How Inequality Hurts

Madison Ave. Declares ‘Mass Affluence’ Over

The American middle class, concludes a new study from the ad industry’s top trade journal, has essentially become irrelevant. In a deeply unequal America, if you don’t make $200,000, you don’t matter.

By Sam Pizzigati

The chain-smoking ad agency account execs of Mad Men, the hit cable TV series set in the early 1960s, all want to be rich some day. But these execs, professionally, couldn’t care less about the rich. They spend their nine-to-fives marketing to average Americans, not rich ones.

Mad Men’s real-life ad agency brethren, 50 years ago, behaved the exact same way — for an eminently common-sense reason: In mid-20th century America, the entire U.S. economy revolved around middle class households. The vast bulk of U.S. income sat in middle class pockets.

A small plutocracy of wealthy elites drives a larger and larger share of total consumer spending and has outsize purchasing influence.

The rich back then, for ad execs, constituted an afterthought, a niche market.

Not anymore. Madison Avenue has now come full circle. The rich no longer rate as a niche. Marketing to the rich — and those about to gain that status — has become the only game that really counts.

“Mass affluence,” as a new white paper from Ad Age, the advertising industry’s top trade journal, has just declared, “is over.”

The Mad Men 1960s America — where average families dominated the consumer market — has totally disappeared, this Ad Age New Wave of Affluence study details. And Madison Avenue has moved on — to where the money sits.

And that money does not sit in average American pockets. The global economic recession, Ad Age relates, has thrown “a spotlight on the yawning divide between the richest Americans and everyone else.”

Taking inflation into account, Ad Age goes on to explain, the “incomes of most American workers have remained more or less static since the 1970s,” while “the income of the rich (and the very rich) has grown exponentially.”

The top 10 percent of American households, the trade journal adds, now account for nearly half of all consumer spending, and a disproportionate share of that spending comes from the top 10’s upper reaches.

“Simply put,” sums up Ad Age’s David Hirschman, “a small plutocracy of wealthy elites drives a larger and larger share of total consumer spending and has outsize purchasing influence — particularly in categories such as technology, financial services, travel, automotive, apparel, and personal care.”

As the very rich become even richer, they amass greater purchasing power, creating an increasingly concentrated market for luxury goods and services as well as consumer goods overall.

America as a whole, the new Ad Age study pauses to note, hasn’t quite caught up with the reality of this steep inequality. Americans still “like to believe in an egalitarian ideal of affluence” where “everyone has an equal shot” at “amassing a great fortune through dint of hard work and ingenuity.”

In actual life, the new Ad Age study points out, “the odds of someone’s worth amounting to $1 million dollars” have shrunk to “1 in 22.”

The new Ad Age white paper makes no value judgments about any of this. The ad industry’s only vested interest: following the money, because that money determines who consumes.

“As the very rich become even richer,” as Ad Age observes, “they amass greater purchasing power, creating an increasingly concentrated market for luxury goods and services as well as consumer goods overall.”

In the future, if current trends continue, no one else but the rich will essentially matter — to Madison Avenue.

“More than ever before,” the new Ad Age paper bluntly sums up, “the wealthiest households will be the households with significant disposable income to spend.”

On the one hand, that makes things easy for Madison Avenue. To thrive in a top-heavy America, a marketer need only zero in on the rich. On the other hand, a real challenge remains: How can savvy Madison Avenue execs identify — and capture the consuming loyalties of — people on their way to wealth?

Before the Great Recession, the Madison Avenue conventional wisdom put great stock in the $100,000 to $200,000 income demographic, a consuming universe populated largely by men and women 35 years and older.

These “aspirational” households, ad men and women figured, could afford a taste of the good life. They rated as a worthwhile advertising target.

Targeting this $100,000 to $200,000 cohort, the new Ad Age report contends, no longer makes particularly good marketing sense. These consumers don’t “feel rich” today and won’t likely “graduate into affluence later on.”

Sign up for To MuchOnly under-35s who make between $100,000 and $200,000, says Ad Age, will likely make that graduation. This under-35 “emerging” tier will have “a far greater chance of eventually crossing the golden threshold of $200,000 than those who achieve household income of $100,000 later in life.”

So that’s it. If you want to be a successful advertising exec in a deeply unequal America, start studying up on 20-somethings making over $100,000 a year.

The ad industry, with this new affluence report, seems to have the future all figured out. And those of us who don’t make $200,000 a year, and don’t have much chance of ever making it, what about us? No need to worry. Who needs purchasing power? We have Mad Men reruns.

Sam Pizzigati, the co-editor of Inequality.Org, also edits Too Much, the Institute for Policy Studies weekly on excess and inequality where this article originally appeared. Read the current Too Much issue or sign up to receive Too Much in your email inbox.

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9 comments for “Madison Ave. Declares ‘Mass Affluence’ Over”

  1. Where are the Jacobins? When I read conservative websites, they advocate for more gulf oil exploration, more nuclear power, fewer restrictions on fishing, mining, and the exploitation of dwindling resources.

    They are the gang that can’t shoot straight – aiming at each other rather than the gangsters.

    America yearns for a hanging judge. Robespierre is overdue.

    This boomer has had enough of crony capitalism. Bring on the guillotines!

    Posted by jack thomsen | June 1, 2011, 10:10 am
  2. I’ve noticed a lot of car ads for Range Rovers and Jaguars. Happily offering lease rates starting at $799/mo.


    Posted by Dan | June 1, 2011, 3:21 pm
  3. “The new Ad Age white paper makes no value judgments about any of this.”

    Your threshold for expressions of values might be a little too high… Put your preconceptions aside and do a temperature check on the article’s tone. Do you think a writer who’s only vested interest is in following the money would even use a word like “plutocracy” to describe the change?

    The only interesting Marxist writing left now is either by economists or by ad men. But one group is too arcane and the other is too jaded.

    – Bill

    Posted by BillP | June 1, 2011, 7:42 pm
  4. You say this like it’s a bad thing. Mass affluence is unsustainable and a bottleneck society is just the natural order of things and the way it should be!

    Posted by Proud Objectivist | June 2, 2011, 1:27 pm
  5. People get confused about the difference btw ‘household’ income and per capita income.

    Household size has shrank steadily over the years, by ~ half a person since 1973, resulting in the ‘low’ growth of that stat. Obviously, you won’t get an apples-to-apples comparison this way.

    The above link shows that per capita Real DPI — what purportedly is the important measure in their arguments, the dollars you actually take home with you — is up 92.45% since 1973 through 2010, using annual data, chained 2005 dollars. [row 38 in the BEA’s tables]

    Real Incomes:
    Since 1970, they are up 118% in real terms, as of Q2 2009.

    Since 1979 they are up 72-74%.

    Since 1984 they are up 58%, all in real terms.

    Ad execs are bad at math.

    Posted by Ad Age is Wrong | June 2, 2011, 3:41 pm
  6. Excellent article. Looking forward to getting more details from the AdAge Study. Any plans for a series on this topic?

    Posted by Michael | June 4, 2011, 10:56 am
  7. We’ll try to follow up.

    Posted by Sam | June 5, 2011, 8:50 pm
  8. So only the rich will get richer. How can they do that now with all these bad economic news hey?

    Posted by melissa | August 19, 2011, 12:42 pm
  9. Posted by NOTaREALmerican | August 30, 2011, 7:37 pm

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