The financial page: ageism in advertising.(The Talk of the Town)

When ABC pursued David Letterman recently as a potential replacement for Ted Koppel in the "Nightline" slot, the rationale was straightforward. Letterman's show, although less popular than Koppel's, has better -- that is, younger -- demographics, so it can charge more for advertising. This is the unquestioned and untested premise of the whole TV-ad business: younger viewers are more valuable, so companies must pay more to reach them. A mere four million people watch "Dawson's Creek," but because they're young the WB network can charge about a hundred thousand dollars for a thirty-second ad; "60 Minutes" has fifteen million viewers, but they're older, so, despite their number, CBS can charge only a few thousand dollars more. To an advertiser, a twenty-five-year-old clerk is apparently worth three times as much as the fifty-year-old vice-president he works for.

Advertisers pay more to reach the kid because they think that once someone hits middle age he's too set in his ways to be susceptible to advertising. But at twenty-five he's tender. He hasn't figured out what car to drive or what beer to drink, but as soon as he does he'll be hooked. Once a Bud man, always a Bud man. As Preston Padden, the former head of ABC, said a few years ago, "Everyone agrees: brand preferences get established at an early age."

In fact, this notion of impressionable kids and hidebound geezers is little more than a fairy tale, a Madison Avenue gloss on Hollywood's cult of youth. We're all impressionable, young and old. And, if brand preferences get established at an early age, they often get disestablished a few years later. "The least brand-loyal people are people between the ages of thirty-five and fifty-four," David Poltrack, a CBS executive vice-president, said last week. A 1996 study by Information Resources found that women in that age group were more likely than younger women to abandon a favorite brand. In 1997, A. C. Nielsen found that baby boomers tried as many different brands of soda, beer, and candy bars as twenty-somethings did. Brand loyalty in general seems more and more a will o' the wisp. A few years ago, a company called the National Purchase Diary found, in a multiyear survey, that almost half the people who described themselves as loyal to a brand one year were no longer loyal to it a year later. And, according to Frederick Reichheld, of the consulting firm Bain & Company, the average American company loses half its customers every five years.

What's strange about the Madison Avenue youth cult is that older consumers now make up the most lucrative market in America. People between the ages of thirty-five and sixty-four account for nearly two-thirds of consumer spending. You'd think companies would pay a premium to reach them, not demand a discount. A few companies have recognized this. Lexus, which didn't even really exist fifteen years ago, became the most popular luxury car in America by going after the over-thirty-five ...