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Grandparents in the US are spending billions of dollars on their grandchildren each year – they spend nearly $1700, on average, on every new grandchild, for example – according to a new study unveiled during this week’s “Meet the Grandparents” Marketing Forum in New York.

The report from Grandparents.com and Focalyst, “Meet the Grandparents: Introducing Today’s First Time and Seasoned Grandparents,” highlights the mindset of US grandparents as well as their spending, media, and behavioral habits.

Among the key results:

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  • First-time grandparents spend, on average, $1,882 on every new grandchild during the first year, whereas seasoned grandparents spend, on average, $1,501.
  • 72% of grandparents start spending before the child is born.
  • 59% believe it’s important to make financial investments for their grandchildren.
  • The internet is cited as the most widely used source for grandparenting information.
  • 71% of grandmothers and 51% of grandfathers tell others about products that excite them, indicating the effectiveness of word-of-mouth marketing with this group.

The more than 70 million grandparents in the US are one of the largest and most powerful consumer segments, and by 2025 one in four Americans will be a grandparent, according to estimates.

“Becoming a grandparent is a momentous occasion – 82% of individuals said their lives had changed since becoming a grandparent and more than three-quarters of those said it was for the better,” said Heather Stern, director of marketing for Focalyst. “With these changes comes openness to purchasing new products. But many companies stand to miss out on this huge marketing opportunity because they are not effectively targeting this group.”

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The research shows that almost half of grandparents surveyed say ads today are geared toward the younger generation. Moreover, most grandparents say the ad industry does not accurately portray them.

Grandparent Buying Power

Spending on grandchildren starts early, with 72% of “Meet the Grandparents” survey respondents reporting purchasing items for their grandchild before the grandchild is born. Grandparents spend an average of $1,691 per new grandchild (combined spending before birth and during the first year). Moreover, 60% admit to “spoiling” their grandchildren, a tendency that increases with the number of grandchildren.

Grandparents are also planning for the future. 59% of all grandparents surveyed say it’s important to make financial investments for their grandchildren. Of those who made investments, nearly three-quarters (71%) say they want to contribute to their grandchild’s education. Other reasons ranged from a desire for their grandchild to get a financial head start (70%), or because the grandchild’s parents are not in a position to invest on behalf of their children themselves (40%).

First-time grandparents outspend seasoned grandparents by about 25% and those who invest money on behalf of their grandchildren put away about $3,150 for the first grandchild, more than double the amount of seasoned grandparents.

For their own homes, new grandparents are also buying copious baby-related items, with a majority purchasing not just toys and clothes, but nursery essentials such as baby furniture (69%), diapers (54%), baby food (57%), and safety items (51%).

Grandparents Plugged-In

Well over half of grandparents surveyed (60%) cited the internet as their top source for information and advice. Those that use the internet for gathering information also find it to be very valuable, with 64% of first-time grandparents and 53% of seasoned grandparents agreeing with that statement.

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Half of grandparents spend 10 or more hours per week online and actively engage in at least three different online activities. They buy products (69%), comparison-shop (83%), click on ads (38%), share photos (67%)…

“The grandparent life stage accounts for a multibillion-dollar marketplace ranging from products to services to educational investments. With grandparents today being more active and aware than ever before, the avenues for spending are varied and deep,” said Grandparents.com CEO Jerry Shereshewsky.

“As marketers come to the realization that purchase decisions at key points or stages in life are driven by factors other than age, grandparents are the latest consumer group to be courted by marketers.”

About the study: The “Meet the Grandparents” study was conducted online from October 30 to November 10, 2007 using Focalyst’s Boomer and Mature specialty panel developed in partnership with Lightspeed Research. The study was conducted among a nationally representative sample of 411 grandparents (age 40 and older) of which 200 of the respondents were first-time grandparents and 211 were seasoned grandparents. “First Timers” refer to those who became a grandparent for the first time in the past 12 months. “Seasoned Pros” are defined as having more than one grandchild, the youngest of which is under 5 years old. The sample was split equally between grandmothers and grandfathers.

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