Tech Savvy Millennials Take Over Spending From Boomers

For marketers, Millennials are the most important generation to come along in the last 100 years, according to a recent Adroit Digital study. This group of young adults is the largest generation by number in US history. Millennials number more than 80 million, a population larger than the Baby Boomers, and it outnumbers Gen X almost 3:1. Millennials came of age in the wake of massive advancements in technology, unparalleled communication access, and media exposure that allowed people to spread information faster to a wider, more diverse audience than in any generation before them.

As Baby Boomers move closer to retirement, they will take with them close to $400 billion in annual spending. Retailers are scrambling to secure the loyalty of the Millennial tech-savvy and fast-paced crowd, which spends $600 billion a year.

By 2030, Millennials will outnumber non-Millennials. In addition to growing up as digital natives, Millennials entered college in the face of the largest recession since the Great Depression. Many of those who completed their college education are accompanied by massive student loan debt, and they also entered college knowing a bleak job market faced them. They also see things differently because they are culturally different. Millennials are the most racially and ethnically diverse American generation ever, with over 20% of the population now identifying as Hispanic and 13% as African American.

When asked about how they think about brands compared to how their parents think about them, and how brands can gain their future loyalty, 64% of Millennials are more brand-loyal or as brand-loyal as their parents. 24% consider themselves to be more brand-loyal than their parents. Rest assured, says the report, this generation demonstrates strong brand loyalty.

To gain insight into how Millennials view brands and their thoughts on brand loyalty, 60% of Millennials said that social advertising has the most influence over them in how they perceive a brand and a brand’s value. Traditional media, outside of TV, fell flat. In the realm of influence, radio, billboards (OOH), and magazines finished last with mobile and online, both display and video, comfortably in the center.

Key findings in the report show that:

  • 39% of all respondents think that brands that don’t advertise through mobile channels, smartphones, and tablets are outdated and undesirable.
  • 32% of those surveyed said social advertising lends the most credibility to influencing their brand decisions, compared to 35% who indicated TV as the most influential advertising channel.
  • 26% of Millennial respondents said social is the most likely channel to introduce a new product that they will consider for trial.
  • 77% of the Millennials surveyed said they are evaluating brands on a different set of criteria than their parents. Millennials may be brand-loyal, and many use several of the same products their parents are loyal to, but they’ll be evaluating them against a new yardstick.
  • 55% of young shoppers said that a recommendation from a friend is one of the strongest influencers in getting them to try a new brand. 47% consider brand reputation to be almost as important. Product quality ranks fourth at 35%, while price has the most sway at 62%.
  • 36% of Millennials believe digital advertising is the most effective method of influencing their brand decisions, with traditional advertising as a standalone showing markedly less influence at 19%.
  • 52% of Millennials want brands that are willing to change based on consumer opinion and feedback to maintain future relevance. 44% want to have open dialogue with brands through social channels, and 38% want brands to be more about the consumer and less about the brand.
  • 38% of Millennials will switch brands if a company is found to have bad business practices. Outside of financial factors, a business found to have bad business practices is the number one reason that Millennials will switch brands.

43% of respondents indicated they use many of the same brands as their parents, but not all the same brands. There are a few who think Mother knows best. 20% of respondents said they use and are brand-loyal to the same brands as their parents. A larger percentage of men than women think Mother knows best: 27% of men compared to 12% of women fall into the above category of loyalty.

  • I'm brand loyal and use the same brands as my parents   20%
  • I use many of the same brands my parents use, but not all   43%
  • I use a few of the same brands as my parents   26%
  • I use different brands than my parents   11%

Younger Millennials, 18–25, are closer to Mother’s apron strings, with 72% indicating they use or are loyal to all or many of the brands their parents use, compared to 56% of older Millennials aged 26–33. 

Good news for marketers, says the report. 64% of Millennials surveyed feel the same level of brand loyalty or greater brand loyalty than their Baby Boom or Gen X parents. 24% fall into the category of feeling more brand-loyal than their parents.

  • Millennial men feel they are more brand-loyal than their parents compared to Millennial women, 30% and 17%, respectively.
  • As Millennials age, their feeling of brand loyalty compared to their parents drops considerably, with 23% of 18–25 year-olds and 37% of those aged 26–33 indicating they are less brand-loyal than their parents.

For brands’ continued success, securing the loyalty of the Millennial audience in the next ten years will create a tremendous upside in the future lifetime value of this customer set, opines the report.

39% of Millennials consider a brand to be undesirable and outdated if it lacks a mobile ad presence, a large enough that brands and agencies can’t ignore it, says the report. There is a significant difference in this sentiment between men and women, as well as between younger Millennials compared to their elder counterparts. More men than women feel mobile is modern: 50% of male respondents compared to 27% of female respondents. And, digital natives, those aged 18–25, see mobile as modern compared to older Millennials aged 26–33, who didn’t spend their formative years with mobile phones and the Internet at their fingertips: 50% compared to 32%, respectively

If agencies and brands want to hold sway over the millennial audience, says the report, TV is the champ, but social is quickly coming up on its heels. Those who spent their youth in front of the TV and not the Internet or game console say TV is their primary influencer in perceiving brand value. 73% of 26–33 year-olds, compared to 66% of 18–25 year-olds, consider TV to be their biggest influencer when it comes to brand value.

For brands prospecting new customers, TV and social will pave the way with Millennials: 29% and 26% indicated TV and social, respectively, as the media most likely to introduce them to a new product for trial. Both men and women indicated social and online display as their largest influencers beyond TV. Women are 1.5 times more likely than men to discover a new product for trial through social media exposure or advertising—31% compared to 21% of men.

When asked if Millennials chose brands on a different set of criteria from that used by their parents, the majority, 77%, indicated yes. When were asked which criteria they use to select a new brand for trial, quality was fourth on the list, with 35% of respondents. It was preceded by brand reputation at 47% and recommendation of a friend at 55%. The most important criterion to a Millennial is value and/or price, with 62%.

The big standout difference between men and women in their selection criteria is exposure to a brand through traditional advertising (TV, radio, magazines). Women are almost 2.5 times more likely than men to use traditional advertising in their brand selection criteria, 36% compared to 15%.

The criteria for selecting a new brand for trial, the list ranked by % of respondents is:

  • Value/price   62%
  • Recommended by friend   55
  • Brand reputation   47
  • Quality   35
  • Brand exposure through social media   29
  • Eco-friendly brands   28
  • Recommended by parent   25
  • Entertaining ad campaigns   23
  • Prestige/social perception   20
  • Established brands that instill trust   20
  • Brand exposure through traditional advertising   19

The key to brand loyalty is just that. What causes you and other people your age to switch brands, asks the study.

  • 56% of Millennials would change brands when they experience a change in finances, as  consumers have to evaluate their current brands and their associated costs and value
  • 41% of Millennials would change brands if their current brand increased in price
  • The other top three reasons that Millennials would change brands are a recommendation from a friend, at 38%; if their current brand is found to have bad business practices, at 32%; and if something newer and shinier comes along, at 37%
  • Women on average are more likely than men to change brands on several counts: something newer, 45% compared to 35%; a brand found to have bad business practices, 36% compared to 28%; and an eco-friendly competitor, 35% compared to 25%.

Outside of the constraints of financially driven motives, concludes the report, brands courting Millennials should adhere to a few ideas: keep people talking about your brand, make sure you’re a good corporate citizen, and keep your products and brand fresh and exciting so consumers aren’t tempted away by the latest new product.

For more information, please visit AdroitDigital here to access the  complete PDF file.

 

 

Tags: gen y, research
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