Mon. Apr 19th, 2021

Baby Boomers Have All The Money, Brands & Advertisers Have To Pay Attention

“So in the Boomers, sports leagues and networks are capturing an audience that is not only far wealthier, but far more enthusiastic about engaging with their products.”

For a number of years, Mike Francesa has been emphasizing that Baby Boomers were a dramatically undervalued audience demographic for advertisers. His generation was working and living longer, and earning and spending far greater money than the 25-54 year old demo coveted by radio and 18-49 by TV. The New York radio legend recognized a vital paradigm shift sooner than just about everyone else in the business, while also probably being a little too dismissive of young professionals. 

“I understand there’s an obsession with youth in this country, but go to a Mercedes-Benz dealer and ask them how many Mercedes did you sell in the last month to people between the ages of 18 and 34?” Francesa mused at the Barrett Sports Media summit early last year. “And then ask them how many they sold to the people between the ages of 55 and 65.”

I’ll acknowledge that my initial reaction to when Francesa started making this point years ago was thinking “Ok Boomer” inside my own mind. I was over-sensitive to the fact that he was hand-waving my generation of Millennials like he would a WFAN caller from Yonkers who suggested a dumb trade. His opinion was transparently self-serving in regards to his own aging audience, and he underrated what habit-forming can mean to advertisers. Nonetheless, as I’ve thought about it more I’ve realized he’s completely right about the considerable spending power of people in their 50s, 60s, and 70s in this country — and brands are also recognizing it and adapting. 

Buying for 3-4 Generations

Jill Albert is the CEO of Direct Results, a firm that buys ads across audio platforms including radio, podcasts, and streaming for brands like Omaha Steaks, USC, Home Advisor, Mathnasium and Chewy.com. She told Barrett Sports Media that 25-54 remains the “core” demographic target in audio, but that 55-75 year-olds are “kind of misunderstood and undervalued.” 

Lauren McHale, SVP and Director of Sales at the Katz Radio Group ad agency, agrees that 55+ is “often undervalued”. 

McHale said, “Advertisers target consumers via their lifestyle choices. Research shows that sports radio, play-by-play in particular, delivers an audience that is educated, employed, and has a higher income and higher net worth than the average adult.  Stats from the Federal Reserve and the Bureau of Labor Statistics show that adults 55+ have the highest net worth among all households, and account for the largest share (41%) of all consumer spending in the U.S.”

Albert made the point that Boomers, with accumulated wealth that dwarfs younger generations’, are in a position where in many cases they are spending not just on themselves but on care for their elderly parents, and potentially providing support for their children and grandchildren. 

Michael Mulvihill, EVP and Head of Strategy at Fox Sports, affirmed this point. “How many young people use a Netflix password that’s paid for by their parents? A lot,” he said. “How many parents use a Netflix account that’s paid for by their kid? Seems like not many. That seems to flow almost entirely in one direction.” 

So what we are seeing isn’t necessarily what Francesa lobbied for in prioritizing the boomers for ad targeting, but a gradual shift in which they’re being valued more than before but still not the priority. “At the end of the day we want as many ears on our platforms as we can get — whether it’s over-the-air or digital” said Mitch Rosen, Program Director of Audacy stations 670 The Score in Chicago and 105.7 The Fan in Milwaukee. “I still believe we live in a 25-54 world. I still think that’s the target.”

Contextualizing the Wealth

It’s one thing to just say that Boomers are rich and thus imply that the youth are poor, but when you look at the data it really smacks you in your face. According to the Federal Reserve, here is the wealth in trillions of dollars for the generations:

Silent & Earlier is defined as born before 1946, Baby Boomers were born from 1946 through 1964, GenX from 1965-1980, and Millennials from 1981-1996. The differential magnitude is stunning: Boomers have nearly twice as much wealth as GenX’ers and nearly 11 times what the Millennials do. 

Michael Mulvihill, the Fox Sports executive, pointed me to a study, circulated by the AARP, which said that if you separated out the economic contributions of Americans aged 50+, it would be the third largest economy in the world behind the United States and China. “So the third largest economy on Earth is completely ignored by the advertising industry,” Mulvhill said of those who cut off audience value of those older than 18-49. “That seems like it should be reconsidered.”

Those numbers, as gobsmacking as they are, still do not tell the full story. Part of the emphasis on reaching 18-49 or 25-54 was the presumption of upward mobility amongst generations of Americans. The Boomers, when they were the target demo, were the leading illustration of this belief. However, the ladder got pulled up behind them. 

This chart, shared recently by UNC Greensboro economist Gray Kimbrough, takes a few seconds to read, but when you figure it out it plainly spells out what Mike Francesa was stating: young professionals have not been accumulating wealth like their predecessors did:

How can you respond to that besides acknowledging that fundamental assumptions about buying power must be re-assessed?

What it Means for Sports

You can hardly call it a dire situation when the NFL is nearly doubling their media rights money in the next TV contract, but there were some sirens sounded when the median viewership of the Chiefs-Bucs Super Bowl was at 50.6 years old, up from 46.6 in 2018 and 49.1 last year. To illustrate why we constantly hear about the old viewership for MLB and younger for NBA, the World Series was at 56.2 and the NBA Finals at 46.1. 

The Boomers are the generation most apt to sit down and watch all or most of a game, while the youngs are increasingly satisfied to nibble on highlights on their phones. Last week, Variety revealed a survey in which different generations were asked whether they preferred to watch full games or highlights. Here are the percentages that preferred watching highlights:

NFL

18-34: 48%
35-49: 20%

50+: 11%

NBA

18-34: 54%
35-49: 47%

50+: 40%

MLB

18-34: 58%
35-49: 48%

50+: 24%

So in the Boomers, sports leagues and networks are capturing an audience that is not only far wealthier, but far more enthusiastic about engaging with their products.

How do you harness that?

When I’ve talked about the undervaluation of older audiences, one response that I’ve gotten is that people’s preferences are set by the time they’re in their fifties and they become impervious to the influence of advertising. That is partially true, and explains why the youth is coveted. Look at what Dave Portnoy and Barstool have built. For two decades they have reached college-aged fans and kept them around. Portnoy isn’t content to let the audience age with them, and earlier this week explained the funnel system of doing drama-filled shows with Tik-Tok stars so that Barstool can capitalize on the young audience when they start making money:

Nonetheless, advertisers who cut off their targets at 49 or 54 are dismissing a remarkable amount of massive opportunities. 

“Buying habits may be set on consumer packaged products, so when they go to the grocery store things may be set from that perspective. You’re not going to sell them on a new brand of toothpaste,” said Jill Albert, the CEO of Direct Results. “But their world is opening up. They’re not spending as much time taking care of school-age children or working. So now they get to do whatever they want. Take travel: How many times do you talk to people who are 55 years old that are trying to figure out all the places they want to go? That’s a huge opportunity, especially after coming off a stretch where travel has been shut down and will be opening up.” 

Lauren McHale, of Katz Radio Group, says that they’ve discovered that Boomers express feeling excluded by marketers. “Using our proprietary research panel of U.S. consumers across the country, Katz surveyed older adults to gauge their opinions of brands not speaking to them,” she says. “Based on our research, the 55+ consumers are aware they’re being snubbed – they are also aware of their spending power. Our findings show that the 55+ audience want brands to speak to them and they take action when they hear an ad.”

There has been what I think is a misconception that mobile devices and streaming would cannibalize traditional media platforms when in many cases there are incremental strategic advantages. For example, for years Mitch Rosen was selling 670 The Score’s reach in car radios or perhaps in the office. Now, the app can reach you through your phone headphones or home speakers. For the first time ever this season, Cubs games will stream on their app. The audience from all of this can get aggregated and targeted accordingly. 

Another element, and this is a topic for a whole other piece, is addressable advertising. Facebook, Google, and Amazon have built an oligopoly in digital advertising with their sophisticated targeting technologies. This strategy is already percolating in audio and TV. Jill Albert said that Direct Results is already using attribution models and pixel tracking techniques across audio platforms — even including terrestrial radio. 

To borrow a conclusion phrase from Mike Francesa, the bottom line is that he was perhaps a little too dismissive of young professionals, but absolutely right that the Baby Boomers need to be a focal point in sports media marketing. This is an audience that has more wealth and the desire to spend it than the generations who came before it and the ones coming up behind. For the right industries, targeting them is quite advantageous. 

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