The Economics of Everyday Things - Greeting Cards (Replay)

Episode Date: December 2, 2024

The tradition of sending cards to loved ones was in decline — until it was rescued by a new generation. But millennials have their own ideas about what sentiments they want to convey. Zachary Crockett is thinking of you on your special day. SOURCES:Mia Mercado, writer and former editor at Hallmark.George White, president of Up With Paper and former president of the American Greeting Card Association. RESOURCES:34th Louie Awards - Finalists & Winners, (2022-2023)."Season’s (and Other...) Greetings," by Maria Ricapito (Marie Claire, 2020)."Hallmark Greeting Cards Have Adjusted to the Digital Revolution," by Trent Gillies (CNBC, 2017)."Testimony of Don Hall, Jr. President and CEO of Hallmark Cards, Inc. Before a Joint Hearing of the Senate Subcommittee on Federal Financial Management, Government Information, Federal Services and International Security and the House, Postal Service and the District of Columbia" (2010).

Hollywood has the Oscars. The music industry has the Grammys. Broadway the Tonys. And then there's this. First category we have birthday general, $5 and below, paper salad, great aero graphics, fine moments, and hallmark hearts. And the winner is? The winner is? Paper Salad!

This is the Louis Awards, where a panel of judges selects the year's best greeting cards. More than a thousand entrants compete in 51 categories. Birthday, sympathy, thank you, all the major holidays. In the friendship and encouragement category, the 2023 Louis Award goes to a card with a bunch of flowers. It says, remember, you're an infinitely iconic bitch having a human experience. The winner in the Christmas humor category reads, happy collecting new material for your therapist holidays.

Lines like those are now the backbone of the $7 billion greeting card business. A business that has found some new customers. The millennial generation is now the largest buyers of greeting cards from a dollar standpoint. They've saved our industry. For the Freakonomics Radio Network, this is the economics of everyday things.

I'm Zachary Crockett. Today, greeting cards. Every year, Americans buy around 6.5 billion greeting cards. They come in all different shapes, sizes, colors, and designs. They're cards that sing to you, cards with LED lights, and cards with elaborate pop-up designs. Some are blank inside, others contain puns or sentimental poems. Two privately owned card giants, Hallmark Cards and American Greetings, control an estimated

80% of the greeting card market. The rest of the industry is fragmented. There are 2,000 additional publishers of greeting cards in the United States that range from people just producing a few cards that are sold to one retailer down the street to companies like mine, which is what we would call a mid-size company. That's George White. He's the president of Up With Paper, a specialty greeting card firm based in Ohio. He's also a former president of the American Greeting Card Association,

a trade group that represents card makers all over the world. White says the companies that sell you greeting cards divide them into two categories, everyday and seasonal. Everyday business would be birthdays, wedding, new baby, sympathy, thinking of you card. That is over half of the total business. But seasonal, there are huge spikes in seasonal. Christmas

is the biggest holiday by far. So out of the six and a half billion cards we talked about selling a year, about 1.5 of those are Christmas. And then there's a big drop from Christmas to Mother's Day and another drop down to Easter. And then because not enough people care about fathers, Father's Day is even lower than that. Ha ha ha. ["The Star-Spangled Banner"] Nine out of 10 U.S. households buy greeting cards every year. And buyers tend to fit a certain profile.

85% of the cards are bought by women. In general, the people who buy cards, one of my favorite phrases in the industry is kinkeeper. The kinkeeper's usually an aunt or something, and the aunt is the one who keeps connections with all the cousins and the uncles and the nephews and the nieces. Those are generally people between 40 and 60 to 65.

Those people know the most people they'll ever know in their life, both younger and older, for whom they would send cards to. When baby boomers entered this age bracket in the 1980s and 90s, they bought cards like crazy. Christmas cards, Valentine's Day cards, birthday cards, thank you cards. Any occasion, big or small, was marked with a card. But that practice did not get passed down.

The next demographic that came in was Generation X. And for whatever reason, Generation X did not buy greeting cards at nearly the rate of their preceding generation. And so there was a lot of panic in my industry as to what was gonna happen. Then the millennials came along. Now, it's not every day you hear about Millennials saving an

industry. My generation is usually accused of killing things. Diamonds, cable TV, shopping malls, banks, nine-to-five jobs, business suits, movie theaters, fabric softener, barrage. But White says Millennials, the folks born between 1981 and 1996, have jumpstarted a new era in greeting cards. Not only do they like to send cards, but they like to send really highly differentiated cards. So they have no problem spending a lot more money on greeting cards. While boomers still buy the most greeting cards, millennials now spend more money on

them than their elders. The market has shifted toward more expensive cards, and that has a lot to do with the way shopping habits have changed. So traditionally, the boomer would buy cards by going into the big drug store, the big grocery store, and they would walk down this giant aisle of cards, and they would spend their five or ten minutes and find the cards that they needed. The millennials have sets of friends that they can send a text to, happy birthday.

They have friends they can post on Facebook or Instagram or TikTok, happy birthday. And then they have friends they call card worthy. And that phrase comes up again and again in research, which is really cool. They're card worthy friends that they have to find a card for. And that card can't be a run of the mill

card. When their friend receives that card, they want that card to reflect the relationship that they have with that person. The greeting card giants Hallmark and American Greetings, they have their own branded retail stores where they sell cards. They also have distribution deals with huge national retailers like CVS and Walgreens. At many big retail chains, these two brands have a near monopoly on the card aisle. The more artisanal personal cards that millennials are looking for are more likely to come from smaller card brands, which can't compete with the likes of Hallmark for shelf space.

So they tend to set up shop in different settings. What you're seeing with the millennial generation is a tremendous diversity of stores now carrying greeting cards that didn't used to. So a jewelry store, a dress store, car washes. Car washes are great sellers of cars in California, for example. Anywhere where there are women with money and taste, you go into these little stores

and they'll have 20 different suppliers of cards, you know, with just a handful of cards from each of these suppliers. But what exactly makes a greeting card appealing to a millennial? And who comes up with all those sayings inside the fold? That's coming up. At George White's company, Up With Paper, the greeting card design process begins by looking at what's trending with younger demographics. A few years ago, llamas were hot. Don't ask me why these things happen, but they just do. Owls were big ten years ago. And then you try to match what's trending with the sentiment. So, you know, does an owl work for birthday? Maybe. Does an owl work for sympathy?

No. Up with Paper makes premium pop-up cards that sell for $8 to $15 each. And they only make around 100 new designs a year. Most small and mid-sized card companies like this don't have a budget for market research. They generally go with their intuition and hope that every card is a hit. We can't afford to have any that don't work. Hallmark, on the other hand, makes 10,000 new cards every year. And the process they use to come up with new ideas is a bit more scientific. It involves focus

groups, psychographics, and entire teams of writers and editors who focus on specific niches. My name is Mia Mercado. I used to be an editor at Hallmark. My job was to work with the editorial director and the art director and basically decide what writing goes on the greeting cards. Mercado worked at Hallmark for five years. She says the company had a card for just about everything. Oh yeah, like Christmas cards. There were ones that were for mail carriers

and hairdressers and pet sitters and teachers. Hallmark employees constantly visit the card aisles at their own stores and at major retailers to find out how cards and categories are selling. There were people on the staff that their entire job was analytics. We would do like this analysis inventory of the cards that were out there. We would have information on how well the cards sold and our job as people working on the writing would then be to come up with a writing proposal or writing plan that we would pitch to the writing team.

Once that data is gathered, teams of designers and writers convene in planning rooms to hash out ideas. Sometimes Mercado says the meetings would get a little surreal. It would literally be conversations like, so dogs are performing really well for birthdays, for dads. It seems like cats aren't doing as well. Maybe we want to do less cat cards. People saying this straight faced. There's also a specific art to coming up with the copy inside cards. Hallmark had this saying, universally specific, which is very much an oxymoron.

When you're working on something that in theory is supposed to be given to someone in a really intimate moment, like at a funeral or to my wife on our anniversary, things that you want that card to say need to feel emotionally relevant to that relationship, but not be so limiting that it would only appeal or apply to one specific person. Throughout all of these conversations, one thing is critically important. Pretty much every single card line that I worked on, there was at least a portion of that discussion that was about making cards that wouldn't turn millennials off.

For decades, greeting cards played it pretty safe. They were family-friendly, polite, and sappy. Those cards still exist, and they continue to sell. But the designs that appeal to millennials tend to avoid traditional motifs. They're self-deprecating, brutally honest, and edgy. I remember doing a whole collection that every single card had some kind of explicit offensive word on the front. The tamest of those would be like, damn, or like hell. I mean, like most things at Hallmark, the things that were considered taboo were pretty mild.

Hallmark may be the industry leader in greeting cards, but the company, which was founded in 1906, faces some steep competition when it comes to selling cards to the youths. Card makers are now competing with social media posts, text messages and e cards, which can be sent via email for free. And on platforms like Etsy and Fiverr, there are thousands of independent card artists who can make and ship custom designs in a matter of days. A new Hallmark card from start to finish might take a year to hit the shelves. That's an eternity in today's creative economy, where trends live and die in a week. We definitely did a lot of things that we're trying to capitalize on, internet trends,

that then felt really dated by the time that they went out into the world. A lot of the things that are funny online are flash in the pan, so I don't know, nobody's going to want to buy a card that has a Twitter joke on it from seven months ago. Sometimes, industry veterans also have a blind spot when it comes to millennial humor. George White admits that at his company, there have been times when he didn't see the appeal of a card his younger colleagues pitched. One example sticks out in his mind.

It was a possum in a trash can. And when you pulled the tab, a possum jumped out of the trash can and says, let's get trashed. And so I was like, I don't understand why you would send this to someone. And we have a lot of millennials on our creative staff, and they're like, this card is going to do great, trust us. And I did, and it's one of our best sellers. So, you know, I'm a young boomer.

I would not send that to somebody, but they totally would. Possums and trash cans aside, the greeting card industry is involved in much more serious affairs. The greeting card association, which White previously oversaw, has played a surprisingly central role in the way our mail is delivered. Almost 60% of greeting cards are delivered to their final recipient by mail. If it costs over a dollar to mail one of my cards, then people start thinking when they see our cards in the store, eh, I don't want to spend a dollar to mail this. It just becomes another part of the thought process.

The Greeting Card Association pushed for the creation of the Forever Stamp. That's a stamp that's always good for a regular letter or card regardless of future price increases. The organization also testified before Congress to ensure that mail remains affordable. You know, we're talking about things like processing time and how the mail is sent around the country and how many workers there are and union contracts. I mean, we get into all that all that sort of exciting stuff with the postal service. [♪ soft music begins to play in the background.

Greetings cards can be a way to express your feelings. Even if those feelings are just, Happy birthday, or I'm thinking about you, or let's get trashed. Sending a card to say that might cost you $6. The store you bought it from probably paid half that much for it. And the company that created it made about 30 cents of profit. I think it's one of the best values in the economy today. On that day, in that moment,

that person knows that I was thinking about them. That's pretty powerful, right? Mia Mercado has a more measured take. Now that I've been out of homework for a few years, I'm a little more back in the real world of thinking of greeting cards like I don't know how anyone else thinks of greeting cards, which is just like, I don't really think about greeting cards. For the economics of everyday things, I'm Zachary Crockett. This episode was produced by Sarah Lilly and mixed by Jeremy Johnston.

We had help from Julie Canfer and Daniel Moritz-Rapson. Like any creative thing, there's only so much science that you can put into it. There's only so far that a number can go before you're like, well, I think people just like this card because there's a cute puppy on it. The Freakonomics Radio Network. The hidden side of everything.