Generational Analysis 2019

Generational Analysis 2019

By: Jim DeGood, Director of Client Services

Data Analysis: Nariman Tulepkaliev, Data Analyst

As a follow up to
Millennials Are Not the Answer to Your Revenue Problems blog post, the TRG Arts 2019 Generational Analysis provides an in depth view of North American demographic shifts that are occurring now or will occur in the near future.

Through data analysis, TRG Arts continues to see a link between life stage and arts consumption – arts patronage tends to occur from mid-life onwards, as careers and household earning stabilize, with the majority of arts and cultural patronage still comprised of Silents and Boomers. But the reality is that these audiences are diminishing.

Consequently, the arts and cultural industry has a near obsession with creating Millennial audiences. The focus on this particular generation is understandable given their sheer volume of numbers which could help offset losses anticipated by declining attendance and giving from Silents and Boomers. But, our research continues to show that not one generation – Millennials included – are a silver bullet to creating sustainable revenues.

hat are arts and cultural organizations prepared to do in fostering other generations – not just Millennials? What about Generation X? In conclusion, six ways in which arts organisations can start to address these generational shifts are shared.

Part One: Will Your Organization Take Its Final Bow This Decade?

Significant demographic cultural shifts are occurring. Maintaining the status quo and failing to lead your organization in confronting these changes will mean its extinction. 

It’s time for a reality check.

As someone personally enriched by the arts and who has chosen to work with artists and arts managers, I believe deeply in the work of our field. I also observe the field continuing to wrestle with and contextualize the major demographic changes on the horizon. I see the accessibility and inclusion programs aimed at creating welcoming spaces for working in and consuming arts and culture. I see the beta tests designed to make the arts and cultural industry more “accessible” to Millennials and/or underserved audiences. At the heart of it all, I observe the field tinkering around the edges of current business models by making experimental changes here and modest investments there. A dramatic re-imagining of how arts and cultural organizations invest in building audiences is required.

As a leader in the arts and culture, you must begin this work today as major generational changes are already upon us and more are coming. And, not all changes will be felt by all communities or organizations with equal impact. Macro trends point to one element of change; community-level ethno- and socioeconomic changes also create disruption to current business models. As Darwinian as it sounds, if we don’t adapt to the changes our communities are experiencing, we will become irrelevant. Or worse, extinct.

Generational Shifts: An Overview

To the field’s credit, some of these generational shifts were identified long ago. It’s only now, with the aggregated view of more than 67 million arts and culture transactions from 568 organizations, that TRG Arts can fully contextualize the dire economic and audience shifts on the horizon.

In 2018, there were 12% more Millennials than Gen Xers, and the number of Millennials surpassed Baby Boomers for the first time. Over the next 10 years, the number of Baby Boomers will decline by almost 15%, Generation X will decline 3%, Millennials will increase 4% due to net positive immigration of younger people.

By 2030, Boomers will be firmly in the life stage where arts consumerism stalls and even contracts. It cannot be overstated how important it is to immediately recognize the impact that this contraction of Boomer participation will have even though we may see this trend slowed due to improved health and longer life expectancy. Generation X is 10-15% smaller than Boomers, and Millennials are often looked to as the answer to replacing the volume gap expected to be left by Boomers. Our analysis challenges this notion: what are arts and cultural organizations prepared to do in fostering other generations – not just Millennials – to fill this void?

TRG Arts continues to see a link between life stage and arts consumption. Arts patronage tends to occur mid-life, as careers and household earning stabilize and children living at home are older. Eighty percent of performing arts customers are between the ages of 38 and 79, with age 44 being the optimal age to begin cultivating repeat attendance and traditional loyalty-building. By age 48, a patron enters the 50th percentile for participation; about 65% of arts patrons are between the ages of 48 and 71.

There’s a clear generational link between traditional loyalty behaviors like subscription and donation in TRG’s aggregated national data set. Additionally, participation for Boomers grew by 4% for subscription and 1% for donation between 2011 and 2018. During this same timeframe, Millennials saw an increase in subscription participation from 1% to 5% (yes, Millennials will subscribe!). Which often overlooked generational cohort saw a doubling of their donation participation, increased subscription participation, and is entering the prime age for arts consumerism? Generation X.

Arts patrons tend to earn more and be more highly educated than the non-arts attending population. 61% of arts consumers have completed college, with 26% having attained a graduate degree (compared to 38% national average for college completion and 12% attainment of graduate degree). Arts and culture patrons continue to skew more heavily Caucasian (see table). For arts consumers, all generations except Generation X earn more than double the national average. Patrons of the arts also tend to have smaller families, with one fewer child than the national average.

Part Two: Arts Consumption in Decline with Silents and Boomers

A majority of arts and cultural patronage is still comprised of Silents and Boomers, and the concern the field has for these audiences diminishing is no longer in the realm of a future possibility. That reality is now. 

TRG aggregated data shows 2014 as a turning point in attendance patterns by Silents with philanthropic decline occurring even earlier. Silents are in the life stage where preferences are firmly established, and sampling new things is more infrequent (E.g.: single ticket buying). Looking at estate and legacy planning, discretionary expenses become more tightly controlled with philanthropic support narrowed to those institutions that are most closely aligned with the passions and interests that Silents established long ago. Attendance via subscription is diminishing and appears to be the last transactional behavior to decline. 

These shifts are immediately concerning because declines in philanthropic participation by Silents cost organizations in the TRG data set more than $27 million in contributed revenue since 2008. Furthermore, every 1% reduction now equates to $3 million of lost contributed and earned revenue from Silents.

Surprisingly, TRG data indicates Boomers have now reached the plateau for their own arts sampling with single ticket consumption declining by 12% in the last 4 years. The proportion of Boomers who comprise the subscriber and donor cohorts are growing as Silent participation declines, but the actual number gains here are modest. 

These participation trends suggest that loyalty is not deepening with Boomers but merely being maintained. Shifting focus away from cultivating deeper relationships with Boomers to grow other audience cohorts has had a dramatic impact: a 1% shift in participation can mean a gain or loss of $5.4 million.


Part Three: Let’s Talk About More Than Just Millennials.

The field’s near obsession with creating Millennial audiences is understandable. This generation has the sheer volume of numbers to help offset losses anticipated by declining participation by Silents and Boomers. And yet, TRG research continues to show that not one generation – Millennials included – are a silver bullet to creating sustainable revenues.

First, let’s be reminded that that Millennials are in an “establishing” life stage. The oldest among them are not even mid-career, and a majority are still establishing their professional footing. Educational attainment is increasing across all age groups. Millennials are choosing to have children later (26 years, compared to 23 for Generation X), and are having slightly larger families (2.2 children compared to 1.9 in Boomer families; see chart above.)

When corrected for inflation, Millennials are earning slightly more than Generation X by age 34 (a trend this is expected to continue) however
Millennials are facing more substantial expenses in this stage of life than any other generation.

All of these financial factors influence how Millennials will engage with arts and culture. In addition, TRG data shows that Millennials are even more culturally promiscuous than their predecessors: it takes a longer cultivation window to convert a Millennial single ticket buyer to a subscriber and triple the time to move a Millennial subscriber into a philanthropic relationship compared to Boomers.

While it not only takes longer to cultivate deeper relationships with Millennials, it’s also more difficult. Attrition rates for Millennials are higher than any other generational cohort. Only 1 in 4 Millennials new to your organization will return in the subsequent 5 years. Of those who do choose to return, 42% will never to return after a repeat engagement. Compare this returning buyer attrition rate to the North American average of 26%. There’s a long, complicated road ahead for building a sustainable relationship with Millennials that can replace Boomer and Silent participation.

Finally, TRG data affirms other research about Millennials: they are a generous generation, unafraid of philanthropy. Indeed, the number of Millennials participating in philanthropy grew 95% from 2015 to 2018.This increase is double that of subscription (48%) and dwarfs the increase in participation with single tickets (16%). 

TRG research indicates donations from individuals who are connected with the art are the most renewable and sustainable. This early research seems to indicate Millennials are willing to skip a few loyalty steps and donate earlier in their relationship (as compared to the traditional path of moving from buying a single ticket, to becoming a subscriber, and then move on to the donor path. Traditional loyalty building with Millennials requires more frequent attendance before they consider purchasing curated packages or making a contribution after committing to a subscription (see chart above). 

For those organizations who can focus on reducing the churn rate of Millennials, there is certainly an enormous upside. But today’s business models that have little-to-no focus on retention and over-emphasis on invitations to new audiences that are set up for long-term failure. Further, organizations who are cultivating Millennial gifts without a holistic view of participation may be building a donor base that is more susceptible to attrition and erosion. This lack of a holistic view and primary focus on Millennials can also have the unintended consequence of not focusing enough Generation X. 

Part Four: Generation X - The Audience You Need to be Cultivating Today.

Comically, especially for those of us in the cohort, that leaves Generation X as the last generation to explore.

Right now, Generation X is in the prime of career building. Even though the rate of increase has slowed in the last five years, earnings are higher for Generation X than other generations at the same age. In addition, disposable incomes are reaching their highest levels, and with older children in the household and well-established careers, disposable time is increasing. The net result is that Generation X is the audience you need to be cultivating immediately. 

Given that the optimal median age for cultivating repeat arts and culture participation is 44, Generation X is squarely at the center of the audience-building target. And, Generation X has been showing early signs of deepening loyalty. Since 2015:

  • Single ticket buying was down across nearly all generational cohorts. However, Generation X participation decreased by only 8% as compared to 12% for Boomers and 22% for Silents.
  • Subscription participation decreased for Silents by 10%; Boomers grew 1%, while Generation X grew 10%.
  • Donation rates for Generation X grew 27%. This is compared to a 2% loss in Boomers and 27% loss in Silents.

The power of cultivating deeper relationships with the most likely generational cohort cannot be understated. Think of it this way:

  • $2.8 million in potential single ticket revenue by retaining just 2% more of Generation X.
  • $2 million in subscription revenue opportunity with a 5% increase in subscribership by Generation X.
  • A1.5% increase in holistic participation by Generation X offsets a 1% reduction in participation by Silents.
  • And, without increased participation, it takes 2.5 Millennials for every one Generation Xer to contribute the same revenue to an organization’s bottom line.

Given this final bullet point the essential truth is this: we must not neglect developing the participation of Generation X. While there are 7 million more Millennials than Gen Xers, the latter generation is poised to contribute significantly to organizations’ bottom lines immediately, without the additional cultivation steps required by Millennials. 

Part Five: The Way Forward - Deepen Loyalty with Boomers. Grow Loyalty with Generation X. Invest for the Long-term with Millennials.

TRG’s research reflects what the field has been wrestling with for a decade: audience development is multi-pronged, takes time and focus, and challenged to take a long-term view. The most sustainable organizations will acknowledge the required “and” statement here. They will invest in a strategy that deepens loyalty with each generational cohort independently.

In the immediate, here are six ways in which TRG clients, early in their journey, are charting a data-driven course to address these generational shifts:

  1. Use TRG’s Data Center to baseline your current audience generational breakout. Understand not just proportion of participation, but volume and annual spend rates by each cohort.
  2. Share generational, socioeconomic, and ethnographic research for your community with the artistic team. Create a holistic picture of audience development unique to the macro- and micro-trends in your community that starts with the artform. 
  3. Measure and relentlessly reduce attrition rates across all key transactional touchpoints with your patrons. Create a formal budget line and campaign markers for progress in retention rates.
  4. Integrate the education team with audience development. We see shifts in family size and know arts education has been reduced for Generation X and Millennials, as well as their children. Create paths for participation for parent and child together. Do this with attention given to curating a stickier relationship, rather than a one-time experience.
  5. Create campaign plans with the generational and other important audience cohorts unique to your community. Align resources to appropriately allow for longer, more frequent communication and cultivation with some cohorts. Change campaign messaging to resonate with the differing values for each cohort.
  6. Elevate Generation X as central to your immediate audience building strategy.

These six ways are not dramatic or groundbreaking in and of themselves. However, the only way to chart a new path is simply to begin. TRG clients are beginning. Where are you in the journey?

Data Sources:

  • TRG’s national arts data set. Comprised of more than 67 million arts and culture transactions from 568 organizations. All participation and economic impact figures come from study of this aggregated data.
  • U.S. Census data was used to describe the size and changing proportion of generational cohorts.
  • Acxiom data was appended to TRG’s national arts data set to describe demographic characteristics of arts attendees; U.S. Census data provided the national comparison points.
  • Pew Research Center provided additional generational shift and quality of living data points.

Posted March 20, 2019

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