Generation Y: A marketing nightmare

The Reason Y
SMH RADAR Liftout August 10, 2005
Companies are eager to discover what drives 20-somethings, writes Ben Wyld.
In your 20s? Chances are you enjoy international travel, have a circle of friends that encompasses the globe and are more content spending your money on entertainment, clothing and your mobile phone bill than saving for a home deposit. As one market researcher puts it, you're probably enjoying a decade of delay - before thoughts of home ownership, marriage or children enter your mind. We're told that, collectively, you are a difficult group to reach, inquisitive, well educated, and keen to buy into a lifestyle that reflects your identity - even if that means racking up credit-card debt. However, you're cynical of big corporations and not afraid to ask the big questions, in both the retail space and workplace. With increasing regularity, news reports, research studies and books are being released promising to debunk the mystery that is generation Y. But are young people, in the age of the internet, really so different from their forebears? Have we really become so difficult to understand? The motivation behind the research drive is clear: people born since the late 1970s are cashed up and willing to spend, which means marketers, researchers, advertisers and companies are hunting for the key to their hip pockets.
Peter Sheahan, 25, a self-styled generation Y consultant and author of Generation Y: Thriving (and Surviving) with Generation Y at Work, says gen Yers have substantially more purchasing power than their predecessors, gen Xers, had at the same age. Not only do the 4.5 million Australians that fall into the generation Y category have a high disposable income, but their ability to set trends and influence spending patterns makes them a target for advertising. "Studies in the UK show one in three consumer dollars spent in Europe are influenced by generation Y," Sheahan says. "It's not just how much generation Y spend, but how much they influence what other people spend ... what they say is cool drives sales up the chain." Social researcher Mark McCrindle says this is the driving factor behind generation Y research - despite the fact that generation X and the baby boomers are the wealth accumulators and holders respectively. "It used to be people looked to older people for advice, but in a youth-obsessed society they are now looking to the young," McCrindle says. The purchasing power of children extends 10 times beyond what they actually have, according to a World Advertising Research Centre study, published in the International Journal of Advertising and Marketing to Children (now Young Consumers) in 2002. Extrapolate that to people in their early 20s - when young people are likely to be working but living at home, further increasing their net worth - and McCrindle says that gives this group considerable influence. "Children have enormous influence over the spending of parents and do influence the purchase of big ticket items such as cars and holidays," he says. That doesn't mean this group exists solely in the home environment, content to set trends for their family. Dr Tania Bucic, lecturer in the school of marketing at the University of NSW, says a defining characteristic of generation Y is a love of travel. Put off by the high cost of housing, these people opt to spend their money on experiences now and defer buying property until later. "It's all about experiences and living for now, making the best of what you've got now because you don't know what's going to happen in the future," Bucic says. For obvious reasons, members of gen Y are proficient in technology and willing and able to access information. But that doesn't mean they digest every message thrown their way. Because of their understanding of media and advertising, generation Y are skilled at filtering information and selecting only what they need, Bucic says. "[They're] not afraid to ask questions: why am I here, what are you going to give me, how are you going to deliver what am I paying for? They are not as willing to spend their money on things they're unsure about, [so] the benefit of what they're getting has to be well defined." This is the barrow social researchers and market research companies push when explaining the need for their research. Traditional advertising campaigns are not only ineffective at reaching the trend-setting generation Y, researchers claim, but they also fail to cater for the sub-sectors or "tribes" within the group. For example, take the Spin Sweeney Report: The definitive lifestyle guide to 16- to 28-year-olds in Australia 2004-05, which identifies six "tribes" of young Australians - each with their own traits and idiosyncrasies. "Life Junkies" are defined as those who pack as much into their lives as possible, while "Burbanites" have traditional values and place family relationships ahead of material gain. "Drifters" are detached and introverted and have relationship issues with their parents or partner, while those known as "Glitterazzi" live for now with next to no social conscience. "Life mappers" (focused on career and material accumulation) and "renegades" (who live life on the edge and reject responsibility) are the remaining groups. The research seems to back experts' claims that this generation of young people is more fragmented than previous groups, Bucic says. "They don't fit into a trend, they're more about being themselves above and beyond anything else ... they're not that interested in being part of a social norm." This in turn, she says, is contributing to a rise in niche marketing to tap sub-groups within the population. So brace yourself. Research, books and reports dissecting the lifestyle habits of young people will increase as companies try to tailor campaigns. "[The body of research] is definitely growing," McCrindle says. "No one in this day and age wants to make a big advertising decision without some research to cover themselves and generally ensure they're on the right track."talking about a generationMarket research doesn't just benefit organisations and companies hoping to secure your disposable income. Examining young people's lifestyles is also a lucrative area for researchers. A copy of Spin Sweeney's lifestyle report will set you back $14,000. Another social trends and market research company, Heartbeat Trends, offers its study of 20-somethings, Literati, to organisations for $20,000. Neer Korn, a director of Heartbeat Trends and co-author of the study, says it is money well spent for companies preparing a million-dollar advertising campaign. "Spending on research makes sense," Korn says. "It's so easy to get it wrong." The price also helps offset the cost of producing the report, which involves conducting focus groups, producing CD-Roms and short documentary films. It takes a team of 10 researchers about five months and costs "well into the six figures," Korn says. However, Fabio Buresti, strategic planner at the ad agency Saatchi & Saatchi, believes such reports have limited benefits. "From an agency's point of view, they're good for very top-line kind of information, but you're not going to get any deep consumer insights from them; they're not going to form the basis of your campaign," Buresti says. "You could spend a quarter of the money doing some focus groups." One method Buresti uses when developing a campaign for his clients is Saatchi's exploring tool, where he hangs out with a group of guys and girls for a week or two with a video camera. The results help him understand their mindset, he says - the key to any successful brand. "Commonsense really does prevail," he says. "If you've got a brand, understand how the market interacts with your brand and how they perceive it and then really understand how your brand can connect and communicate with them."Are the experts right about gen Y? Have your say at radar.smh.com.au.