When It Comes To The Economy, It's The Boomers, Stupid
While economists and pundits debate back and forth, hither and yon as to a solution for the still anemic economy, and marketers search desperately for ways to increase sales, the answer is staring them all right in the face ... or, in many cases, the mirror.
A little group of 80 million consumers ages 45+.
Herewith, a few reasons why.
Let's start with unemployment.
The percentage of Americans who are unemployed has hovered at around 9.6% for some time now. But what's important to look at is who is unemployed.
According to recent New York Times and Bureau of Labor Statistics numbers, by far the largest group of unemployed is the 15-to-24 cohort at a whopping 16.7% (in July this number soared to a record 48% due to the lack of summer jobs for the younger in this group), followed by the 25 to 44 group at 8.2% and finally, the 45+ contingent at only (easy to say if you're employed, I know) 6.3%.
Now, I've been in the advertising business over 30 years and not once have I ever had a client ask me to target the unemployed consumer. I think this is probably for good reason ... the unemployed don't have any money!
So I'll ask, yet again, why are CMOs obsessively focused on the youth market?
Since you've heard me shout the above question so many times before, let's talk for a minute about déjà vu.
One of the perks of living past 50 is that you have something called experience. And experience tells you that things like good times and bad times and Great Recessions come and go and come and go. We lived through the recessions of '73 and '81 and '90 and, of course, the dot-com bubble burst of 2000. And between those times we saw the economy bounce back and we saw huge boom times.
Boomers know that this recession, too, will pass.
Gen Xers, however, aren't quite so sure. And the Millennials have never seen anything like this before. Maybe that's why a whopping 1 in 8 have boomeranged back home to live with their parents. Or why 25 states have shown a decline in birthrates (remember, the oldest Millennials are nearing 30) since the recession began.
And, by the way, all those younger people who have moved back in with their parents -- parents who pay the rent, the cable, the gas and electric and water, buy the food, pay for health insurance, buy and insure the cars -- in most cases, those parents are boomers, 45+.
Speaking of cars (one of my favorite subjects), I have also said many times that people over 50 buy 56% of new cars. In fact, the average age of new car buyers is on the rise, from 43 in 2007 to 48 in 2009.
Now you might counter that this isn't surprising given the economy; young people can't afford to buy new cars, they buy used cars.
According to CNW Research, the used car market for teens has fallen from 7.5 million used vehicles bought in 2004 to 4.2 million in 2009. Teens have gone from 17.4% of the used car market to just 10.9% in just five years.
Why? Of course the recession has a lot to do with those numbers. But expecting them to recover anytime soon may be the stuff of pipe dreams. A recent study by J.D Power & Associates indicates that, thanks to technologies like Facebook, Twitter and smartphones, today's young people are feeling less of a need to physically congregate, which results in less need for transportation.
This from the editor of the website Car Connection in July 2010: "It's the peak of summer-job season. And while in the past savings from teens' summer jobs used to often go towards buying a first used car, today it's more likely to go be used for a smartphone, and young drivers are more likely to share the family car ... or stay out of the driver's seat altogether."
So why would a company like Volvo spend millions of dollars to be the car of choice for a teen heart-throb vampire in "Eclipse"?
I can't for the life of me tell you the answer to that question, but I can tell you the results.
"Eclipse" hit theatres in June of this year; in July, Volvo sales were down 33% over the same month a year earlier (which wasn't a banner year either).
Ford is now in the process of selling Volvo to the Chinese.
And my favorite result of the Volvo youth marketing effort comes from a 19 year old's MySpace page: "Why would a rich vampire drive a Volvo?"
I've said it before, I'll say it again:
Eighty million consumers earning $2.5 trillion annually with 2.5 times the discretionary spending power of any other group, holding 75% of the nation's current wealth and standing to inherit between $14 and $20 trillion over the next 20 years seems to me like a group worth targeting by marketers.
I mean, I'm not an economist ... but I'm not stupid, either.