• November 1, 2008
  • By Jessica Tsai, Assistant Editor, CRM magazine

Who, What, Where, When, Y

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“Fact! Kids don’t have bills to pay. Fact! They don’t pay taxes. But they do babysit and hold minimum-wage jobs that earn them wads of cash.... But these kids today aren’t dumb. They’re not gonna buy just anything. That’s why the government has been planting small subliminal advertising suggestions in today’s rock music. The results? We can now get these kids to buy just about anything. We can have them chasing a new trend every week. And that is good for the economy.”             —Eugene Levy, Josie and the Pussycats (2001)

See the clip here: http://snurl.com/1108YVideo

Age: 14 to 31 (born between 1977 and 1994)
Biggest Economic Concern: Paying tuition
Biggest Political Concern: Economy and job market
Preferred Communication Channel: Text messaging via cell phone or smartphone

Only one year apart, my brother and I couldn’t be any more different when it comes to spending money. He refuses to buy clothing on sale because, according to him, if it’s on sale that means nobody had wanted it. I have no such qualms, immediately making a beeline for the clearance section upon entering any store. That stick-the-milk-in-the-back-of-the-store retail strategy is futile against this bargain hunter. My brother enjoys the latest and greatest; I’m currently using the hand-me-down Motorola Razr he no longer needed when he pounced on a new iPhone.

As different as the members of Generation Y are in our individual spending habits, there’s one thing we have in common—we all want to be treated as unique individuals. Popularly characterized as the most technologically adept group in history, it’s no secret that this generation has successfully differentiated itself from others simply because it has access to more information, not to mention the time to search for it. A February 2008 eMarketer study on United States Internet users reports that 91 percent of Gen Y is on the Web, comprising about 32 percent of the national total.

This group’s spending power was estimated at $189.7 billion in 2006—and it’s rising, says Maryland-based consumer-market research firm Packaged Facts. While Gen Y is far from being the richest demographic, much of its spending is discretionary—and its members certainly do a good job as influencers: The 2007 Nielsen Homescan Consumer Panel found that American households with at least one Gen Y member spent 15 percent more than the average U.S. household.

Gender Role-Over
The 2008 presidential campaign has seen a female candidate for the top spot and a female vice presidential nominee—a sure sign that women are rising up in the ranks politically, socially, and economically—and Gen Y is at the forefront of that shift. “This is the first generation in history that’s driven by women,” says Radha Subramanyam, global insight strategy leader at Yahoo!. While open access to technology may be one factor, Subramanyam contends that the great equalizer is actually the upbringing of the modern child. “Boomer parents, especially because they lived through the gender revolution, were very conscious about raising [girls] equally.” Not that boys are falling behind: The two have more in common today than ever before—equally interested in success, careers, and achievement. “Success is much more complicated than money,” Subramanyam adds. “It’s about balance. It’s wanting a whole life.”

As gender barriers crumble, interests are no longer segregated into pinks and blues. “Many categories of advertising were focused on boys,” Subramanyam says. “That’s not true anymore.” Especially important, she adds, is that girls tend to spend more. And teen boys and young men have their own surprise for marketers: Turns out they’re just as likely to stay home as girls are, and are just as much into their appearance, Subramanyam says.

One recent Gen Y marketing success is Unilever’s Axe body spray: Despite its controversial campaigns—which critics say degrade women—it’s one back-to-school product every hormonal teenage male has to have. At a low cost ($4.99), it’s affordable even for a guy with a thrift-shop wardrobe. Moreover, Axe has managed to sway its target audience with a Web site loaded with dating and grooming advice and interactive games that pique a young male’s interest on a particular topic—sex. In doing so, United Kingdom–based consumer-product research firm Mintel found that Lynx (as Axe is known in Australia and the U.K.) had secured a higher level of appeal and customer loyalty than all other brands.

Redefining Cool
“All generations are comfortable with technology, but this is the generation that’s been formed by technology,” Subramanyam says. “There’s no technology with a capital ‘T’ for them. It’s not something separate. It’s just something they do.” In fact, walking around the mall one day, Subramanyam spotted a teenage girl sporting a shirt emblazoned with the message “Texting is my favorite form of reading.” Digital is the language they speak. Marketers need to embrace it.

Until recently, a Gen Y consumer’s definition of “cool” was highly dependent on clothes and shoes. Now, the attention and the dollars are being pushed toward technology. “A few years ago,” Subramanyam says, “you just didn’t have young people spending that much money on high-tech items.” With products like the iPod, the iPhone, the Mac—and pretty much any item in the Apple family—technology is the new black.

Whereas a creative design used to be the differentiator, it’s now the point of entry. “If you’re not in the design space, they probably won’t enter your store at all,” Subramanyam says. One iPod may look the same as the next, but rarely, if ever, will any two have the same songs or videos. From playlists, to ringtones, to background images, Gen Y enjoys the duality of fitting in and being different.

This struggle to be unique has reinvigorated the do-it-yourself (DIY) trend, currently more popular among females than males. Subramanyam met a girl who would buy designer jeans only to cut them up to make them her own. She advises marketers to look at how consumers are interacting not just with brands, but with the products themselves, and to provide the tools and materials to facilitate it—perhaps by cross-selling consumers a prepackaged kit of jewels or design patterns.

Sites such as Etsy.com, an online marketplace, and MyHandworkStudio.com, a needle-arts community for kids, cater to DIY folks who create their own projects. Customization, says Tina Wells, chief executive officer of “tweenteen” research firm Buzz Marketing Group, is “very cool for back to school.”

The Google Generation
Wells started her company when she was 16. Today, just over a decade later, she says she’s seen a dramatic change in the market. “When I was a kid, there were four main ways of reaching me: the radio, the TV, the mall, or Seventeen magazine,” she says. The proliferation of communication channels, driven by the Internet, has undoubtedly made it harder to pinpoint this elusive group. As a result, she says, marketers need to listen more than lead.

With more channels to feed, marketers are forced to compete with more content. Wells recalls Thursday nights that used to give teenagers the option of watching either Dawson’s Creek and Felicity or...
Dawson’s Creek and Felicity. “We like to make the assumption that, because we do our jobs as marketers, people want what we have,” Wells says. “When kids have the option to make their own TV show and post it on YouTube, you have to do a better job of creating something that’s worth them tuning in to.”

When Gossip Girl debuted on The CW last September, there was hope of it becoming a breakout hit with teens. Packed with what producers thought its audience wanted—sex, scandal, and beautiful people—it was a recipe that worked in the 1990s, when teenagers became avid fans of (the original!) Beverly Hills 90210.

But Gossip Girl, while generating enough buzz to make a marketer giddy, has failed to live up to network expectations. Some say the show has effectively missed its target, failing to viscerally connect with the high schoolers who, for one thing, actually have time to watch scheduled programming. “Consumers are so multifaceted these days that they’re not accepting the same old bag of tricks, even if it’s wrapped in an attractive package,” Wells wrote in an online article for the Huffington Post. They want something they can relate to, and Gossip Girl, she continued, “is something just too remote and far-fetched to be truly compelling.”

One promising aspect, though, was The CW’s commitment to online streaming, which had been popular with younger viewers but hard to monetize with advertisers. When the network decided in April to forgo online streaming of the season’s final episodes in an attempt to funnel those viewers toward their televisions, the decision backfired, constraining—some might say choking—the show’s already dwindling audience. The lesson? Limiting Gen Y’s options flies directly in the face of how this generation functions.

Even ABC’s Grey’s Anatomy—one of the top-rated shows, with an average of more than 20 million viewers per episode—was accessible via DVDs from Netflix and streamed episodes on ABC.com. It comes as no surprise, then, that The CW’s move was met with protest. Gossip Girl viewers enjoyed the show, but their schedules couldn’t conform to a single timeslot—forcing many to stop watching the show altogether. Three months later, with no noticeable improvement in ratings, The CW brought the show back online.

Conscious of Your Conscience?
“Because of technology, [Gen Yers] are used to having a voice,” Subramanyam says. More so than talking to a brand, they like talking about a brand with each other. A survey by consultancy Deloitte & Touche shows that this group has a clear lead when it comes to interacting with user-generated content. The opinion of someone-like-me couldn’t be more valuable to any other group. Even a company-sponsored blog is viewed with skepticism.

“I can’t see any reason to trust that blog,” said Justin de Graaf, Unilever’s assistant brand-development manager, at the Association of National Advertisers’ 2008 Brand Innovation Conference. This “Google Generation,” as Wells calls them, has the “truth” at their fingertips and they’re not afraid to use it. If your company is involved in a scandal, Gen Yers are going to ask questions—and they want answers you may be unwilling to provide.

Abiding by fair and humane business practices is probably this generation’s most critical stipulation. Any time they log onto a Web site, headlines—about the war, the recession, the environment, the fight for human rights abroad—are hard to avoid and it’s hard for them not to care.

“The older generations have left them with a lot of problems,” Subramanyam says. According to James White, a 23-year-old and author of My First Million, the problem with Gen Yers is that they’ve been raised to value a materialistic lifestyle. “There are too many toys that entice people,” he says. “We’ve never gone through a hard time until now.” The interesting thing is that this is perhaps the only generation that has successfully created a balance between materialism and altruism.

Wanting money, Subramanyam says, used to mean you were greedy. “This generation has really reconciled the two.” They’re inspired by the rare Boomer: Oprah Winfrey and Bill Gates have massive bank accounts, but they’re committed to using those funds to help others.

“Generation Y could be the first generation in the world to leave the earth a better place than they found it,” writes Kenneth Gronbach in his book, The Age Curve. (See Required Reading, page 20, for more with Gronbach.) Although environmental-awareness campaigns have popped up in the past, experts don’t see this wave going away any time soon. Consumer demand has driven companies to shift to ecofriendly initiatives, from fuel-efficient cars to carbon offsets.

Change takes time, and a good-faith effort may be enough to make an impact. But companies can’t just put out an Eco-Shape water bottle and call it a day. Gen Y needs convincing. “It’s never completely altruistic,” de Graaf told attendees at the ANA show, but Gen Y rewards companies that aim higher than “increased margins.”

Gen Y is also the most ethnically diverse population to date, according to the 2006 American Community Survey: 60 percent are white, 18 percent Hispanic, 15 percent black non-Hispanic, and 4 percent Asian. “I have a child who is half white, half Asian. What box is she going to check?” Subramanyam asks. “I look at her assortment of friends and many of them aren’t a single race.” Marketing campaigns have no choice but to reflect that diversity. Having a white protagonist simply won’t do anymore, especially when there’s $1 trillion to be earned from the multicultural market. (See “The Markets Within the Masses,” March 2008, for more on multicultural marketing.)

The Y Employee
Today’s younger consumer cannot be accurately characterized as the angsty individual who rebels against authority. Studies indicate that these young men and women are distinct from those of past generations in one big way: They’re still close to their folks. A survey by New York–based Applied Research & Consulting found that 90 percent of teenagers enjoy a close relationship with their parents, compared to 40 percent of Baby Boomers who said, when surveyed in 1974, that they’d be better off without the ’rents.

The same mentality extends to Gen Y’s entrance into the workforce. “They’re far more scheduled and driven than generations before them,” Subramanyam says, but at the same time, they want to be “chillaxed.” They’ll get the job done, but it doesn’t always require “face time.”

Technologically connected in their personal lives, Gen Y expects to have the same tools in the workplace to help them be more efficient and productive. “We don’t want to have to come into the office for a meeting with someone in the U.S.,” says Thomas Tachibana, an intern in the Tokyo office of an American financial services firm. James White, the My First Million author, agrees: “We want a job, but we want flexibility.”
Gronbach’s figures show more than 100 million Gen Yers by 2010, all aiming to fill the shoes of the 69.5 million Gen Xers—so competition will be fierce. Many youngsters are starting their own businesses, creating an expanding pool of what Wells calls “teenpreneurs.” Inevitably, Gen Y will end up meeting the needs of Gen Y, Gronbach says.

In response, companies targeting Gen Y customers should look to hire Gen Y employees. Austin Lavin, at 24 years old the cofounder and chief executive officer of online job site MyFirstPaycheck.com, says that companies that hire teenagers are more likely to attract teenaged buyers. If there’s a concern that Gen Yers are “generally poor performers”—an October 2008 Jobfox poll shows 30 percent of recruiters share that perception—Lavin counters by saying they’re not only affordable but enthusiastic. “You can’t pick a better group of brand ambassadors.” Urban Outfitters exemplifies a company that uses its employees to sell a certain image in its various retail chains: Anthropologie projects the feminine and Urban Outfitters fits the hipster look.

Charleston, S.C.–based America’s Research Group (ARG) confirms that 2008 was the weakest year for summer-job hiring in over 20 years, which contributed to a 4 percent decrease in back-to-school sales. Teens do everything online, Lavin says, including searching for employment. Companies that could potentially hire teens and don’t post job listings online miss a huge opportunity, especially since gas prices are forcing more people to stay home, rather than stroll around looking for “Help Wanted” signs.

Since teenagers with jobs are typically still living under the care of their parents, much of what they earn is discretionary. Some may be saving for college, but most of the time, teens are earning to spend. Hiring from the crowd you’re targeting will have long-term benefits as well. Businesses that cater to this demographic have a better chance of making a strong first impression on a very impressionable crowd, and of building customer loyalty as a result. “Everyone remembers who gave them their first job,” Lavin says.

The mobile phone may be the defining tool for Gen Y—personally and professionally. Data from online marketing-solutions provider iPerceptions confirms that the most important product for visitors under the age of 25 is mobile phones (39 percent compared to 17 percent of the general population). Carriers are catching on: In August, Verizon Wireless released the Blitz, in an appeal to its “text-heavy” users—and their parents.

Playing the Game
One attendee at the Brand Innovation Conference asked a panel of Gen Yers if they were using new social technology, namely Twitter. One response was echoed by the rest: “I know I’m not,” said Andrew Schneider, a strategic research specialist at Mercedes-Benz USA. “We like to think they need all of these bells and whistles,” Wells says, when in actuality, if one medium can provide a similar service, there’s no motivation to add another to the list. Facebook’s status feed, for example, provides a Twitter-like service. “Understand why they want the things they want and why they do what they do, rather than assuming we know,” she says.

As much as marketing is an art, some say it’s time to refocus on the science when it comes to understanding Gen Y. “There are a lot of myths out there,” Subramanyam says, and only research can remove them. Otherwise, she says, “you’re just using a 1950s methodology to talk to young people in 2008.”

“At the end of the day, we need teens to buy what we’re selling and that means adapting to what they want,” Wells says.

So before launching into what seems like the hippest new marketing ploy, do your homework, talk to actual Gen Yers, and immerse yourself in their world.

Gen Y superstar Shawn Fanning  changed the game in marketing when he created Napster during his freshman year at Boston’s Northeastern University, popularizing peer-to-peer file-sharing (and incurring the wrath of the music industry). It completely wiped out the need to purchase overpriced albums and videos, and while Napster’s ride eventually turned bumpy, it helped create the market for online distribution.
Apple’s iTunes provided an alternative solution, offering singles for 99 cents, but even that doesn’t beat free. Sites such as imeem.com are limited to online streaming, but it was only a matter of time before someone figured out how to convert such files to the transportable MP3 format—something even I, an admittedly below-average tech-user for this generation, can now do. Knowledge spreads like wildfire and companies that continue to bounce back are those that are listening.

Technology is empowering the Gen Y consumer and it should serve marketers in the same way. “We in marketing need to catch up with technology,” Wells says. “When we do, then we’ll be able to play this game fairly.”

SIDEBAR: What worked for you and how do you view marketing?

  • Obama’s campaign was successful by giving away free buttons and stickers via Facebook. Marketing isn’t especially successful in pitching new items to me. My information is almost exclusively Internet-based, and so it’s fairly easy to ignore the ads on a conscious level.  —Sarah Pedersen, 21, Albany, N.Y.
  • Online ads and viral online videos created for the sole purpose of marketing a product [work for me] (e.g. Kobe’s stunts for Nike’s Hyperdunk shoes). Marketing does a good job when it is able to appeal to a target audience through the use of shock value or humor.  —Daniel Tith, 23, Los Angeles
  • Gossip Girl ads have totally worked for me with their use of parental advisories. It’s like a guilty pleasure and the marketing admits that it’s OK. Today’s marketing is tailored for its target audience more than ever.  —Emily Hue, 22, Brooklyn, N.Y.

Contact Assistant Editor Jessica Tsai at jtsai@destinationCRM.com.

Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visit http://www.destinationcrm.com/subscribe/.

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