Archive for June, 2011

Common Consumer Preferences of the Wealthy

Tuesday, June 28th, 2011

We often talk about the rich, watch the rich on TV, and even try to imitate them. But how well do we know what they like (and dislike)? To find out, I went through Scarborough Research’s PRIME Lingo database, an immense collection of consumer research data. To find suitable collections of wealthy persons, I grouped adults age 35 and over together from the richest zip codes in the New York, Washington, Los Angeles, Detroit, Atlanta, Dallas, Houston, and Nashville areas. The zip codes collected are a balance of urban and suburban locations, and also balanced politically. These themes will be explored in future posts.

It is nothing new to report that the affluent like to drive Lexuses and Jaguars. What I will do is report some findings that are not immediately obvious. Some of the findings will not be surprising, but others will be somewhat at odds with the perception of who the rich are.

Some similarities among all the subgroups:

Gambling: The rich generally do not gamble. They have low rates of playing slot machines, table games, watching casino shows, and frequenting casino bars. The only casino activity where they resemble the general population is attending an upscale restaurant attached to a casino, a standard of newly built casinos. The high rollers table may make for good James Bond movie settings, but that runs against the typical pattern of who frequents casinos.

Hotels: The hotel chains the affluent like the most are Marriott, Courtyard by Marriott, Hilton, Embassy Suites, and surprisingly, Hampton Inns. Hampton Inns are an odd choice considering they are limited service hotels that cater to travelers on a budget. The category leader in the field is Holiday Inn, and while the rich are less likely than average to stay in one, it is still the most common hotel chain for them to check into. The rich sometimes aren’t so different from the masses.

Soft drinks: Soft drinks are another common facet of American life that aren’t popular among the wealthy. This is likely because they are older and soft drinks are more likely to be consumed by children and teenagers. There are regional exceptions such as Coke being very popular in Atlanta, and Dr. Pepper being widespread in the Dallas area. Both beverages are headquartered in the immediate areas, and conceivably the executives at Coca-Cola and Dr. Pepper could be part of these subgroups. If any soft drinks are popular, they are caffeine free beverages.

Alcohol: Among all Americans nationally, more name beer as their alcoholic beverage of choice than wine. Among all of our subgroups, wine is more popular than beer, sometimes much more so. Their second choice is beer and the third choice is liquor. Their propensity to name beer as their first choice is less than average and their preference for liquor is above average.

Credit cards: You would think the wealthy would have less need for credit cards. You would be wrong. The wealthy across the board are more likely to use credit cards, in almost every case including traditional big name brands, gasoline credit cards, and department store credit cards. It would seem intuitive that the rich could pay for more out of pocket, but the convenience (and safety) of paying without cash has appeal with the rich.

NASCAR: To be blunt, the rich shun NASCAR. In many of the northeastern locations, the amount who expresses even slight interest is only around 5-10 percent. It might be expected that rich Manhattanites aren’t fans of stock car racing, but even the elite in some of NASCAR’s hotbeds are not very interested. There are more fans in Nashville, Atlanta, and Texas than the northern cohorts, but they are among the least interested fans in their areas. There could very well be a class-based judgment against NASCAR.

Branded sports apparel: Sporting merchandise such as jerseys, t-shirts, and athletic paraphernalia are less likely to be worn by the rich. This is true of all the major sports leagues. The one exception is college sports gear. Here, the affluent are more likely than average to own apparel. It may be the case that they buy a shirt to root on their alma mater come college football or hoops season, but they won’t wear jerseys of the local pro teams.

Satellite radio: All of the subgroups are much more likely to listen to satellite radio. Depending on the subgroup, anywhere between one fifth and one third of respondents listened to satellite radio in the past week. The general population total averages around 10 percent.

Cable channels: The relevant point here is that the rich are less likely to watch TV. All subgroups were more likely to watch business channels like CNBC. There is a wide preference for watching cable news. Turner Classic Movies and National Geographic Channel are disproportionately popular in most (but not all) markets. Otherwise, nearly every other channel scores lower with the rich than with their fellow viewers. Perhaps being a couch potato is incompatible with being wealthy.

Online activity: If the rich aren’t watching TV, perhaps they decided to shift their leisure time online. The wealthy are more likely to use most common internet functions. Across the board, the wealthy are more likely to do such activities as using online auction sites, read blogs, play fantasy sports, pay their bills, and even use online dating sites. The only sorts of activities they are less likely to do are online gambling, look for jobs, and play video games.

These are some of the characteristics that are broadly similar among differing classes of the wealthy. In future posts, I will explore differences based on political affiliation and the urban/suburban divide.

Philo TV: A Marriage of Traditional and Social Media

Monday, June 27th, 2011

Now sitting in front of the TV screen at home can be a social experience.  Philo TV is an application for mobile devices used to browse television shows airing on broadcast stations and cable networks and is used to “check-in” to a television show being watched by the user. The application provides information including episode specific details, air time, genre and premise.

Popularity of certain TV shows increases quickly within social circles because Philo allows users to share with others what they are watching. Users report how much and why they do or do not like each episode by “checking-in”. You can view only your friends’ opinions or the entire Philo community. Philo TV begins to interpret user’s TV preferences and will recommend shows based on prior ratings. Couch potatoes now have the option to share what show they are watching on Facebook and Twitter.

Users earn points each time they “check-in” and comment on shows.  Like Foursquare, Philo TV has a “leaderboard” displaying users’ points. Points are broken up by show creating a competition to be the number one fan, or “executive producer” of a certain series. Specific series chat rooms are available to allow groups to have live conversation about favorite shows.

To promote shows networks can give awards, similar to badges on Foursquare. (See prior blog post here.) For example TV Insider awards a badge for watching a show they recommended. Philo TV has the unique promotion of giving users the chance to win prizes for watching their favorite shows. For instance, someone could win a trip to the Super Bowl for watching NFL Football. These options are for debuting series, those on air for decades and everyone in between, making it easy to tie your network or show to a promotion.

The Future of Foursquare

Wednesday, June 1st, 2011

Foursquare, a location-based social networking site predominantly used as a mobile application, allows users to “check-in” on smartphones when visiting a location.  When checking-in users are notified of friends nearby. Foursquare users may opt to share their location with friends on other social networking sites, such as Twitter and Facebook. 

A venue can be created by any Foursquare user, but employees of a particular business must claim the venue on Foursquare. Once claimed, businesses are able to manage “campaigns”, or promotions, to encourage users to visit their business. An example being, “get a free appetizer every fifth check-in.”

The title of “mayor” is achieved through consistent check-ins at the same venue. Mayorship is earned by the person with the most check-ins within the last 60 days at a single venue. The bragging rights combined with enhanced promotions for mayors promote customer loyalty. Varieties of badges exist on Foursquare and are obtained in unique ways. For example the “JetSetter” badge is earned by having five airport check-ins. With the launch of Foursquare 3.0 in March 2011, users are able to search businesses around them by category or keywords to find a business meeting their needs. For instance, there are the preselected categories of “nightlife” and “coffee”, but users can also search for something as specific as “latkas” or “disco music”.

Aside from the fact users see other venues near where they check-in, not much else was available on Foursquare to benefit businesses outside of the retail sector. Businesses not tied to a particular location can now choose from two Foursquare marketing tools—pages and custom badges—to connect with users. Pages show tips about nearby locations fitting into a particular business’s brand. For instance, Bravo TV shows tips of businesses left by cast members of their Real Housewives series. Partner badges are created as a reward for users who check-in somewhere seen as fitting into a business’s brand. An example is the CNN Healthy Eater badge given to users who checked into farmers’ markets. If you’re interested in creating a partner badge do so here.

These two options are just the beginning ways brands will be able to promote themselves on Foursquare. With over 10 million users, more localized advertising options are sure to surface, so stay tuned. Oh and if you ever stop by Smart Media Group, make sure to check-in!

The Problem of Large TV Markets in Advertising

Wednesday, June 1st, 2011

A Designated Market Area (DMA) is a technical term for what most people commonly refer to as a TV market.  Broadcast networks typically have an affiliate in each DMA.  Currently there are 210 DMAs in the United States.  Every county in the US is part of a DMA, no matter how close or far you live to your local network affiliate.

Because every county is part of a DMA, some can be very large and full of rural counties many miles away from the center of the market.  Let us take the example of the Dallas-Fort Worth DMA, the 5th largest in the country.  Over 7 million people live in the DMA, which includes over 2.5 million TV households.

The size and sprawl of the DFW DMA is enormous.  Dallas TV stations reach 32 counties in Northeast Texas.  The size of the DMA is over 26,000 square miles, which is larger than the state of West Virginia.  Traveling from Downtown Dallas to some of the counties on the edge of the viewing area can be quite a trek.  The distance from Downtown Dallas to Comanche, the county seat of Comanche County, is approximately 120 miles.  Traveling by car, it is somewhere near 140 miles away.  On the other end of the DMA is Red River County.  Its county seat, Clarksville, is 115 miles northeast of Downtown Dallas.  Even if you push the limits on the back roads, it will take over two hours to go from Dallas to these locales.  It’s safe to say no one in Clarksville or Comanche is commuting into Dallas every day.  And yet, they are equally part of the TV market as the city of Dallas.

The Census Bureau defines the Dallas-Ft. Worth Metropolitan Statistical Area (MSA) as only 12 counties.

Even so, this 12 county region is nearly the size of Maryland.  This more restrictive definition of the metro area still includes some totally rural counties such as Delta, Hunt, and Wise Counties.  In reality, there are only a handful of counties with true urbanization.  Nearly all of Dallas County is developed.  Most of Tarrant County (Ft. Worth), except for the southern and western fringes, is developed.  The northern suburban counties of Collin and Denton have some parts closest to the big cities developed, but even the majority of their land remains rural.  Finally, the edges of Rockwall, Johnson, and Ellis Counties have seen some recent development.  Everything else in the region is rural and small town.

This creates some issues in advertising.  In a huge DMA like Dallas-Ft. Worth, any advertising that doesn’t have a reach in the whole market will see significant waste of resources.  Local businesses and non-statewide political candidates would be targeting only a fraction of a very expensive market.

Additionally, there is a sizable amount of socioeconomic diversity within the viewing area.  Residents of the super wealthy Park Cities enclave (Highland Park, University Park) are much more likely to read out of town newspapers, attend high culture events (ballet, symphony), drives Porsches and Lexuses, drink cocktails or wine, and go to Whole Foods.

Suburbanites out in Collin County have disproportionately large families, heavily frequent amusement parks, like to buy sporting goods, and listen extensively to childrens and Christian radio stations.

Comanche and Red River Counties, in contrast, are much less affluent.  They are much more likely to hunt, gamble, drive cars from the Big Three domestic auto makers, drink domestic beers, and support country music.  These are just three of numerous segments of consumers that advertisers will reach on broadcast TV.  Many times, it won’t make sense to target all of these segments.

So how do you avoid waste in delivering your message?  One way is to use cable.  Cable advertising is done through local cable systems, which have a far smaller geographic sweep.  For example, the Park Cities have their own cable system, Time-Warner Park Cities.  This is a small cable system that can be specifically targeted at this viewer base.  Similarly, Red River County also has its own cable system, Suddenlink Clarksville.  Collin County has a few different overlapping cable providers such as Time Warner and Viamedia spread out on a few different systems apiece.  Through a judicious use of cable, you can target customers in a much more efficient manner.

Some rural areas do not have cable at all.  If you are still interested in targeting consumers in outlying areas of a DMA, you can explore non-metro radio.  Unlike TV, not every county is part of a radio market.  The Dallas-Ft. Worth radio market is only 11 counties, meaning that the majority of remaining counties are non-metro radio.  There are state radio networks that specialize in placing spots on rural radio stations, saving buyers the trouble of searching through the multitude of small town stations.

Broadcast advertising remains the most popular medium for advertising due to its extensive reach.  In many circumstances, broadcast TV is too expensive and too widely diffused for anything but a buy from a national advertiser.  Exploring other options such as cable or radio can be a much more effective method for selling a product or candidate.