• by Larry Dobrow , March 3, 2004

The overarching conclusion of a report released Tuesday on the media and consumption habits of college graduates wasn't exactly earth-shattering: they plan to spend plenty in the months after they enter the real world, and thus should be prime targets for marketers across a broad range of categories.

Yet John Fees, co-founder and chief executive officer of Youth Media and Marketing Networks (YMMN), believes that most companies haven't invested enough time, energy, or resources in reaching them. As a result, many brands have lost the fight to win educated young, brand-conscious customers without throwing a single punch.

"Most companies don't realize when lifetime decisions are being made," says Fees, whose research firm has conducted the eGrad Research Study annually since 2000. "It's not when you're an 18-year-old going off to college. The first real decisions come when you graduate." Indeed, the 2.3 million students who graduate every year spend approximately $40 billion on products and services, according to the study.

Although he commends buyers for understanding that "it's all about niches nowadays," Fees questions whether the media community distinguishes between college grads and the broader 18-24 demographic. Given that a college degree is among the characteristics that most companies would like to see in the demographic profile of its customers, Fees believes that the media community might want to consider narrowing its focus somewhat.

"Around 60 percent of high school students start college, but only one in three eventually graduates," he notes. "Using the status of being a college graduate is a terrific way for media buyers to reach the most valued part of the 18-24 demographic."

The mediums best suited to accomplish this include the Internet and, surprisingly, radio. During the four years that YMMN has conducted the eGrad study, online is the only medium that has increased its share of grads' time and attention; radio has remained constant, with every other medium dipping. "Radio is the most undervalued source for reaching these grads, even with the huge iPod and MP3 adoption we're seeing," Fees notes. "Radio is great value for the money."

As for Internet marketing, grads averaged 2.6 email accounts in 2000; today, that figure has grown to 4.5. "What this says to me is that with these folks, [marketers] are going to be characterized in terms of how you fit into their lives," Fees continues, suggesting that the way into a college grad's wallet may be through his or her inbox.

The majority of marketers have done little to curry favor among college graduates, yet Fees is quick to note a handful of exceptions. While auto insurance companies have historically stayed away from just about everybody under 25, companies like Geico and Progressive have invested in programs that target young customers. Similarly, Liberty Mutual offers a discount to recent college grads.

The moves clearly make sense: tech-savvy grads are likely to conduct a host of research, both online and off, before choosing an insurance provider. "It's not like 10 years ago. They're not just going to ask their parents or their siblings to recommend the guy who lives down the street," Fees says. Auto companies also score well with YMMN, with BMW (which has a program in place to reach grads of top schools) and Ford (which has run a college-grad program for more than 20 years) getting high marks.

As for industries that seem to be oblivious to the potential of recent college grads, Fees points to consumer electronics and packaged goods. "Even something like the mattress business--they've traditionally focused on newlyweds, but more than 40 percent of new grads are buying a new mattress," he notes. "If you're not in New York or San Francisco, you're probably moving into a larger apartment, and your rent is probably low enough so that you can afford a $600 mattress. What an opportunity this could be for a Sealy or Simmons."

And, as with just about everything else, timing is everything when it comes to reaching recent college graduates. Fees advises marketers and media buyers not to bother with the post-grad crowd until the September after they get out of school. "Around 30 percent of college graduates expect to return home for at least a little while--they go home and maybe travel, then they move out and start a job in the fall," he notes. "There's no reason to market to them during that summer. It doesn't register."