Debbie Klein - Why business can't afford to ignore the 9m
1. May 12 2011 Why business can’t afford to ignore the 9 million
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3. Who are the 9m not yet online? Others 1.5m Age Household income 16 75+ 45 Source: TGI/Mosaic Groups add up to 7.5m. Remaining people “not online” split across a wide range of demographic groups. Sheltered Seniors 1.4m Uncertain & Unpersuaded 2.2m Traditionalists 2.7m Young & Excluded 1.2m £10K £20K £30K+
4. Others 1.5m Age Household income 16 75+ 45 Source: TGI/Mosaic Groups add up to 7.5m. Remaining people ”not online” split across a wide range of demographic groups. Sheltered Seniors 1.4m Uncertain & Unpersuaded 2.2m Traditionalists 2.7m Young & Excluded 1.2m £10K £20K £30K+ An attractive audience for business
6. Over 55s have the majority of wealth Source: ILCU; Wealth and Assets Survey, ONS, age of Household Head, 2006/8
7. 2.5m “ non-liners” who are over 55 are classified as ABC1 Source: ONS, TGI UK 2011
8. 4.2m own their homes outright. Their money is theirs to spend Source: ONS, TGI UK 2011
9. 2.7m of them have ISAs 2.8m of them have three or more current / savings accounts They could be managing their finances online Source: TGI Source: ONS, TGI UK 2011
10. 2.2m take 2 or more holidays per year Nearly 1m take 4 or more - which could be booked online Source: ONS, TGI UK 2011
11. An untapped market for broadband worth at least £642m per year Source: Enders Analysis / Engine
Engine have been working with Race Online since September last year, when we committed our marketing communications expertise to them. We wanted to help Race Online understand how to transform their passion for demolishing the digital divide into a movement – a movement that encompasses both business and consumers. We have been on quite a journey with the Race Online team - we have learnt a lot about their world; seen the value of digital from their perspective and come to understand the problems that they, and the 9m who are not online, face. Lots of great work already goes on under the Race Online banner – partner support recently hit the 1100 th pledge – and you will have heard today about all the initiatives, places and tools that exist to inspire, encourage and support inexperienced Internet users. You’ll have heard how a lot of this good work comes from charities, NGOs and government projects aspiring to “digital by default” BUT I am here today to talk about the business opportunity that the 9m present. I am here today to propose that this audience are one that can’t be ignored from a business perspective.
I want to begin with a few misconceptions about the 9m that are prevalent within the business community. I may be preaching to the converted here but – weather by design or by default – there has been a tendency within the business community to dismiss anyone who isn’t already on the internet. Business may not always say it but often they may be thinking: These people are too poor. They’re can’t, or don’t want to learn new things. They’ll be dead in a few years anyway.
To disprove some of these misconceptions one of the first things we did for Race Online was to dig deeper into who exactly were the 9m people who weren’t on the internet. Prior to this, all the parties involved had a lot of anecdotal information but much of the legwork to understand the makeup of this group had yet to be done. After segmenting the audience in various ways we found that attitude to technology was a useful method of grouping our audience. This is most clearly illustrated when you map income and age. You can see four key groups here which I’ll talk you through now: Young and Excluded: Age: 15-34 Despite their income being typically less than £10,000 this group are an attractive audience for youth brands - heavy spenders on mobile phones and fast food. We have had people from this group say to us that they’d love to have the internet, but can’t afford a phone line, let alone broadband and a computer. Their barriers are predominantly cost based, although lack of fixed address and landline is certainly an issue too. It costs £2 for internet access in a cafe and a lot of them just aren’t the sort of people who would naturally go to the library for help. For this group support an motivation are needed in the form of: Low cost hardware and Low-cost, plug & play broadband Internet access where they go Making key services available via mobile At the other end of the spectrum we have… Sheltered Seniors Age: 75+ Their income isn’t much at all (£7-£10,000) and they are likely to be widowed and / or living in sheltered accommodation Cost is a barrier but harder to overcome are their declining capabilities and the difficulty they have in taking on new ideas. This is a group who already need substantial support from their existing care providers, but who could certainly gain social benefits if they were given help via assisted access. Just think of them going online with a carer, or family member at a centre, or the local post office - speaking to grandchildren via video conferencing, or using email to connect with family and distant friends.
Adults aged 55 and over make up almost two-thirds of those individuals who have never accessed the Internet. Within this age bracket there are many individuals who are just ripe for conversion: Traditionalists Age: 65+ Income: £13-30,000+ They have what people think of as the classic barriers to technology: - They do not trust it. - They worry about security and think its better to deal with people face-to-face anyway. - There is a lack of motivation, knowledge and skill – They could afford a very good computer if they wanted one, but you’re more likely to hear a lot of them saying “It just isn’t for me”. However, they are also very interesting – they are yesterday’s captains, pillars of local society who have downsized and are comfortably enjoying pensions gained from successful, skilled careers. Their main worry is about becoming more and more disconnected from the community – something technology and business can step in to help with. They’re a very attractive audience for many brands. Certainly, they are potential customers for broadband, hardware and all types of ecommerce, particularly travel. The other group, ripe for conversion are the… Uncertain and Unpersuaded Age: 55+ Income: £10-£20,000+ They aren’t against technology per-se but they just haven’t seen the benefit. They did fine without it before they retired and there’s always something else to spend their money on. This group are an attractive audience for mass market brands. They are all potential customers for broadband, hardware and ecommerce. Like the Traditionalists the key here will be to demonstrate the tangible benefits that the internet can bring to them personally, then to support both groups through training, tailored sales packages, set-up and trouble-shooting.
But what else do we know about these Traditionalists and the Uncertain and Unpersuaded groups? … well… They have lots of active life left: Along with the rest of Europe, life expectancy in the UK is on the rise – These days a man aged 65 should expect to live another 17.6 years, and a woman aged 65 another 20.2 years. And they have more time at a key life stage: We know that retirement is a key life stage, a time when people think about doing many things: moving house, taking up a new hobby or dusting off an old one, getting control of your finances, getting fit again, spending more time with the family and taking the opportunity to travel more.
Taking a look at the wealth distribution across the population provides another very compelling reason not to ignore these older groups: - In terms of home owners, only 9% of over 60’s have a mortgage compared with 64% aged under 60. Half of all retired couples have savings over £10,000, while only 1/5 of younger couples with children have similar levels of savings. Over 55s have plenty of wealth. (Note: ONS data shows mean wealth for each age bracket)
… indeed 2.5m non-liners are classified as ABC1. They are normal, active consumers. (TGI: 39.4% of 6.237m 55+ Nonliners)
On top of this 4.2 million of them own their own homes outright – they don’t have a mortgage to pay off anymore and it tends to be just them living at home after the kids have flown the nest. Their money is theirs to spend. (TGI: 67.9% of 6.237m 55+ Nonliners)
Financial management You will have heard today about the government aspiration for “digital by default” for many of their services – claiming universal credit, pensions and so on. And likewise our financial institutions are increasingly moving towards a paperless, online world. Managing money online, and paying for goods and services on the net can sometimes provide a sticking point for this retiree audience – there is sometimes a fear of the unknown, and the seemingly intangible nature of internet finance. Yet at the same this audience could benefit most form not having to make so many trips to the bank. And the numbers show that they’ll be doing this quite often. The solution is education and the continued innovations in user-friendly technology. The easier and more familiar this technology feels to use, the more likely this older generation of non liners will be to use it. And the less burden there will be on your local branch. (TGI: ISAs = 44.2% of 6.237m 55+ Nonliners) (Note: Current / Savings = 44.9% of 6.237m 55+ Nonliners)
This group are active holiday makers too – they have the time for it. 2.2m take two or more holidays per year Nearly 1m take four or more Of course, all of this activity could be booked online – which would naturally benefit both themselves as consumers and many of today’s online travel businesses. (TGI: Two or more = 35% of 6.237million) (TGI: Four or more = 14% of 6.237million = 879k)
The great thing about this audience is that they are outside the current pool of consumers. For instance, by our calculations, the not online group represent an untapped market for broadband worth at least £642m per year. With these kinds of numbers it makes sense to consider the opportunity to grow your market outside of the usual scrabble to compete for market share.
On this note, I just want end by talking about Nintendo. Nintendo’s Wii has been phenomenally successful since it’s launch… They’ve done this by looking beyond the traditional gamer market – advertising their innovations to targets as far from gaming as you can imagine. They’ve seen the commercial potential of the older generation, targeting them explicitly with adverts featuring Helen Mirren on Wii Fit, and groups of over 65s playing Wii Sports bowling and golf. This inclusive targeting strategy has lead to shipping over 86million consoles in the last five years. That’s 40 million more units than the nearest competitors. Nintendo have seen the opportunity… (n.b. stat source: Wikipedia http://en.wikipedia.org/wiki/List_of_best-selling_game_consoles )
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