department of Housing and Urban Development.
Today, AAG says it’s generating twice the amount of leads and has doubled their staff to meet the demand. RMD spoke with three people outside of AAG that work with the company and all confirm that the volume and quality of leads has increased dramatically.
In Thompson, it’s clear that AAG has found their spokesperson and is looking for additional ways build the brand, but Jahangiri also believes he could play an important role for the industry as a whole. “He has the knowledge, the background, and understands the product from a policy standpoint and can have a real impact on our industry’s future,” he says.
While it’s doubtful we will see Thompson lobbying Congress, expect to see plenty more videos like this promoting reverse mortgages in the near future.