Since the 60s, brands have been spending their advertising dollars on influencing consumers in the age 18 to 54 demographic segments. Today more and more advertisers are targeting those 55 and up. The reason is simple: advertising to older adults makes good business sense.
Except for certain products designed specifically for older Americans, advertisers have virtually ignored older demographic segments in their advertising campaigns. Advertising sales have come to be based on two main segments, people aged 18 to 49 and those 25 to 54. "With a continued emphasis on these groups, companies are increasingly losing their connection with the 78 million Baby Boomers," Doug Anderson, SVP Research & Development for Nielsen, tells Marketing Daily.
While Boomers spend 38.5% of CPG dollars, Nielsen estimates that only 5% of advertising dollars are currently targeted toward adults 35-64 years old (a slice that includes the latter half of Generation X as well as Boomers).
The wooing of younger people by advertisers has been based on a number of assumptions:
- Younger consumer groups are still in the process of developing their buying habits and brand loyalties. Once preferences are established, they will keep them as they age.
- Younger consumers take more effort, i.e. more advertising, to reach than mature consumers
- Younger consumers spend more on things as they become independent, acquire their own family, buy their first house, etc.
- 55 and up segments have set buying patterns and brand loyalties. Therefore advertising is less effective with older consumers.
- Older consumer groups are not active and won’t buy anything with multiple buttons or keys.
Baby Boomers Changing Advertising Assumptions: The sheer number of people in this segment is leading many businesses to reconsider their advertising targets. In reality there are a number of demographic and psychographic characteristics of today’s over 55 consumer market that are driving a major rethinking of the advertising industry’s assumptions and stereotypes about “older” consumers.
This change is understandable. As Baby Boomers have aged, they have postponed or transformed every life-stage they have experienced. Take, for instance, the following demographic and psychographic findings for this generation:
- Older adults are willing to reconsider their brand choices: An American Association of Retired Persons (AARP) study conducted by Roper ASW reported that older consumers ar quite open to trying new brands and are receptive to marketing initiatives. Gallup researchers have founds that, while seniors have higher brand engagement for almost every product category, they are still open to changing brands. According to AARP CEO Bill Novelli, "The stereotype is that older people won't change brands, that they're too brand loyal, but there's lots of research that shows that's a myth."
- Older Americans are living longer and staying active longer. They comprise a diverse group of consumers and are not a monolithic group. They have various interests and lifestyles and many stay active into their eighties and nineties.
- Baby Boomers have different spending attitudes than previous generations. They value self empowerment and will spend money to stay that way. " They are purchasing at rates just as high as other segments, and because they are often buying for their kids, many are double-dipping." according to Doug Anderson, SVP for Research & Development for Nielsen.
- Mature consumers spend on categories not traditionally associated with older people. NBC Universal initiated a study last year of the Baby Boom generation. The NBC study showed that they spend more than the average consumer on categories like home improvement, large appliances, casual dining and cosmetics. They are also heavy spenders on electronics and digital devices. The Study showed that members of the 55 - 64 age group were just as likely as those 18 to 34 to have high-definition televisions, digital video recorders and broadband service.
- Older Americans have an estimated $3.4 trillion in annual buying power. Baby Boomers have created more wealth than any preceding generation, both because of their numbers(78 million Americans were born between 1946-1964) and because many of them went to college. More than 60 percent of older Baby Boomers are professional, managerial or other white-collar workers.
- The over 50 age group will grow by 23 percent to 113 million people by 2017, according to Boomer Project analysis of census data. By contrast, the age 18-to-49 demographic traditionally favored by marketers will increase by less than 1 percent to 136 million people.
- Baby Boomers are wealthier than other Americans. They represent a larger and wealthier segment of the U.S. population and current economic conditions continue to be favorable for them. For example, a recent unemployment rate for those 20 to 24 years of age was 14.2 percent and for those 25 - 34 it was 9.4 percent. Contrast these with the unemployment rate for 55 -64 which stood at 6.2 percent at the same time. According to the Bureau of Labor Statistics, Americans aged 45 to 54 and 55 to 64 had the highest median weekly earnings of any age group in the U.S. Those 45 to 54 earned $844 while those in the 55 to 64 age segment earned $860 weekly. The wages can be compared to those 20 to 24 ($454 weekly earnings) and 25 to 34 ($682 weekly earnings).
Companies are Paying Attention: Below are some sample reactions and views of the industry on this topic:
- "Today's older generation is primed to buy and consume new technologies like no previous group of seniors," says David Kelly, president of technology research company Upside Research.
- Nielsen's research says Baby Boomers dominate 1,023 out of 1,083 consumer packaged goods categories, and watch 9.34 hours of video per day -- more than any other segment. They also comprise a third of all TV viewers, online users, social media users and Twitter users, and are significantly more likely to have broadband Internet.
- Mr. Alan Wurtzel, President of Research for NBC Universal said that as NBC put together its lineup of potential new series for fall, he made the programmers in the company aware of the attractiveness of the 55-plus audience The network has already ordered a new series, “Playboy,” set in the 1960s, and this week renewed the drama “Harry’s Law,” which stars Kathy Bates, who is 62.
- "We had to find ways to appeal to this aging audience." says George Harrison, Nintendo Senior Vice President of Marketing and Corporate Communications.
- AT the annual preview of this fall’s television season, broadcast television network executives introduced shows created to have broad appeal, including to older viewers, and the ad dollars they represent.
- Marketers like Kellogg, Sketchers and 5-Hour Energy drink are broadening their focus to those 55 and up, who were largely ignored in most of their media plans until recently.
- Patricia McDonough, Senior VP for Insights, Analysis and Policy for Nielsen says that "35 to 64 is becoming a relatively common target now."
Combine this group’s buying history with their demographic's colossal size and its trillions in spending power — and it adds up to a massive sales opportunity for companies, most of which have not courted older adults before.
Stephanie Pappas, a Senior Planner for BBDO, NY, Said that there are good reasons for ad clients to seek the mature audience. "In some ways they are the ideal consumer. They have money, the consume loads of media, and they remain optimistic."
"For companies to avoid shifting advertising and marketing attention toward older Americans is "a big mistake" according to Alan Wurtzel, the President of Research for NBC Universal. “You risk not only growth, but at some point you risk your brand.”
A word to the wise is sufficient!