The Value of Baby Boomers
By Brian Steinberg
Get ready: Nielsen is once again trying to challenge one of the industry's oldest chestnuts -- that consumers over 50 aren't worth the expense to target. The measurement-and-data giant is out to prove that it is advertisers' continued focus on younger customers that's out of date, thanks to a massive and aging population of baby boomers as well as changes in consumers' lifestyle sparked by new technology.
Nielsen is in for a tough battle. Any number of parties have complained over the decades about marketers' obsession with youth. Consumers over AARP age often have more money saved and can spend more on items other than food and groceries, but marketers maintain that reaching younger consumers, particularly those between the ages of 18 and 49, is more important. The logic? That group usually hasn't committed to a favorite toothpaste or window cleaner, while older folks have -- and won't have their minds changed by a TV-ad blitz.
Nielsen wants to change those perceptions and it's got numbers on its side. Its researchers believe consumers over the next decade will have fewer children, leading to smaller households and fewer young consumers to lure. A rough economy will lead to those smaller young families spending less, and smaller salaries for younger generations known today as "Generation Y" and "Millenials." Indeed, as the baby-boom generation retires and grows old, America is likely to have a larger older population and a much slower-growing young one, suggested Doug Anderson, Nielsen's senior VP-research and thought leadership.
"There will be a huge number of people over the age of 65, 75, and 85 over the coming decade. We've never had a population this big this old before," he said. "This is not something that demographers and anthropologists have tons of models sitting around that they can talk about. We as a species have never had this many older people before. It's new ground."
There is some interest. In May, NBC Universal and Procter & Gamble launched a group of websites under the rubric "life goes strong" and aimed at catching boomers' fancy. Topics include technology and health. "With this property in particular, we're enabling advertisers and brands to reach a powerful demographic with an annual spending power of $1 trillion," Rich DelCore, director-branded entertainment at P&G, said in a prepared statement at the time.
Most times senior citizens are still seen in ads selling life insurance or denture cream, yet the older person in the U.S. in the next decade is likely to be anything but helpless and in the market for more than just financial help and medications.
According to Nielsen, baby boomers in 2010 account for approximately 38.5% of all dollars spent on consumer package-goods such as diapers, toothpaste and laundry detergent. They account for 40% of customers paying for wireless services and 41% of customers paying for Apple personal computers. And while brand alliances are often thought to be established when a consumer is in his or her 20s, changing technology has unleashed a steady spate of new devices and gadgets that are new to all consumers.
With older folks having salted money away and younger consumers expected to find income shrinking over the next decade, "targeting older consumers makes sense because you might be reaching more of your consumers" with the pitch, said Pat McDonough, Nielsen's senior VP-planning and policy analysis.
These aging boomers could also establish new behaviors, said Nielsen's Mr. Anderson. Boomers are accustomed to advertisers meeting their demands, and have always been so, he suggested. As such, they may be less brand loyal than the elderly of the past. This generation also drinks more heavily than previous post-retirement consumers. "Alcohol is a bigger part of their lives,"he said. "They aren't going to just stop."
To be sure, there are business dynamics in place that make the pursuit of a generation of consumers previously thought useless to marketers more crucial than in eras past. TV advertising was founded on reaching the demographic of consumers between the ages of 18 and 49, yet the median age of viewers of prime-time broadcast TV is nearing 51 -- two years above that age range. To maintain relevance to advertisers, the big networks need to find a way to establish the relevance of older consumers if they want to continue to draw the marketers that support TV so heavily.
"There isn't a single media-content company that won't face this, and the same is true for mass marketers," said Alan Wurtzel, president-research and media development at NBC Universal.
The hope is that advertisers will grant new consideration to the older demographic as baby boomers, the generation that has set consumer attitudes by dint of its sheer mass, moves off the radar screen currently established in the advertising industry. While baby boomers are leaving the demographics that have been favored by advertisers for decades, said Mr. Wurtzel, "their value is actually increasing in many ways and no one has noticed it. For many years, we all got along with it. Now what everyone is seeing is that a very significant portion of the audience is leaving the group, the Nielsen group that is counted."
Thanks to their wealth and the rise of new product categories, he added, the generation could maintain its importance. "These guys are changing. They are not behaving the way people would normally think" they should, he said.
Old dogs learning new tricks? If older consumers do act in this fashion -- and continue to do so for the next decade -- advertisers may have to adopt a few new methods as well.