Strategy

Grey power: On target

Businesses are discovering the value of marketing to older consumers.

How about an online dating service for dog lovers? That’s just one of the ideas that crossed the mind of Agneta Owen, a marketing consultant for Lavalife Corp., when she was dreaming up new business lines for the Toronto-based company two years ago. Around the same time, Owen heard a frequent complaint from her baby boomer friends looking for love on the web: they were sick and tired of competing with 20-year-olds. On top of that, her pals wanted to meet companions in the same stage of life. “They wanted to talk to someone about, say, the meaning of life, that maybe younger people don’t understand anything about,” she says. After doing some homework, Owen realized a dating service for the older crowd looked attractive. There were roughly 85 million baby boomers in North America. Unlike previous generations, many of the women had careers and were self-sufficient. As a result, the rates of people who were divorced or never married were relatively high, at 30%.

With a handful of colleagues, Owen began to develop a product, using focus groups and surveys to fine-tune the idea. Rather than just show pictures of users, the website would allow people to use videos, audio clips, photos and words to give a more well-rounded representation of themselves. The fonts would be slightly larger than on the lavalife.com site, to make the text easier for older users to read, and other features had to be especially user-friendly. The site would include tips on topics such as dating etiquette and safe-sex techniques. “For a lot of them,” Owen says, “this would be the first time in 30 or 40 years they’d be single again, and many wouldn’t have a clue.”

With an advertising budget of less than $1 million, Lava-lifePRIME, an online service “where singles 45+ click!,” launched in June 2007. Owen expected it might attract 25,000 members in its first year. It ended up with nearly double that number. But for her, the real sign of its success is the robustness of the community. The forums are buzzing with activity. (This feature has been so successful, it has been added to the main Lavalife site.) “Our LavalifePRIME members are actually planning and executing their own events, where people meet offline and call each other by their online nicknames,” Owen says.

LavalifePRIME is, however, just one of a growing number of successful boomer-targeted products that are challenging the widely held belief that marketing to people over 50 is a waste of time. These folks are set in their ways, goes the conventional thinking; they’re not willing to try new things. Yet research paints a different picture. A 2003 study by the American Association of Retired People revealed the 50-plus crowd is about as fickle about brands as the 18-to-49-year-old demographic. Seven in 10 American adults 45-plus would try a new brand if a person they trust recommended it, while about 50% in the age group are “always looking for better products.” Those numbers hardly surprise Matt Thornhill, president of the Boomer Project, a marketing research and consulting company in Richmond, Va. “Boomers have been marketed to and tried new stuff ever since they were five years old, sitting in front of a black-and-white TV,” he says. “They’re used to it.”

Moses Znaimer, for one, doesn’t need to be convinced about the value of marketing to the older crowd. The media mogul, who launched MuchMusic and Citytv, apparently thinks targeting people 50-plus is the biggest thing since using music videos to sell stuff to teenagers. In December, Znaimer gained control of Kemur Publishing Co. Ltd. and Fifty-Plus.Net International Inc., two of the country’s top media organizations focused on the demographic. (Znaimer recently combined those companies to form ZoomerMedia Ltd. (TSXV: ZUM).) He’s also taken on the role of executive director of CARP (whose acronym used to stand for the Canadian Association of Retired People, now known as Canada’s Association for Zoomers). Zoomers is a term he coined for the 50-plus demographic, 350,000 of whom are members of CARP, an acronym Znaimer chose not to change. It’s a play on “zip” and “boomer” — or maybe, as Znaimer himself has hinted, on “boomer” and his own last name. The 65-year-old’s goal is to grow membership to a million.

But you don’t have to be a media mogul to see opportunities in the 50-plus demographic. They represent about one-third of Canada’s 33 million people — many of whom are in the peak earning years of their life — and control 77% of the country’s wealth. Yet only an estimated 4% of advertising dollars is spent on the segment, suggesting brand messages aimed at the group may face less clutter from other ads. South of the border, the median age of the nation’s massive group of baby boomers is now 51.

OK, the opportunity to market to older boomers looks huge. How do you do it?

Not surprisingly, Znaimer has a few ideas. In an interview with CBC, he cautioned against reminding people 50-plus of their age, with words such as mature, senior and elder. But at the same time, Znaimer said advertisers should acknowledge that older boomers are savvy consumers. “You’re not going to get me to buy that high-priced car by flashing a 20-year-old’s picture at me, because that 20-year-old can’t afford that car,” he quipped. “You see a 20-year-old driving a fancy car and you know his daddy bought it for him.”

Marketers also need to be mindful of the mindset of older boomers. Thornhill says his company’s research shows that behaviour changes to being inwardly driven (rather than socially motivated) when people reach 50. “Consumers in their 20s and 30s buy brands of jeans and beer to help them fit in with their family and friends,” he says. “When you get to your 50s, you could care less what your friends are buying. You buy stuff based on how it makes you feel inside.”

Lumping 50-year-olds with 20-year-olds is a mistake, but so, too, is grouping all boomers together. Unlike previous generations, many boomers married late, got divorced, started second families, went back to school and pursued second careers. In other words, age alone can’t tell you whether, say, they’re empty nesters or still putting kids through college. “You need to target a life stage, an attitude or a lifestyle,” says Thornhill.

For example, management consulting firm McKinsey & Co. has identified a segment it calls “u-boomers,” comprising 24 million middle-class American households. These folks have grown accustomed to a high standard of living — anfd have spent rather than saved to achieve it. Moreover, they expect to continue satisfying their expensive tastes in retirement, despite having planned poorly for their golden years. Among other traits, they’re tech-savvy, adventurous and concerned about their health. The consulting firm predicts the group will account for almost a quarter of U.S. spending by 2015; it also foresees an enormous market for goods that fit u-boomers’ lifestyles at price tags the group can afford.

Another attractive segment is “grandboomers”: boomers who are grandparents. In the U.S., their average age is just 53, and 75,000 people join this group each month. Companies such as Disney and MasterCard have been targeting grandboomers for years, and with good reason. “Boomers spoiled their kids, raising them, but they’re really spoiling their grandkids,” says Thornhill.

But perhaps the smartest marketers craft their advertising to cut across generations. Thornhill holds up Harley-Davidson as an example. “The company doesn’t care how old you are. If you’re interested in freedom of the road and have a bit of a rebel in you, that’s the motorcycle for you,” he says.

Clever companies will also take advantage of shopping trends. For starters, 50-plussers are keen on buying experiences rather than a product that simply fills a need, says Thom Blischok, the president of innovation and consulting at Information Resources Inc. in Chicago. From watching a man land on the moon to blissed-out hippies dancing at Woodstock, these people have lived through interesting times — and certainly don’t want their golden years to be dull. Blischok points to boomers filling their shopping carts with Kobe beef and exotic cheeses: positioning a brand as an experience rather than as a product with functional benefits isn’t just a strategy for goods in the lifestyle category. For more proof, just look at bottled water.

Experiences marketed to older boomers, however, must be affordable. Like everyone else, they’re being pinched by higher gas and food prices. But on top of that, many live off a fixed income in retirement. That represents a huge opportunity for companies that can offer “affordable indulgences,” says Blischok. A $12-bottle of fine wine, anyone?

Although experiential products should do well with older boomers, companies shouldn’t overlook the less sexy but growing demand for health and wellness goods. Kellogg’s has tapped into this area with brands like Special K, as has L’Oréal with its pricey anti-aging creams. Earlier this year, Frito-Lay launched TrueNorth, a 100% natural nut snack line which is the food giant’s first product aimed specifically at aging boomers. These goods capitalize on the fact that many people 50-plus aren’t ready to acknowledge their mortality. “Boomers are allabout renewal and rejuvenation,” says Blischok. “They’re just not ready to jump in the grave and take a dirt nap.”

Advertising to older boomers will require a mix of media, depending on the target and brand. But most communication plans should include an online component. Canadians 50-plus are increasing their Internet usage faster than any other demographic group. Each month, they surf the web an average of 24.8 days and spend over 33 hours online. Their numbers online, which currently total 5.2 million, are quickly growing. Part of the increase is likely coming from the fact online tools have become more user-friendly, says Bryan Segal, vice-president of comScore. “Banking online is as easy as visiting the branch,” he says. But he also sees much more emotional reasons older boomers are jumping online. “With the advent of Facebook, photo sites, instant messengers, Flickr and social networking, we’re seeing this age group adapting to keep in touch with their families,” he says.

For Lavalife’s Owen, the decision to advertise and market to older boomers wasn’t a tough sell. For others, it might be. After all, the bias to go after younger and impressionable consumers is ingrained in many industries and incorporated into companies’ long-term growth plans. That can make targeting a different demographic seem risky. Yet the rewards can be great. Not only do older boomers have money to spend but, with lifespans extending, they also could prove to be lucrative consumers for many years to come.