Commentary
Take Me To Your CFO
- by Brent Bouchez , September 21, 2009
Today, I'm going to bite the hand that feeds me. Actually, not so much the hand, more like the whole arm and part of the shoulder.
Why? Because I'm addressing this article not to the Chief Marketing Officers of the world, the people who would normally hire me, I'm addressing it to the Chief Financial Officers.
CFOs love numbers, especially the kind that are black and accrue to the bottom line. This article is loaded with them, but it's not about a new type of accounting or a way to shelter revenue from the IRS, it's about the numbers that CMOs are ignoring at the expense of their brands success, especially in this economy.
According to McKinsey Consulting, by 2010 (3.5 short months from now) 50% of all consumer spending in America will be by people over the age of 50. People 50+ earn $2.4 trillion annually compared to $1 trillion for the 18-34 group (and they spend at the same rate). Also according to McKinsey, people 50+ generate 41% of all disposable income, while they represent only 30% of the population. They buy 60% of all packaged goods, over half of all new cars and spend 75% more per vacation than consumers under 50. And in 2007, those over 50 spent 3 times the national average holiday shopping online.
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And yet, less than 10% of all U.S. marketing dollars are spent against the 50+ consumer, and nationwide research shows that the majority of consumers over 50 feel that advertising and marketing either portrays them negatively or ignores them altogether.
If you're a CFO, right about now you're probably thinking something like ... if people over 50 spend over $2.5 trillion a year and the 18-34 group spends $1 trillion a year, my CMO better have a damn good reason why we're not also talking to people over 50.
To which I would answer ... they do, but you're not going to like it.
The reason? To most CMOs, older just isn't cool.
The marketing world is obsessed with the idea that youth equals success. Get the young audience and you've got them for life ... young buyers drive new products ... they decide what's what ... they make or break brands.
As I've said in this column before, this is a way of thinking that made perfect sense in 1975 ... when we boomers came up with it. Today, however, things have changed.
Cool is no longer a factor of age. Just ask Madonna, Bono, Alec Baldwin, Ellen, Frank Gehry, Oprah, Diane Keaton, Meryl Streep, the Cohen Brothers, Anna Wintour, Jake Burton, Steve Jobs or ... need I go on?
These days, cool is in the eye of the beholder, and the fastest-growing, richest, most advertising- and brand-conscious group of beholders are consumers 50 and older.
And, chances are, this will be the case for quite some time to come. In fact, the most recent numbers from the Bureau of Labor Statistics show that the highest incidence of unemployment in the country is in the under-29 segment, where July hit a whopping 11% (highest) unemployed rate vs. 5.4% (lowest) for the 50-64 group. And the last time I checked, the unemployed weren't high on any marketer's list of targets.
So, if you're a CFO, and you want to improve the look of your bottom line (and show me one who doesn't), I suggest you forward this article directly to your CMO. And while you're at it, you might remind them that they get paid like everyone else in the company ... by the amount of product or service sold. Not by how many You Tube clicks, Facebook friends or Tweets your brand amasses.
In this economy or any other ... sales are what's really, really cool.
But Brent, you forget the other reason CMOs don't want to focus marketing dollars on those over 50 -- that segment is "dying off."
Why invest in an audience that is about to kick the bucket?
Yes, my tongue is firmly in cheek. What really gets me is that in this short-term business environment, one would bet the company's coffers on what might come with younger consumers, versus growing the bottom line by focusing on today's consumer: Boomers.
Keep up the good fight.
As we boomers like to say "right on!".
I remember working on Levi Strauss "Personal Pair" jeans back in the nineties, and after research discovered that the majority of the purchasers were women over 40, they quickly abandoned that brand, renamed and repositioned it as a brand that could be "customized" based on your style (ie. add stitching, cool patches, etc), so it would appeal to the under 25 crowd. Oprah had covered the original product so it had a lot of momentum/sales going... but no, that didn't seem to be good enough.
I may not be hip like Madonna, but I have wayyy more in my wallet than most gals browsing at the mall.
There are several sides to your story. I am btw new to advertising. I spent 14 years in heavy industry doing sales/business development and have worked in almost every B2B industry except for maybe Mining. This is a career change. I have a Finance Degree and I take a CFO view with a creative bent. I was floored when I found out how much brands spend just to have a chance you will see an Ad, how much Advertising is mis-targeted and how much money is wasted. So I am an ROI person.
The first side of things. Your numbers are accurate. In fact the 25 to 34 year age group WITH college degrees saw their real incomes shrink by 11% under Bush (2000-2008 numbers from Business Week latest issue). And in fact the Boomers were the ones who actually made out like bandits...AND will mostly pass on to the afterlife before all this debt they racked up come due. So why not take advantage of the demographic that has the money and probably is the last group for 2 to 3 generations in the US to make out so well? As an ROI person it is crazy not too go after them.
The second side of things which my Agency's first product is aimed at (college students), there is the Net Present Value, Internal Rate of Return view. Someone with more years ahead will have more money in the future to spend in aggregate. Get them loyal now and have a customer for life. And I would bet many CMO's use this theory because advertising is more exciting when it comes to younger demographics. Do you want an Ad Campaign targeting people with Dentures....or one targeting Extreme Sports fans? Of course the Denture crowd is larger has much more money than 16 year old Skate Board brats!
The one caveat to the second theme is the debt we have to pay off (I am 41). US Today had run numbers showing we owe over $400k each when all is said and done to cover all our liabilities not just the national debt. And it will be very hard to pay this off, our own current personal debt, and get ahead. So the future NPV/IRR for younger demographics will be impacted by these realities.
So as a younger person who knows myself and the people younger than me will have to bear the brunt of all this debt, which frankly we benefited from the least....what is the one way to claw some of that money back? Sell to the Boomer and Older Demographics! So in effect we can solve ROI and ethical realities by doing what your fine article logically says we need to do. Go where the money is!
Wunderfully said! I know this had to be taken directly to the money men; However, I am becoming increasingly scared of using Mckinsey as the basis for all. They are quickly approaching that "nielsen" level. They are primarily focused on "counting beans." In order for this macro economic system to change, we creatives need to continue to take the control away from these types and focus the hollistic macro eceonimc world. One which does not solely focus on quarterly contrieved numbers, but instead on sustainable growth. We boomers have the money and numbers, it's time to really flex our muscle. Thanks again!
Brent, for more fuel for your argument, see Bob Deutsch's Marketing Daily article from September 11, "Beware Rising Differences in Outlook" (http://tiny.cc/bqk4O)
Bob demonstrates how the much sought-after Gen X is the generation that has scaled its spending back the most, and is more paralyzed in the current economic environment than any other.
If Gen Xers are more anxious about the future, it is likely due to the fact that until now, all they've known (as a generation) was unbridled growth. They grew up in an era when escalating real estate values, surging stock prices and an employment market that has more jobs than skilled people to fill them was as predictable as the sun rising in the east. Boomers, on the other hand, have seen inflation, stagnation, recession and 9% unemployment before, and for the most part, have come out on the other side of it in pretty good shape. This generation's attitude could be summed up as "This, too, shall pass."
So statistics aren't the only thing working in your favor; you also have behavioral analytics.
http://www.quisenblog.com
The bigger question here and especially based on the brand, is instead of having one umbrella strategy that tries to reach everyone, isn't it better to segment it and have it be more relevant? I agree that you're probably alienating a good percentage of your audience with current approaches, and the 50+ target group needs to be treated with a different brand voice both visually and verbally.
Sure, the overall brand messaging needs to be consistent, but the specific message and strategic approach needs to be relevant to that target. This approach would not only make it more cost effective, but easier to track and to measure ROI.
Another toss in...really....how many of the younger generation have loyalty to anything, especially when the next big thing appears? So those 18-34's loyalty to a brand which will be around in 10 years or more will alter along with consumer needs including soap detergent. Attentive spans are hyping out. Count on what you can count on.
Brent;
You are right on! I've taken up that cause for years now as well. As a product innovation specialist and qualitative market researcher I've fought many a battle with client who see their consumer target as "female 18-34" or something like that...and then I say, "What about me? I'm another generation, but I'm a regular user of (fill in client brand name...)" The problem, as you've stated it, is that to many marketers old is not cool, HOWEVER...the notion of old keeps advancing. I'm stronger, more fit, more active in every way than my parents' generation at the same age. I don't know what old is any more...but from an emotional and physical perspective, for many of us Boomers it's decades beyond where we are today, and especially now, in light of this economy, we are likely to be active members of the workforce for far longer than our parent's generation. That means we will not be sitting in our rocking chairs, but very much in the world and consuming the goods and services of our younger brethren.
These stats have been staring us in the face for a long time...Glad to hear the obvious being recognized
I'm a Boomer and African-American to boot...been in marketing & advertising for the better part of 30 years and can validate what everyone has said. In our "15 minutes of fame" ADD culture where nothing lasts and--to everyone's points--there ain't no loyalty in the younger groups, CMOs BETTER watch what we Boomers are doing. We're the last consumer generation that DOES have some sense of brand loyalty, so you better keep speaking to us! Or are you just taking us for granted???
On my earlier post, I referred to CMOs, even though the original article was directed to CFOs. The fact is, both execs better engage with Boomers...or suffer the consequences!
Interesting. So now I'm curious? If the following is true:
"50% of all consumer spending in America will be by people over the age of 50. People 50+ earn $2.4 trillion annually compared to $1 trillion for the 18-34 group (and they spend at the same rate). Also according to McKinsey, people 50+ generate 41% of all disposable income, while they represent only 30% of the population. They buy 60% of all packaged goods, over half of all new cars and spend 75% more per vacation than consumers under 50. And in 2007, those over 50 spent 3 times the national average holiday shopping online."
and
"...yet, less than 10% of all U.S. marketing dollars are spent against the 50+ consumer, and nationwide research shows that the majority of consumers over 50 feel that advertising and marketing either portrays them negatively or ignores them altogether."
Question: It seems to me the older generation is not the ones marketing dollars need to target right?
Perhaps these ads are working, but surprisingly for the older demographic.
I believe Rod Stewart said it best, "Forever Young".