We’re the generation that’s been accused of killing cereal, napkins, diamonds, fabric softener, casual dining chains, home ownership, beer (surprised me), and more.
With major differences existing between each generation of consumers, advertisers and brand managers have the important task of understanding each generational segment to better reach their audience.
Here’s my take on advertising to Millennials, a cluster that I and many of my colleagues have been coined to be a part of.
Before we start, this article will not be an attempt to prescribe specific strategies to reach Millennials — every company will have a different situation and approach required, so in my opinion, this would be a bad place to focus.
Instead, I’ll focus on who Millennials are and what we value, as well as some key Millennial spending or behavioral trends that can help companies improve their own strategies to better reach our generation. So, let’s get started.
Defining the Millennial Generation
Generational theorists Neil Howe and William Strauss define Millennials as those born between 1982 until approximately 2004. However, there is no exact or objectively correct date range for this and you will find slightly different estimates from different sources.
Most importantly though, is to avoid thinking of and advertising to Millennials as one segment.
Millennials represent the largest living generation in both Canada and the United States. We’re also the most culturally diverse. There’s only one segmentation variable that we all can unarguably be categorized under, and that’s our age range. But even then, with an age range of 14-36 in 2018, you’ll find our oldest Millennials at completely different life stages, with completely different wants and needs than the youngest Millennials of the group.
What Makes Millennials So Important for Business?
- At this ripe age range, we as Millennials are about to step into our prime spending years — an estimated $1.14 trillion annually by 2020.
- As the Millennial generation continues to grow over the next two decades, our smaller and older generations are expected to experience a decline in population size.
Needless to say, figuring out effective Millennial segmentation, marketing, and advertising strategies will be crucial for businesses to thrive.
Segmenting the Millennial Generation
As Millennials, we know that we aren’t all alike, but how would you group us into different segments?
Going on something like psychographics alone would be a nightmare — our values and views tend to change quite a bit as we move from younger ages to emerging and mid-adulthood.
Luckily, Jean-Yves Sabot (VP Retail Business Development, Epsilon) provided a great segmentation scheme from looking at spending habits by life-stage. Sabot mentions six groups:
- Recent College Grads: invested in their career, spend on professional wardrobes, are likely to have college debt, and are highly active on social media (specifically Instagram).
- Boomerang Kids: moved back in with their parents, are likely to have college debt, and want high-speed internet for gaming and social media.
- Newlyweds: defined by spending as a couple on wedding and home expenses.
- Having Children: family-oriented spending; active on Facebook and influenced by its content.
- Buying a New Home: are looking to own a home (unlike one quarter of Millennials who wish to rent); shop online more often than other segments.
- Experiential: prefer spending on experiences rather than products.
Funny enough, myself and many other younger Millennials fall into none of these groups. I propose two additional stages:
- University/College Students: hard to reach via conventional media such as television; brand-loyal to responsible brands.
- Teenage Years: in middle or high school; shop for “feel-good” products; highly influenced by word-of-mouth communication.
The Commonalities that We (Millennials) Do Share
While Millennials are vastly different with highly varying wants and needs, there still are some traits, values, and behaviors that we tend to share among ourselves.
Common Traits, Values, and Attitudes
Our Millennial values are said to be fostered by our optimistic and highly-involved parents. We were taught that we were special, that we could achieve anything, and that everyone should be friends. We were sheltered from danger and failure, which in some regards is believed to be a result of a society shocked by tragic events such as 9/11 and school shootings. As such, Millennials grew up to be confident, optimistic, socio-oriented, and diversity-focused; we expect to be respected, care about our social status, and are sensitive to criticism.
Millennials have also grown up in a digital world; we get our information online, socialize online, and expect technology to be available to us.
Again, this is all on average; each trait/value will not always apply. If we were to use myself as a guinea pig, we’d find that I do fit the mold of most points above, but am highly welcoming of criticism rather than sensitive to it. To each their own.
Millennials take longer to transition between significant life stages. We’re living with our parents longer, getting married later, and having children later than previous generations. Rather, we tend to be more concentrated on school and our careers. We enjoy a work-life balance, are mostly employed, and have a lower average household income than working elder generations.
On top of this many Millennials are burdened by debt from post-secondary education, which has led to Millennials becoming a minimalist generation; we still spend, but conduct research before purchasing and place a higher emphasis on frugality (resales, access over ownership, etc.). A shopping behavior which I definitely see in myself and most of my peers.
Advertising to Millennials
Getting into it, the generational traits I’ve mentioned form the constructs of four emerging consumer trends among Millennials:
- Shifting to access over ownership
- Shopping for experiences
- Purchasing online
- Admiring corporate social responsibility (CSR)
It is by understanding each of these trends that we can begin to form our own marketing and advertising strategies to leverage each one.
1. Shifting to Access over Ownership
The “sharing economy” is something that was defined by PwC. It discusses the trend of consumers moving to peer-to-peer and access-driven business models, such as car rentals and subscription services, rather than following the traditional ownership model. For example: access to an entire music library rather than owning individual songs — sound familiar? You can read PwC’s full report on the subject here.
Millennials are the most active generation in the sharing economy. You can see the effects of this ripple into many of the industries that we’ve been accused of ruining. For example, car ownership. This was commonly listed as one of the things that Millennials won’t pay for, and here’s the reasoning behind it: with cars, we’ve been found to see them as less of a status symbol (on average) than our past generations. If we have good public transit we see it as cost-effective and environmentally friendly, so we’ll opt for that instead; for those few trips that a bus or subway can’t make, we can rely on Uber.
We see this in several areas: AirBnB over traditional hotel stays (both access-based, but the peer-to-peer model drives down our costs), Netflix over Cable TV, streaming over paying for music; it’s access over ownership.
A company could leverage this in many different ways without completely changing its business model. The entire basis of a “sharing” or a peer-to-peer economy is founded on trust. For example, an Uber driver needs to trust that his or her passengers won’t damage the car; Uber riders need to trust that their driver will transport them safely to their requested destination.
Based on this, communicate value, convenience, and trust. If your product/service offering doesn’t fit an “access” model, you can still target the key traits of Millennials that lead to them regarding it so highly.
2. Shopping for Experiences
Millennials are placing more value on long-term memories achieved from the consumption of experiences than on the short-term satisfaction they get from the consumption of products. In numbers, a Harris study found that 72% of Millennials prefer spending on experiences over material things.
This is often referred to as the “experience economy”.
Contributing to this is the ability for us to share photos and videos with ease over social media. It’s peaked our awareness of events and interesting locations, both in our local area and abroad. It gives incentive to visit the places we see online for enjoyment, but also for that “perfect post”.
More so, constantly seeing posts from our friends and being aware of their nearly-every move makes the FOMO (fear of missing out) phenomenon stronger than ever — the Harris study above found that 69% of Millennials experience it. Ironically, while we’ve been accused of only being able to maintain relationships in the online world, our phones and social media are some of the strongest influences on making us go out of our homes to be with others (and to not miss out).
Improve experiential offerings and increase brand image through the production or sponsorship of live events. For live events, leverage Millennials’ need for affiliation to increase participation rates; show who’s participating, give testimonials of people who’ve experienced your offering, and so on.
3. Purchasing Online
This one’s obvious.
Millennials contribute to 35% of retail spending and often prefer to interact with brands through online channels (Frederick, 2015). This doesn’t only have to do with the fact that we’re digital-natives, but also plays again into our price-sensitivity and minimalist shopping behaviors. A huge reason why many Millennials will turn to online shopping is to find the best deal and discount. Online gives wider access to information than retail, allowing us to have more transparency in our shopping decisions.
Discounts are a key prompter to Millennials’ online shopping activities, which in part has given rise to e-commerce sites like eBay and Amazon. A full report on Millennial online buying habits can be seen here.
Other important online behaviors include our research. A large part of why we go online is because we are seeking transparency, hoping to collect a wide set of information and alternative options before making a purchase decision. This is something that isn’t typically possible at traditional brick-and-mortar retail stores, so even if we make a retail purchase, the buyer journey will likely go online at some point in time before reaching the final point of sale. The desire to have full transparency is why 85% of Millennials will research a product/service before purchasing (60% of research being done on the company website).
Online purchasing also brings back the topic of social media. We interact with our favorite brands and causes online, we follow and share posts with friends, and we are influenced by others with large social media followings. Some Millennials are less connected, but 52% say that social media advertising does influence their decision to purchase a product/service.
Get your digital strategy down. This is probably where we’re seeing companies make the biggest shift right now, and if you don’t already have a solid digital marketing team, you’re likely to fall behind. On top of traditional advertising, look at in-bound strategies and work on your search engine optimization; build great content on your website (we’ll be reading it); ensure your online reviews are strong; offer competitive pricing and discounts, whether online or at retail locations; and don’t just get on social media, build a social media strategy and be consistently active with your posts.
4. Admiring Corporate Social Responsibility
This is common among many generations. Corporate social responsibility (CSR) is defined as the voluntary activities undertaken by a company to operate in an economic, social, and environmentally responsible manner. It takes the view that a company should be responsible for more than just profits, and it’s more often becoming expected of businesses — especially by Millennials.
In a survey, Pew Research noted that 75% of Millennials would think more highly of a company if it supported a cause and that 70% of Millennials consider themselves to be social activists.
Millennials have high expectations for companies to be transparent and honest about their initiatives. Deeper than an advertising perspective, companies need to think about how they can contribute to this initiative so that it can become a genuine part of their brand image.
Any CSR-related campaigns should be grounded in true initiatives and provide meaningful value to give credibility to your claims. To do this, companies should ensure that any issue they focus on is derived from their core values; the issue should be supported by employees and represent an extension of their own beliefs. Further, Millennials expect to have two-way dialogues with companies; constantly seek to engage Millennials that also support the cause through social media and use the opportunity to build a more intimate relationship with them and their like-minded peers.
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