Jerry, Part Three. On the Next Big Thing!
The Ambassadors of Internet's Quan
By Tim McHale
For the last two days, we've been publishing a conversation I had with Jerry Shereshewsky, CEO of Grandparents.com recently about his experiences on Madison Avenue (Part One) and at Yahoo! (Part Two). Our focus will be on what he's up to now; evangelizing "lifestage" marketing and selling Grandparents.com.
Everyone who knows Jerry always appreciates his quips and stories. One which we loved was something he passed on to us; that "being a grandparent is the dessert of life;" Jerry said this "icing on the cake" effect applies to marketers who "get it" as well!
Mr. Shereshewsky's challenges are not all that different from the ones that Tom Cruise's character had in the film, Jerry McGuire! Considering all the fabulous lines out of Cameron Crowe's film, few are as powerful as, "You had me at hello!" It's that throat-tightening, tear-wrenching part of the film that Hollywood insiders call "The Money Line."
How different are parents' reactions when they receive the line from their adult child that, "We're going to have a baby!" Jerry says that it's "The Money Line" to marketers.
Given the size and enormous wealth among expectant grandparents - which actually dwarfs younger family incomes - this is a lifestage that smart advertisers ought to recognize, given the extra support grandparents provide their new families and the grandchildren of all ages who add an exciting new lifestage, filled with love and care.
Apparently, from what Jerry's hears from those marketers who are producing "lifestage marketing" solutions with Grandparents.com they're telling the CEO that "You Complete Me!" Needless to say, its effect on Shereshewsky is like Cruise's:"That's more than a dress. That's an Audrey Hepburn movie!"
Tim: Tell me about the Grandparents market overall.
Jerry: There are over 70 million grandparents in this country. And roughly 50% of all boomers, are grandparents already.
Jerry: It is a completely under served group. That said, I don't know that anybody thinks of themselves as being a baby boomer or a Gen X or Gen Y or whatever. Those descriptors are the labels created by demographers. But these descriptors are not behavioral, so the difference between someone who is 42 years old and someone who is 52 years old is pretty pronounced.
Tim: What do you mean pronounced? Different?
Jerry: I mean, if you are 42 years old, it is almost certain that you are working full-time that you have no possibility of retiring in the next year or two and that you've got relatively young kids at home. That means all the things that are really important to you are different than those of somebody 20 years older. By the time you reach 60, you've begun seriously thinking about the rest of your life, retirement and things that have nothing to do with your life 20 years before. Your kids are probably either gone or on their way out of the door. You own 2.5 of everything that you ever need to buy. So instead of buying necessities, you are buying things for amusement and pleasure.
Jerry: It's a different world between 42 and 62. There's no reason to suppose that merely because you both happen to be under the same umbrella called "the baby-boom" that it means anything to consumers. What's really interesting is Life Stages. For instance, when you decide that you're going to get married for the first time, I don't care if you are 17 years old or 37 years old, or may be even 57 years old, you buy brides magazines, and collect wedding information. You're about to make hundreds of decisions involving tens of thousands of dollars, in front of your family, in front of your future husband's family and all of your friends. Most likely, you have no hard experience in making most of those decisions.
Tim: That's true.
Jerry: We view ourselves as not being about an age but being about a stage. One of the things that we know to be true is that people identify with the title "grandparents."
Tim: Give me an example.
Jerry: Here are two, the Premier of China says he prefers to call himself Grandpa rather than his official state title. When Nancy Pelosi was interviewed right after she became the speaker of the House of Representatives, they said, "Madam Speaker, how do you like the title?" She said, "Well, it's a nice title, but the one that I really like the best is Grandma." Somebody once referred to being a grandparent as the "Dessert of Life."
Tim: When did you see a transformation into companies thinking about grandparents and understanding that there's a huge market out there for 55+
Jerry: It hasn't happened yet. And it's not about 55+, it's not about an age. It's about a stage.
Tim: Got it.
Jerry: The average age for a first-time grandparent in the United States today, is 53.
Tim: Did you say 70 million people are either seniors and/ or grandparents.
Jerry: No, 70 million people are grandparents. There are many more than that who are seniors.
Tim: Okay, so marketers haven't got it, but people obviously, the grandparents have seen their lives change, their interest in certain products change. Obviously, they are thinking as much about retirement as they are about baby toys.
Jerry: And if you look at our site, two of our initial advertisers are Playskool and Johnson's Baby products.
Jerry: I'll tell you, who the third one is. Pepsi. That's the break through.
Tim: That's amazing. That makes much more... that's a big "Ah-ha!" from me, because there traditionally... Are they selling Pepsi or are they selling water or juices?
Jerry: First of all, who was the Pepsi generation? The Pepsi generation is me and you. Pepsi has been focusing on the younger segment. They have largely ignored those younger kids once they got older. Now they will be experimenting with a direct approach to this grandparent lifestage by connecting grandparents and grandkids.
Tim: how is that possible?
Jerry: We'll be launching a Pepsi promotional program called "Pepsi Stuff" aimed at grandparents' desire to connect with their grandchildren. It's going to shake Madison Avenue into re-thinking about this market as nothing has ever before.
Tim: are they selling products to grandparents that are attractive to grandchildren?
Jerry: You'll have to wait and see it all as it comes to life in July. I can tell you that what we're going to do energize that connectivity.
Tim: Besides the three you mentioned, can you talk about what other companies you're servicing?
Jerry: Another is Regent Seven Seas Cruisers.
Tim: I've seen them on the site.
Jerry: Regent is very high-end cruise company who understands that a significant percentage of their audience are already grandparents. The hottest trend in travel today is grandparents taking vacations with their grandchildren. When you think about it, the parents are home working two jobs. The grandparents have the time and the money, they can take their grandchildren places that their parents don't have time to do or can't afford to do. We're doing a very cool promotional program with them, developing a reality show, if you will, about grandparent-grandchild travel called, Grandest Adventures. The first one will take place this summer on a cruise ship going from Alaska to Canada.
Tim: Very cool. I have to say, as a marketer, hearing this makes it easier to conceptualize grandparents.com. Grandparents are a market that we have to do something for. It's actually not a niche. It's large enough to develop a separate element.
Jerry: The grandparent market is the wealthiest audience in the country. 70% of the wealth in the United States, is in the hands of people 50+.
Tim: I see a similarity obviously, between the evangelism that you had to do in the early days of Yahoo! to what you are doing now. I would imagine that grandparents.com is the leader who is essentially selling the market as much as your own particular audience.
Jerry: That's the good news. And the bad news is that there's nobody else selling the market.
Jerry: You think you'll ever be able to financially, retire, seriously?
Tim: I'm not honestly thinking about it but I will within the next 10 years.
Jerry: Right. All the big financial institutions, Schwab and Fidelity among others are promoting their 401Ks and why you should do your retirement planning with them. Almost nobody can afford to retire. On the other hand there are almost no marketers who are saying, "You have grandchildren or will shortly ave grandchildren. They are going to have to go the college. They are going to have to be competing in a financially changed world. You can help, By doing advanced planning on their behalf. Come talk to us about 529s and other things for your grandchildren."
Tim: That's interesting.
Jerry: Most financial companies are selling against age, not stage. Retirement is, by the way, a life stage, but the number of people that are going to be physically able to really retire is very small. The next thing that's going to happen is that they are going to raise the security retirement age from 65 to 70 and then to 75. There are not enough young people paying into social security to enable social security and Medicare to pay out for our generation.
Tim: No, because people live for much longer now.
Jerry: Correct. The assumption when Franklin Roosevelt signed social security into being is that by 69 you would have moved on. People didn't live all that long just 75 years ago. It's a different world.
Tim: People in more blue collar labor-based companies do have pensions.
Jerry: Used to have. Think of how many pension plans have gone belly up in the last 10 years?
Tim: Right. Obviously, pensions are not offered at white collar businesses.
Jerry: Also remember that a huge percentage of the work force is in service industries rather than manufacturing.
Tim: So who is your audience?
Jerry: When you think about a grandparent, an important process begins when your kids come to you and say "Hey Dad/ Hey Mom, we are pregnant." That is an unbelievable moment for people and in fact if you go to YouTube, there are kids who have actually made videos of them telling their parents that they are having a baby.
Tim: No kidding.
Jerry: And, they will knock your socks off. It is an enormously emotional moment for the parents. The next thing that happens is that you begin to recognize that your children are not as prepared as you'd love them to be, to be the parents of your grandchildren. They are young, their financial situation is not nearly as good as yours and so you are going to help them. In the first year of that grandchild's life, you are going to spend on an average 1,800 dollars on your grandchild, directly. You are going to buy toys, you are going to buy cribs, you are going to buy furniture, and you're going to buy car seats. You are going to buy all kinds of products and services for them.
Jerry: Then the next thing that happens is that you begin to make major adaptations in your own home for the grandchildren. Why? Because you want your kids to bring the grandchildren to visit you. So will you have a high chair in your house too? Yes. Will you have a playpen. Yes, of course. Will you have a changing table? Yes again. Will you have Johnson's Baby Powder and diapers and all that stuff? Yes for sure. So that's a big learning for those companies. The third thing that happens is you begin to think, "Wait a minute. I sent my kids to college. And it cost a fortune. Tuition now is through the roof. How are your kids ever going to afford to send your grandchildren to college?
Jerry: Now once the celebration of "Dad, we are going to have a baby," wears off, you think, "How the heck are your kids guys going to afford to live." They live in a one bedroom apartment. "How are you going to get a bigger apartment?" You've got a little tiny car. "How are you going to get a bigger car?" "Are you putting away money for your retirement? Are you putting away money for your kids going to college?" And the answer to all those questions is, "No!"
Tim: How depressing!
Jerry: Exactly. so you and your wife will step in. And you'll make investments in 529K and UGM's and all kinds of things because your kids would if they could, but they can't. But you can.
Tim: That's good news!
Jerry: Here is how some of the arithmetic works. How many parents does that child have?
Tim: Two. Potentially more, or less.
Jerry: Two or four max. Let's assume two, and given the divorce rate, probably less than that. Some kids only one, some of them have two and a half to three. How many grandparents do they have?
Tim: At least four.
Jerry: Or more... I've met many kids who have like six and seven. It is a very simple concept. You have divorces and remarriages and you have step fathers and step mothers. You also have step grandfathers and step grandmothers. And they want to be supportive and involved.
Tim: You're describing a huge audience with all sorts of relationships. You have this enormous task as the first one to understand this market, which means you have to do an immense amount of education.
Jerry: There are other issues going on in our business and in society overall. One is ageism. In our culture where there's a built-in caricature of people of a certain age, especially, among younger people, media planners and buyers who think that someone aged 62 is old. Are you a fan of "The Simpsons"?
Jerry: Look at the way Bart Simpson's grandfather, Abe, is portrayed. His pants are kind of falling down, he is portrayed as a very old man. Think about Granny from the Beverly Hillbillies. And Clara Peller from the Wendy's commercials ("Where's the beef?").
Tim: Let me ask you a question. Did you understand the heavy lifting that would be involved when you became CEO?
Tim: What categories do you see as -- and I hate this expression - the low hanging fruit. Standard major advertisers, the automotive and packaged goods obviously packaged goods is a very broad statement, but is entertainment... certainly financial... as I think about it, there are numerous categories...
Jerry: All of them. Here's one company you probably haven't thought of, Nintendo.
Tim: Really, I guess grandparents are the ones who can afford the $300 or whatever it costs Nintendo machine costs as larger gifts versus the parents.
Jerry: It's not just the gifts. They want one in their own home. This is a very important concept. I want you to think about this for a second. When my kids were young, my wife and I made a strategic decision. We said, we want to be the house that my kids want to bring their friends to. That was a strategic decision on our part, because we wanted to know who their friends were and what they were doing.
Tim: That's brilliant.
Jerry: When you are a grandparent, of course you can go visit the grandchildren, but so much better when the parents say, "Let's go visit grandma and the kids jump up and down and say, "Yeah," instead of dreading it. How do you get that? You get that by having all the things that those kids want to have. You inform grandparents that if they buy a Nintendo Wii, they can have a tennis match with their grandchild. How cool is that!
Stay tuned for Part Four tomorrow!