Census Breakdowns Help Marketers ‘Follow the Money’
When Hyundai Motor America learned that its Elantra and Accent models were striking a chord with nurses, the car company turned to Census Bureau data to shape advertising that would reach the largely female profession. Hyundai now is anxiously awaiting the release of detailed income, education and occupation data from the 2000 census, with an eye toward honing that specialized pitch.
“That information is going to be wonderful,” said Andrea Repass, vice president of Bates USA West, Hyundai’s Irvine-based advertising agency. “We’ll be able to match Hyundai’s buyer data against general population data to determine how big this market is and where those nurses might be living.”
Grocery store chains use census data to decide whether to stock coolers with pricey imports or cheaper domestic brews. Colleges rely upon it to craft menus that will appeal to increasingly diverse student populations. Oil companies turn to the census to help decide which service stations might support convenience stores, car washes or fast-food restaurants.
And when marketers blend census data with what they already know about customers, they can differentiate between religious music fans who prefer Gospel and those who favor contemporary Christian rock. They can segment book buyers by mystery, science fiction and romance novels. They can tell which neighborhoods are likely to be hooked on ESPN2, the Family Channel or the Food Network.
“So much research gets based upon the census, either directly or indirectly,” said Tom Watson, vice president and research director at Initiative Media North, a media buyer for Walt Disney Co. and other companies. “The TV ratings company turns to census data to draw a panel that’s representative of the country.”
The explosion in media outlets is forcing marketers to pay more attention to how they spend limited advertising dollars. Increasingly, that means factoring census data into marketing strategies. “You’ve got seven or eight networks--more if you count Hispanic, Pax and the others,” Watson said. “The same fragmentation is evident in other media. It seems everyone--Oprah, Rosie O’Donnell and Martha Stewart--has a magazine.”
The most effective way to track consumers’ preferences is “by following the money,” said Carolyn Scott, a Chicago-based economist and retail consultant. “And, every 10 years, the census gives you the best [financial] snapshot you can get.”
In 2002, Census to Get New, Vital Data
The real news for marketers won’t break until 2002, when the Census Bureau releases aggregated responses on income, education and occupations from the 17% of American households that received long-form questionnaires.
“The 2000 census data is of critical importance because it provides a new base or cornerstone,” said Linda Jacobsen, a senior vice president of Claritas, which began crunching census data in the early 1970s.
What’s more, the census data will be “the foundation” of the annual demographic updates Claritas sells to clients, as well as the basis for Prizm, a marketing program that blends census data, survey results and other proprietary data to predict how consumers will spend their time and money.
Fast-growing neighborhoods underscore the importance of census data. Although various government agencies track population changes on a year-to-year basis, only the 10-year national census provides detailed occupation, income and education data.
“Sometimes the population shifts almost overnight,” said Allen Girndt, manager of franchise recruiting for Texaco StarMart, which is using census data to guide a planned expansion for the gas station and convenience store chain.
Texaco’s Girndt frequently flies from his base in Houston to such fast-growing regions as Orange County, where he’ll commandeer a rental car and “just drive . . . . It’s not unusual to put 400 to 500 miles on a rental car during a two-day trip.”
The value of census data explodes when it is blended in with proprietary data.
Claritas is a subsidiary of VNU Marketing Information Inc., a Dutch conglomerate that owns Nielsen Media Research, the TV ratings company, and Nielsen NetRatings, which tracks consumers online.
“For years, we’ve told our clients what their customers are likely to be reading, listening to and watching on television,” said Claritas President and Chief Executive Robert Nascenzi. “Now we can tell them what their customers are likely to be surfing.”
The growing wealth of demographic data leads to inevitable fears that Corporate America, with an assist from Big Government, is learning far too much about individuals and their lifestyles. Nascenzi asserts that his company’s approach is consumer-friendly, because Claritas relies upon aggregated information that predicts how a group with similar income, education and lifestyles will act.
Claritas is, however, a partner with powerful companies that know quite a bit about the spending habits of individual households. The predictive value of the Prizm system, for example, is enhanced by a partnership with consumer credit giant Equifax Inc.
Claritas maintains that its Equifax relationship won’t be disturbed by a federal judge’s recent decision to uphold a proposed government regulation that would prohibit credit bureaus from selling consumers’ names, addresses and Social Security numbers to marketers. “We do not receive credit header data, names or personal information from Equivax,” said Claritas Senior Vice President Steve Egge. “We receive aggregated data to target areas of geography. In fact, the aggregated data protects privacy.”
Claritas also forges business relationships with such powerful marketers as Ford Motor Co., Procter & Gamble Co. and Sodexho Marriott Services Inc., which all use census data in marketing. The company also works with such market researchers as J.D. Power & Associates (automotive market research), Gallup Inc. (polling), Mendelshon Media Research (affluent consumers) and Database America (direct marketing).
The detailed nature of the resulting socioeconomic snapshot that the San Diego-based Claritas delivers in its Prizm system is evident at the company’s Web site. Punch in your ZIP Code, then sit back and watch as your neighborhood’s reflection appears in the market research firm’s online mirror.
Using such catchy categories as Kids & Cul-de-Sacs, Young Literati, Gray Power and Latino America, the firm neatly divides more than 100 million households into 62 lifestyle “clusters” that predict whether your neighbors are comfortable using debit cards, shopping at Eddie Bauer, contributing to a Keogh plan or reading Runner’s World.
Some Good Examples of What’s Available
A sampling of what’s to be found:
* Kids & Cul-de-Sacs: Representing 2.9% of American households, this cluster has a median household income of $68,900 and is likely to read boating magazines, shop online and visit Disney theme parks.
* Young Influentials: These upwardly mobile singles and couples ages 25 to 44 boast a median income of $51,700 and represent 1.32% of households. They’re likely to be buying rock-concert tickets, Eddie Bauer apparel and Runner’s World subscriptions.
* Mobility Blues: The 34-and-under segment is home to blue-collar and service-industry employees with a median income of $33,600. The group that represents 1.46% of households tends to favor Nissan trucks, watch the World Wrestling Federation on television and read Road & Track magazine.
Census data do have their limits.
Direct marketers are growing less dependent upon census information as they build their treasure trove of demographic data gleaned from consumer purchase records, credit records, consumer surveys and other sources. “On a scale from 1 to 10, I’d probably give the census a 5,” said John Healy, executive vice president of direct marketing for Atlanta-based Equifax. “If we were having this discussion in 1990, I probably would have given it a higher number because we had a bigger appetite for it.”
Marketers charter aircraft to take detailed aerial photographs of rapidly growing regions and feed data into complex growth models that predict growth patterns. Researchers monitor U.S. Postal Service change-of-address forms and study voting records and motor vehicle registrations as well as birth and death certificates.
“You go to Radio Shack to buy batteries and they want to know your ZIP Code,” Watson said. “You buy Rival dog food at the grocery store and they scan that information into their system. That helps a company to understand who their customer really is.”
They study data spun off by the Economic Census, a less-publicized federal census that tells where people work, and use the data to choose locations in business parks and downtown districts for restaurants, dry cleaners, gas stations and other businesses.
Claritas, along with such competitors as CACI International Inc., which offers a 42-cluster lifestyle program, constantly refines its systems to reflect the evolving population. It’s likely that the total number of Claritas clusters, now at 62, will change after 2000 census figures are released.
Marketers at bricks-and-mortar companies caution against an over-reliance on census data. Brad Whitaker, executive vice president of Panda Management Co., will use the census to help find sites for 70 restaurants that the Pasadena-based company will open this year. But Whitaker describes the census as “only one piece of the puzzle.”
Texaco StarMart’s Girndt also uses census data as a safety check.
“Our franchisees typically have a selected piece of geography in mind, and their investment is going to be in the neighborhood of $2 million to $3 million,” Girndt said. “We’re not going to select locations by sticking a finger in the air and seeing which way the wind blows. We need objective data, including the census, to support or negate their enthusiasm for that site.”
