Should Boomers Be More Important to Marketers Than Millennials?
Conventional wisdom suggests marketers should bond with the 18-34 demographic, to formulate strong brand relationships and win customers with the highest likelihood of providing strong lifetime value. But do these decisions make sense in an era when Baby Boomers control so much wealth, have the ability and desire to purchase?
With boomers representing nearly half the nation by 2017, marketers may need to reassess their current practices. This group represents nearly 80MM people, equates to $43 trillion in buying power, 40% of all CPG purchases, and – contrary to popular belief – are the largest online shopping audience.
With their scale, power, and new aging techniques, this cohort commands attention. Boomers are aging dramatically different than generations prior; as they are working well beyond retirement age, formulating new businesses, designing products to help aging, joining gyms, exercise clubs to name a few. However, advertisers remain focused largely on younger audience segments, holding true to the popular belief that these younger audiences offer long term brand loyalty. While this theory may have been true in decades past, it was the Baby Boom generation that made up the coveted 18-49 segment when the belief was popularized. This year, the last of the boomers will age out of the segment, according to the popular generational definitions. With that thought in mind, brands need to shift focus and spend more time understanding the nuances of the nation’s wealthiest group, A50+.
Today’s reality is extremely different, since the distribution of wealth has changed so radically in the U.S. Adults 18-25 have minimal disposable income, are saddled with college debt and often live at home with their parents. However on the flip side, the older generation represents an enormous potential. As they lead active lifestyles, pursue new interests, and enter new life stages it leads them to new products and purchases. Take a quick look at the mobile marketplace; it expects to see its largest growth come from boomers. Currently, 36% own a smartphone, but that segment represents the greatest purchase potential. Boomers have expressed a high willingness to use and engage with mobile technology.
Contrary to traditional ad-think, the auto industry is increasingly changing their ways, as older Americans significantly drive more, demand mobility and can afford to buy new vehicles. They make greater proportion of shopping trips, more family and personal errands, and more trips for social/recreational activities than younger adults. Boomers today are considered the most relevant group as they equate to buying 6 out of every 10 new vehicles.
Today’s boomers are open to changing their brand preferences and buying patterns. This audience has retained enough wealth that they’re still the authoritative purchasing voice when it comes to their families. In many ways, younger generations remain dependent on their boomer parents. Baby Boomers battle the old bias where aging equates to less value, as they are and will continue to be the nation’s most valuable age segment. Boomers are forging new brand loyalties, particularly as they are introduced to new classes of products that didn’t exist just a few years ago.
There are some key differences between today’s Baby Boomers, their Silent Generation predecessors and the highly prized A18-49 audience. Boomer median household income is 55% greater than that of the Silent Generation. Eighty percent of boomers are home owners. They’re educated and have, on average, nearly $24,000 in annual disposable income. Comparably, home ownership continues to decline within the A18-49 despite economic conditions improving; and today’s 25-34 year olds prefer to live in someone else’ home.
Boomer net worth equates to 3X more than their younger counterparts and they outspend any other generation by an estimated $400 billion each year on CPG products. Spending among this group is 45% more than when the Silent Generation occupied the same age range. They represent the largest online shopping audience, spending nearly twice as much as their younger counterparts. The most significant difference is that boomers embrace and are open to change, much different from the prevailing views of 30 years ago.
While boomers are heavy consumers of traditional media forms, they are quick to embrace technology. They represent the most prolific online shoppers, spending $7 billion annually. They also engage heavily with online media for comparison shopping, information, and current events. A quick evaluation of social media paints a clear picture: nearly 53% of Boomers are actively using Facebook. It’s true that younger generations are earlier adopters of new technologies. However, once those technologies go mainstream, Baby Boomers increasingly engage with them.
Marketers need to further understand the nuances of the 50+ audience today, as they cannot be lumped into one demographic. By 2017, nearly 50% of the nation will be 50+; the most wealthy, affluent and active group; marketers need to keep intact those lifelong relationships, establish meaningful connections and reprioritize boomer importance.
Baby Boomers are reinventing aging as they get older, opening the door for a lot of new business potential. Experiences will become their new priority over amassing material items, and key industries that will flourish with boomer dollars are health, travel, auto, fashion, beauty, housing, wealth and retirement. With that in mind, as the media industry needs to dispel our Boomer biases and invest in forging better relationships with the 50+ demographic. As this group ages out of marketer’s beloved A18-49 demographic group, the greatest ROI may come by aligning with their changing needs.
By Hemali Lakhani
Hemali Lakhani is an experienced media professional with proven success in integrated media planning across high profile brands in the healthcare/pharmaceutical, automotive, retail, and financial services categories. With over ten years of experience in strategic media planning, her expertise lies with developing strategic integrated solutions across clients such as Gilead, Valvoline, GE, Visa & IKEA. Hemali has her BA from Pace University, Lubin School of Management and is in her final semester completing her MBA from Fordham University, Gabelli School of Business concentrating in media and marketing. In addition, Ms. Lakhani resides in Long Island City, NY with her husband and two beautiful little girls, Maya and Arianna.