Every year, 37 cents of every marketing dollar in North America is spent reaching the wrong consumers.
"What do you want for your birthday this year?"
This annual question from my wife (which seems to come sooner every year) has spawned a companion answer that I no longer even need to think about before giving: "Nothing."
It doesn't seem that long ago that the arrival of my birthday heralded an opportunity to receive a cornucopia of goodies all meant for me. As a kid, the prospect of my birthday was enough to induce detailed fantasies of all the good swag I might expect weeks before the event.
Now that I'm forty-something, my enthusiasm for receiving a large pile of gifts is balanced against the good probability that I'll be funding many of the gifts I receive along with the deeper realization that I've reached a point in my life where I really don't need any more "stuff."
During the past holiday season my sister and I joked that this year our gifts to each other would be to come to each other's houses and haul some of the possessions away. That's not to say that I live surrounded by huge piles of consumer goods (although I do have a severe weakness for books), but it's just that I've reached an age where the thrill of purely owning things has been offset by the practicality of needing to maintain, clean up after, and just plain keep track of all the different things that have become my possessions over the years.
The last several decades of unbridled consumerism have left many of us with rooms filled with possession. I don't need a new way to play music. I don't need another computer. I don't need a bicycle or basketball hoop or a car or large television or white picket fence in front of my house. I already have all these things. In short, I want for very little and am slowly getting out of business of consuming.
It appears that I'm not the only one who feels this way. In a recent interview, market researcher Paco Underhill (author of the phenomenally interesting book "Why We Buy") discusses that even if the economy improves dramatically in the next few years, the level of consumption that we have all taken for granted during the last decade isn't sustainable. According to Underhill, 60 percent of all discretionary income is held in the hands of North Americans 55 years of age or older. Like me, the majority has had years to acquire possessions, and as they go through life-cycle changes (children grow up and move out, weddings get paid for, education gets paid off, etc.), their ongoing list of consumer needs shrinks dramatically.
What does this mean for the future? You probably don't need a far-reaching trend analysis to see that the percentage of the population looking to buy new things will be shrinking significantly during the next 10 years. With most active consumers being under the age of 50 and marketing being largely in the hands of people in their 30s, it's very likely that the majority of future marketing efforts will be spent reaching a minority of consumers with less discretionary income.
In their 2006 book, "What Sticks," Rex Briggs and Greg Stuart pointed out that of the roughly $300 billion spent annually on marketing in North America every year, over $112 billion of that is spent reaching the wrong consumers. This means that 37 percent of every marketing budget is used to reach consumers who have absolutely no interest or need for the products and services being offered. You don't need to be an efficiency expert to realize that this is a broken model.
Throughout the history of marketing so much attention has been spent on just reaching consumers without stopping to consider whether the offer met a personal and relevant need. While pushing for reach and frequency may still work for some branding campaigns, most consumers are no longer willing to be bombarded continuously with content that doesn't speak to them personally. Passive consumers have been replaced by dynamic decision makers who can come and go as they please and, in turn, avoid any marketing that doesn't appeal to them personally.
As behavioral marketers, we must learn to look for cues that will help us define consumer behaviors that represent the best candidates for a campaign. Likewise, we also must be able to look for cues that will define those consumers who have no need for the products and services being offered. I can think of 112 billion good reasons for doing so.
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Rob Graham is the CCT (chief creative technologist) of Trainingcraft, Inc., where he heads up development of customized training programs for a wide range of digital marketing, entrepreneurial development, and digital media clients.
A 20 year veteran of digital media, Rob has served as the CEO of a multimedia development company; an interactive media strategist; a rich media production specialist; a Web analytics consultant; a corporate trainer and seminar leader; and a chief marketing officer.
When he isn't on the road presenting training workshops, Rob teaches at Harvard University, Emerson College, and the University of Massachusetts - Lowell where he teaches classes on Digital Media Development, Web Store Creation, Software Programming, Business Strategies, and Interactive Marketing Best Practices.
He is the author of "Fishing From a Barrel," a guide to using audience targeting in online advertising, and "Advertising Interactively," which explores the development and uses of rich-media-based advertising. He has been an industry columnist covering interactive marketing, digital media, and audience targeting topics since 1999.
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12:00pm ET/9:00am PT