• by September 7, 2001

Teenagers are spending millions of dollars online across the US and Europe. That's according to the newest report from independent market analyst Datamonitor, titled Online Teen Payments.

But, according to the report, teenage payment systems, such as prepaid plastic cards, are currently provided by only a handful of suppliers. As such, the sector is lucrative, but marketing and advertising to teenage consumers is likely to prove difficult and operators should look to tie-in with larger teenage-friendly brands.

Datamonitor looked at teenage online spending across the US and 7 European Union countries and found that teenagers spent $483 million online in 2000. Datamonitor's forecasts reveal that this figure will increase to $10.6 billion by 2005 with the development of new payment options, specifically targeted at teenagers. Teenagers are among the most likely groups to pay on the Internet, however, their inability to obtain credit cards and low online debit acceptance has historically made online payment difficult.

Despite being one of the main groups of users on the Internet, many teenagers have no way of purchasing goods online. With a low number of websites accepting debit cards there is often no way a teen can independently shop online. The primary means of payment used on the Internet, the credit card, is not available to them.

But, Datamonitor predicts, online teen payments will grow considerably in the next five years. This is in part due to the growth of the Internet that will be seen across society. However, growth is likely to be very different in the US compared to Europe. US teenagers in general have much more money at their disposal than their European counterparts. The dominance of the credit card in the US will allow products connected to parents' credit cards to flourish.

Credit cards aside, teenage skepticism about large-scale advertising and marketing campaigns makes them difficult to target. Datamonitor says marketing cannot be too over the top or childlike, yet at the same time, the concept must be explicit enough to strike a cord with teenagers. Teens are likely to switch as new products enter the market and become 'cool' and cutting edge. One-way branding can be used is by creating links such as discounts with the large brands, for example Coca-Cola, Nike etc. Although brand loyalty is likely to be low, the importance of a strong, fun, cool image is vital. If something is seen as 'cool,' teens are likely to pass on the word to their friends. This can be the strongest form of marketing possible. Operators such as Splash Plastic and Visa Buxx have found that when teens like the product, they are quick to pass on the details to their peers.

Also, the importance of a presence in the offline environment should not be underestimated. The majority of a person's time is spent offline and as such it is vital to advertise offline. With products such as Visa Buxx offering both online and offline acceptance, this puts other companies under pressure to provide the same. Currently, this is only true in the US, but as products continue to be launched this will extend to other countries. With more companies entering the market, it will be the one with the most features that will survive. As such, offline acceptance will become a matter of course.