The advertising industry is in the midst of growing turmoil, with signs like the 11% plunge in the share price of the world’s largest advertising company, WPP, or the threat from P&G’s chief brand officer to dramatically shift the company’s $2.4 billion in ad spend. But while many attribute this turmoil to “the rapid shift to digital” or the cyclical nature of the business, a far more profound cause has been overlooked: advertisers’ failure to pursue older consumers.
These consumers hold immense market potential for the consumer-goods companies that advertisers rely on, yet ad dollars continue to flow primarily towards younger consumers. This has been confirmed by multiple studies, including one that found only 10% of marketing spending targets Baby Boomers, even though this demographic controls the majority of disposable income in the US. Other studies find that just 31% of firms have accounted for longevity in sales and marketing plans, and only 15% have a business strategy focused on the older demographic. The results show, as more than half of people globally say advertising does not reflect older consumers.
But there’s still time for change: the recent shock to the world’s largest advertising firm should be a wake-up call to advertisers and businesses everywhere. Ignore older consumers at your own risk.
While everyone knows that the 21st century has brought us once unimaginable longevity, few businesses – apparently including the advertising industry – have been able to translate this knowledge into results. There are well over 1.5 billion of us over-50 on the planet; creating a market for far more than traditional “aging” products like an Alzheimer’s drug or a retirement plan. Clearly, this older market has massive implications for the consumer-goods companies that are so precious to WPP and other advertising firms.
Indeed, the “longevity market” is roughly $15 trillion in size – so why isn’t it already the basis for business expansion strategies and advertising spend? One answer is that the leaders controlling these consumer-goods companies’ huge advertising budgets are still stuck in 20th century thinking.
Advertising that targets mainly 20- and 30-somethings might have been valid when we all died by 70. But in today’s modernizing societies – which account for a great deal of that $15 trillion market – life can easily last well into the 80s or 90s. This requires a paradigm shift in how companies conceive of market size and pursue older consumers. Yet, few advertisers or companies are doing this.
Today’s 50-, 60-, and even 70-year-olds must be understood as valuable consumers of products both for themselves and their aging parents. And not just for home care or hospitals, though that too is true.
Received wisdom about the beliefs, preferences, purchasing habits, and market demands of this “older demographic” typically places these 1.5 billion people into one big catch-all – ignoring their immense diversity. Just as no one would ever contemplate lumping 15-year-olds together with 55-year-olds – a comparable 40-year span – why would we put all those older people together? Moreover, many in this older category are behaving more like 35- or 40-year-olds, as the baby boomers in the US, Japan, and across Europe are more tech-savvy, want to keep working, and, in America, hold 70% of all disposable income. Simply put, treating all of these older consumers as a monolith is costing companies billions in lost revenues.
So here are three ideas for consumer-goods companies and their advertisers to turn that loss into profit, using the aging of society as the basis for a new and powerful growth strategy:
First, bring advertising responsibility back to the CEO. During the golden age of advertising – think the heyday of Mad men – executives at the very top of the organization understood and designed strategies on how to communicate about a product or service. But as the Fortune Thousand have become larger and more global over the last three decades, advertising responsibility has been pushed down to mid-level employees who often have neither the authority nor experience to risk identifying new pathways for advertising value. The CEO has all these attributes – they can spark the revolution for the older consumer that the advertising industry so desperately needs.
Second, insist on using the megatrend of population aging to analyze how advertising dollars are spent. This trend – caused both by people living longer and the profound shift in the number of old to young in every economy on the planet as they modernize – is one of the two or three trends that should be used as a strategic growth lens by every business and industry. Advertising designed to capitalize on this trend can lead to communication and marketing strategies, along with advertising creativity, that will sell consumer goods, travel and entertainment, home renovation, and fashion and personal use products, to name a few, alongside nutrition, home care, health, and financial services.
Third, hire and retain older workers. While market research can teach certain things, there’s nothing like an advertising professional who is a part of this market segment themselves. Hiring them and keeping them on is a clear business advantage. How can this not make sense when we are today living ever longer and, society itself, now has more old than young?