Zeroing in on their targets

Census figures are helping retailers pinpoint fast-growing neighborhoods to build stores, bankers to find clusters of super-weathly customers, and advertisers of all kinds to aim their pitches at fast-growing groups, such as single parents and Hispanics.

By JEFF HARRINGTON

© St. Petersburg Times,
published June 25, 2001

When Debra Nichols makes her pitch for women to invest with First Union Corp., she does not depend on "some marketing promotion that's painted pink with butterflies on it."

The head of First Union's financial advisory service for women counts on statistics to convince prospects they need the bank's help.

Three out of four women are single when they die, she tells customers, so estate planning is actually a woman's issue. Seventy-five percent of caretakers for aging parents are women, she points out in promoting savings plans.

"We want to base everything we're doing on research to show women we take their business seriously," she said.

Her No. 1 resource: the old, reliable U.S. Census.

The original idea behind counting heads every 10 years was to help the government decide how to carve up political representation and where to spend money. But like most things American, it has evolved into a decidedly more capitalistic role.

Core census figures breaking down the population by age and race on a state-by-state basis are already out from the 2000 count. But a wealth of information, from household income to occupation, will be coming out in bursts through 2002. Corporations can barely wait.

How do businesses love the census? It's hard to count the ways.

Homebuilders use it to map out growth areas. Hospitals and specialized clinics use it in grant applications to prove they are serving a needy neighborhood. Retailers use it to decide where to build malls and restaurants. Bankers use it to decide where to put branches and to convince regulators that they are giving enough loans to poor customers. Financial planners use it to pinpoint clusters of super-wealthy customers.

And for advertisers, the opportunities to target customers through census data are endless.

It's a direct-mail marketer's dream: ready access to average income, commuting habits, family size, age and other personal information on a neighborhood-by-neighborhood basis.

John McHenry saw the profit potential a decade ago.

A demographer by training, McHenry was working for Florida Power & Light in Miami when details of the 1990 census data started coming out.

"I was getting 300 calls or so from outside clients," he said.

McHenry quit FP&L in 1991 and within a few years formed his own outfit, Demographic Data for Decisionmaking Inc.

Among his early customers were municipalities that thought they were under-counted in the census and, therefore, lost out on federal dollars. Typically, every person counted is worth about $100 in educational funds, social service money and other grants.

"There's a multiplier effect," McHenry said. "If you find 300 extra people (who were not counted) and it's not acted upon over 10 years, you're talking about $3-million."

Shifting to the private sector, McHenry helped a psychiatric hospital expanding in South Florida find its targeted mix of race, gender and age distribution in building clinics. For another client, a growing operator of child care centers, he pinpointed neighborhoods that had both a large Hispanic population and a large number of children.

Immersed in a research project this summer, McHenry has been turning down would-be clients who call him daily to help them use data from the 2000 census to their benefit.

Even without turning to professionals such as McHenry, companies can make general strategic decisions based on major population trends illuminated by the census.

Some of the trends were apparent before initial 2000 census numbers came out this spring: The country is becoming older and more ethnically diverse. Hispanics are moving toward becoming the majority population segment by 2050. And there is a surge of about-to-retire baby boomers with plenty of money to spend, along with an "echo-boom" of preteens on healthy allowances.

Marketers have begun capitalizing on census figures that show about 35-million Americans are at least 65 years old and another 24-million are 55 to 64. Open up a magazine or surf TV channels during commercials and you'll find people in those age brackets being used increasingly to promote everything from financial services to airlines.

Likewise, advertisers are embracing data showing a growing number of households are headed by single parents.

Consider Charles Schwab Corp.'s use of divorced mother Sarah Ferguson, the former Duchess of York, to woo single women investors.

In a TV commercial, Ferguson tells a little girl a bedtime story about a young lady who is whisked away to a castle to live happily ever after. At the end of the story, Ferguson adds cheerily, "Of course, if it doesn't work out, you'll need to understand the difference between a P/E ratio and a dividend yield."

Nichols of First Union said she is considering how to rework bank ads and promotions to appeal to women who are single by choice.

"Some of the data shows how many single moms are (remaining single) because they don't want to get married," she said. "I think that's a surprise to a lot of people."

Perhaps the biggest surprise out of the census so far was the total tally of Americans: 281-million, or about 7-million more than pre-census predictions.

Developers, who compared the news to discovering a city the size of Philadelphia, have been quick to ponder the possibilities in building new stores, restaurants and homes.

"The numbers are bigger than we thought and we can't wait to learn more," said Doug Casey, managing director and head of research and investment strategy for Clarion Partners, a unit of ING Group that invests in large retail portfolios.

As census data is broken down further this summer, Casey expects to see growing evidence of another trend: the return of America to its central cities. Behind the transition are two fast-growing population segments -- young singles and older Americans with kids out of the house -- who do not feel a need to live in the suburbs as young families might.

The 45-and-older and 20-to-29 age groups surged by 13-million in the past decade and, under revised estimates spurred by the census, are expected to grow another 28-million by 2010. That means more opportunity for retail and office construction closer to the central city.

Companies that relished the return of downtown office occupancies and more shopping in the city instead of the suburb "will love this decade," Casey said. "That 28-million person increase is going to be like a tidal wave."

To get into the heart of the census, companies will have to wait until next year's release of detailed information gleaned from the long census form, which was filled out by one in six households.

The long form includes data such as income, home value, occupation, education, employment status, disability, language, ancestry and commuting patterns.

"It comes out in dribs and drabs, which is a little frustrating," said Lidiette Ratiani, a senior vice president at Bank of America and marketing executive for the megabank's private bank, which caters to wealthy clients.

Ratiani is most interested in finding small enclaves that have the largest percentage of individuals with at least $1-million to invest.

The statistics that come out will drive not only where the private bank establishes offices but how it staffs them with loan officers, brokers and estate planners. Employees may even be assigned by age.

"Demographically speaking, we may not want to put a lot of high-charging, young employees in those offices that don't have the interpersonal skills to deal with older clientele," Ratiani said.

Taking the data one step further, Bank of America will shape advertising campaigns based on what the census and other research indicates about changing lifestyle choices by the rich. One recent print ad by the bank, for instance, pictures a 60ish man on a motorcycle. It's intended to appeal to the growing wave of Americans who have accumulated wealth and want to enjoy it while still physically active.

Bank of America's fascination with the financial side of the census is not unusual. Income data is among the most sought-after elements of the census.

Businesses also are keen to find out more about the growth of the country's Hispanic population, particularly as the census further breaks down racial and ethnic groups.

The American Cancer Society uses bilingual pamphlets to get its message out on mammography screenings. But information on whether a Hispanic neighborhood is comprised more of people of Cuban or Mexican descent could take its direct marketing campaigns to another level.

"Hospitals are asking for that kind of data all the time," said Elizabeth Rugg of the Suncoast Health Council, which collects health information for the state.

Pam Schenker, manager of Florida's state data center, has noticed another census hot spot.

Lately, her office, which serves as the gatekeeper for census information concerning the state, has been fielding more business requests for so-called affirmative action data. Based on the census' long form, the data breaks down occupations by race and sex and is frequently used by companies in applying for government grants or, conversely, to allege discrimination.

Applicants will have to wait, though, Schenker said. That breakdown probably will not be available for two years.

Thanks to the Internet, much of the raw census data will be easily available for the first time to anybody with a home computer. The volume of data could quickly lead to information overload.

"You have all this data from every county that is available and you can get in on a CD-ROM but trying to deal with all of that is hell," said Ken Wieand, director of the Center for Economic Development Research at the University of South Florida.

That's where companies such as CACI International and Claritas come in.

Marrying census data with extensive marketing research, the two companies have made a living by classifying people into very specific groups based on such arcane information as the kind of cars they drive, the kind of music they enjoy and whether they're more inclined to watch CNBC or reruns ofDiagnosis: Murder.

CACI subdivides the country into 43 "clusters" such as "Prosperous Baby Boomers" and "Hard Times." Claritas has classified the populace under colorful titles such as "blue-blood estates" and "shotguns and pickups," with each zip code likely to include five or six types.

Researchers think the information has gradually lost some of its worth as the years have passed since the 1990 census.

"With the new census data, they'll be able to test their models and see how well they've predicted the characteristics of the neighborhood," said Gina Space, an analyst with the University of South Florida's economic development research center.

Claritas spokesman Steve Moore said his company, which is owned by Dutch media conglomerate VNU, has updated its models to include the 2000 census information released so far. And with a client roster that includes most of the Fortune 500 companies, demand has been robust, he said.

Hyundai, for one, turned to Claritas when it wondered who would buy its most recent SUV (by age group, sex and ethnicity) and where it should market the vehicle.

Not everyone is so enamored with the census.

Busch Gardens, the Tampa theme park, uses its internal expertise and outside consultants to develop tourist packages and attractions.

Dave Reinhart, head of Tampa Bay operation for radio conglomerate Clear Channel Communications, likewise has little use for the census.

But Reinhart admits to one census-driven number he'd like to see: the reclassification of metropolitan markets.

He hopes the latest numbers show that Tampa/St. Petersburg/Clearwater has been elevated from the 21st- to 20th-largest metropolitan statistical area. The one-spot jump could translate to more money from national advertisers that want to place radio commercials only in the top 20 markets.

For all it does to chronicle change, the census itself is in flux these days.

The Census Bureau is working on a project that would provide an ongoing snapshot of changes in the country through extensive surveys. If the program is fully funded, government and businesses would have constantly updated information down to the census tract level.

McHenry, the Florida demographer, said that could well eliminate the need for long-form samples in future census surveys. Come 2010, everyone might receive a short form.

"By 2007, they'll have coverage down to the tract level," McHenry said, "and then the whole game changes."

- Jeff Harrington can be reached at harrington@sptimes.com or (813) 226-3407.

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