the next generation

Transcription

the next generation

20121210-Affluent.qxp
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TREND REPORT
Insights
THE NEXT GENERATION
Which millennials are already luxury consumers and
which ones will be living large in the next decade? Here’s how
to talk to those spending now, and prepare for the future.
With strategic partner
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Insights
AFFLUENCE IN AMERICA
AFFLUENCE IN
AMERICA:THE NEXT
GENERATION
CONTENTS
INTRODUCTION
3
GEN Y, AFFLUENCE AND LUXURY:
Steve Kraus, Ipsos MediaCT
4
GENERATION GAP
6
THE FIVE SEGMENTS OF GEN Y
HOUSEHOLDS ($100,000+ HHI)
9
SPENDING PATTERNS
14
OUTLOOK AND ATTITUDES
17
CAREER PATHS LEAD TO
AFFLUENCE
19
SUCCESS STORY: BMW 3 SERIES 20
What the luxury consumers
of the future look like today
A conventional image forming for young adults under age
35, known as Gen Y or the millennials, is that they are up to
their ears in student debt; either unemployed or working at
part-time jobs that don’t use their expensive college degrees or
at unpaid internships; living in their parents’ basements, delaying both marriage and buying their first homes; and generally
besieged on all sides by the tough economic hand they’ve been
dealt. However, there is one subset of this group more likely to
rise above this bleak portrait: those in households making more
than $100,000 a year in annual income.
The affluent Gen Yers are the future consumers of luxury
goods and services, and they differ in important ways from their
baby boomer and Gen X parents, who experienced very different economic cues during their formative years. During the
boom times of the early years of the past decade, luxury marketers targeted “mass affluents,” those consumers who were
aspirational luxury consumers and who were feeling flush
thanks to the rising value of their biggest asset, their homes, and
who didn’t mind using credit cards to purchase the signifiers of
a wealthy life. Luxury marketers rolled out more accessible
offerings in order to reach this wider market. But after the housing bubble burst, mass affluent consumers have reverted to the
By Emma Johnson
21
MEDIA HABITS
CASE STUDY: COMEDY CENTRAL 22
“GEN Y IS
ENTERING THE
WEALTHACCUMULATION
PHASE, AND
COMPANIES
THAT ARE
STRUGGLING
SHOULD LOOK
AHEAD.”
— Jason Dorsey,
chief strategy officer of
the Center for
Generational Kinetics
JUMPING THE SHARK
George Scribner, Digitas
24
CONCLUSION
25
CHARTS:
7
AFFLUENT AMERICA
FIVE SEGMENTS OF AFFLUENT GEN Y
HOUSEHOLDS
11
WHERE DO THEY LIVE: GEN Y
13
GEN Y SPENDING POWER
15
MEDIA USE AND ACTIVITY
23
PowerPoint slides of charts
and infographics featured in
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to download. Go to
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CONTINUED ON P. 5
AD AGE INSIGHTS TREND REPORT
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Insights
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GEN Y:AFFLUENCE AND LUXURY
Perspectives from the Mendelsohn Affluent Survey
The Mendelsohn Affluent Survey has been tracking the lives,
lifestyles, purchase patterns and media habits of affluent consumers
for more than 35 years. The study gives us a unique perspective on
the dynamics underlying affluence, luxury and generational change.
It’s no secret that the nature of luxury has changed in recent years.
In the boom years of 2004 to 2007, affluents felt wealthier than they
actually were, and expected that wealth to increase—and they spent
accordingly. The Great Recession reset those mindsets, ushering in a
new perspective on luxury, and a new (more upscale) core target for
luxury marketers. (In fact, nearly two-thirds of affluents agree, “The
definition of luxury today is not the same as it was five years ago.”)
Compared with just a few years ago, luxury today is more personal,
more individually defined, more intimate, more subdued, more occasional, more value oriented and more concentrated among a smaller
group of truly elite consumers.
MILLENNIALS
Just as times have changed, and perspectives on luxury have
changed, so too have generational dynamics. Marketers in a variety of
categories have targeted baby boomers, literally for decades, as their
huge numbers, discretionary incomes and willingness to spend made
them attractive prospects. Today, although boomers remain a large
and attractive target for many, they present challenges as well. Many
are delaying and downsizing retirement plans, as they feel the pinch
of being sandwiched between caring for elderly parents, and tackling
the college bills of their children.
Today, many marketers are increasingly setting their sights on
today’s young adults, often known as Gen Y or millennials, and this
report by Digitas synthesizes many sources to offer insights on this
generation. Although Gen Y lacks the sheer numbers and demographic force of baby boomers, it nevertheless represents substantial numbers and spending capabilities.
In our work, as we enter the 36th year of the Mendelsohn Affluent
Survey, we have strived to enhance our survey and ensure that we represent Gen Y fully and accurately. Two years ago, we switched from a
sampling approach based on affluent heads-of-house to a sampling
approach that accurately represents all affluent adults. As a result, we
more fully represent different subsegments of Gen Y, including not only
those who head their own households, but also those who may be living
with their parents, but who nevertheless command substantial spending
resources. As this report reveals, segmentation is crucial to understanding the opportunities within the diverse generation that is Gen Y.
—STEPHEN KRAUS, senior VP-chief insights officer,
Audience Measurement Group, Ipsos MediaCT
For an explanation of how the Mendelsohn
Affluent Survey is conducted, see page 5.
4 · DECEMBER 10, 2012
LUXURY THEN
A SHARED, COLLECTIVE SENSE OF WHAT
CONSTITUTES “LUXURY”
AN EASY WILLINGNESS TO SPEND AT THE HIGH-END,
AND PAY A PREMIUM FOR TRUE LUXURY
A CONSISTENT LIFESTYLE OF HIGH-END CHOICES (OR AT THE
VERY LEAST, THE ASPIRATION TO SUCH A LIFESTYLE)
“MASS AFFLUENT” CONSUMERS ENGAGED IN
WIDESPREAD “ASPIRATIONAL” SHOPPING BEHAVIOR,
AND LUXURY MARKETERS RESPONDING ACCORDINGLY
WITH LOWER-PRICED BRAND EXTENSIONS
LUXURY TODAY
89% AGREE, “LUXURY IS IN THE EYE OF THE BEHOLDER”
89% AGREE, “WHEN I DECIDE TO PURCHASE A LUXURY ITEM,
I GO OUT OF MY WAY TO FIND THE BEST PRICE POSSIBLE”
92% AGREE, “TO ME, SMALL INDULGENCES
CAN BE JUST AS MEANINGFUL AS PURCHASING
A HIGH-END LUXURY PRODUCT”
LUXURY PURCHASES MORE CONCENTRATED
AMONG ELITE GROUPS SUCH AS “ULTRA AFFLUENTS”
(THE 2%-3% OF AMERICANS WITH $250,000+ HHI)
SOURCE: MENDELSOHN AFFLUENT SURVEY POINT-OF-VIEW FORUM,
“LUXURY IN 2012 AND BEYOND”
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Insights
MENDELSOHN AFFLUENT SURVEY
Digitas used data from this survey to create its segments of Gen Y affluent households
The Mendelsohn Affluent Survey is used by hundreds of organizations for market sizing, consumer insights and media planning. Among
other uses, it serves as a currency study for affluent print advertising, and is an agreed-upon source of audience-measurement data used by
agencies, advertisers and media companies in negotiating the cost and placement of advertising. It also serves as a single source of information about the complete range of affluent media habits across platforms, including television, internet, computers, smartphones and tablets.
The Mendelsohn Affluent Survey uses rigorous sampling and weighting methodologies to ensure the results are truly projectable to the population of America’s 59 million affluents, providing accurate audience and market-sizing information. The Mendelsohn Affluent Survey is an
annual study, complemented by the bimonthly Mendelsohn Affluent Barometer, which tracks affluent attitudes, optimism and buzz.
THE 2012 MENDELSOHN AFFLUENT SURVEY AT A GLANCE
Definition of “affluent”
Adults 18+ with $100K+ household income
Population represented
59 million U.S. affluents
Sampling approach
Random probability sample drawn from address-based sample frame
Methodology
28-page mail survey
Conducted
March–July 2012
Sample size
13,794
CONTINUED FROM P. 3
middle class, and are now behaving and spending in a way that
reflects that reality. While mass affluent consumers—such as
those with $100,000 or more in annual household income—
were participating significantly in luxury markets in 2005, the
disappearance of aspirational luxury consumers means that
today’s luxury marketers increasingly have to refine their target
upward, toward those with $200,000 in household income, or
even more.
Ad agency Digitas investigated these Gen Y consumers and
their approach to luxury. Building on Digitas’ 2011 report,
Affluence in America, which looked at all wealthy households,
this new report synthesizes data and information from a variety
of sources, including the U.S. Census Bureau, media coverage
and interviews with marketers, to examine the next generation
of luxury consumers.
The affluent segment of Generation Y, those ages 18 to 34,
has the largest current and potential spending for luxury items.
Gen Y’s spending power is almost $200 billion a year, according
to marketing research firm Kelton Research.
“Gen Y is starting to enter the wealth-accumulation phase,
and companies that are struggling should look ahead,” said
Jason Dorsey, chief strategy officer of the Center for
Generational Kinetics, a research and consulting firm. “Based
on our and other research, by 2017, Gen Y could outspend
boomers. As boomers move on, they’ll be spending less, but
Gen Y is just getting started.”
The focus on Gen Y has gained urgency due to the postrecession belt tightening that has all income brackets fearful of
losing their jobs and spending more conservatively. The past
two years have seen a bit of a “luxury rebound” among those in
the very top income brackets, who have fared well because of
high-end real estate holding value and growth in the stock market. The Gen Y children of these top-earning households have
benefited as well, often by being able to use family assets like
real estate and automobiles that would be out of reach on their
salaries alone.
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GENERATION GAP:
BOOMERS VS.
MILLENNIALS
As boomers change their spending patterns,
luxury marketers need to shift focus to Gen Y
Why should marketers pay attention to the millennials
now? They represent the biggest group of consumers to come
along since the baby boom generation, and at 71 million, are
37% of adult consumers. In the next decade, this group will
move through their 20s and early 30s, prime years for establishing households, building careers and starting families. Those
living in households with income above $100,000 number 16.6
million already, a sizable target that will likely gain members as
its members mature.
When it comes to selling luxury products, marketers need to
shift their focus from the boomers, whose consumer patterns
for luxury patterns are evolving as they age. This group—once
luxury brands’ obsession—is slowing its spending on fashion,
travel and luxury vehicles. Now, affluent older Americans are
spending their money on their children’s college educations
and saving for their retirements. As boomers continue to age, all
indications suggest that their spending will grow for health and
wellness products when compared with other product categories. “Brands riding the wave of boomers may find that they’ll
fall off a cliff if they don’t adapt,” warns George Scribner, Digitas
senior VP-account planning.
FORCES SHAPING GEN Y
Meanwhile, the forces shaping Gen Y’s consumer outlook are
very different than the baby boomers, who grew up in a period
when conspicuous consumption was celebrated. Gen Y has
6 · DECEMBER 10, 2012
grown up during a time when a “green” ethos was ascendant,
and terms like “sustainability,” “organic,” “fair trade,” “authenticity” and “artisanal” all gained credibility and respect. Gen Y
is also of the generation that was raised with praise. They are
generally eager to chronicle their achievements and get their
rewards for doing so, whether it be with a “like” or a “check-in.”
Having come of age when every house had a VCR and then a
DVD player, ATMs have always dispensed cash, and information, music, movies and TV were often free on the internet if
you knew where to look, this is also a group that expects to get
what they want when they want it, and as consumers, usually
despise being told to wait. Paradoxically, their childhood was
punctuated with carefully orchestrated releases of must-have
items where they (or their parents) lined up to wait for Tickle
Me Elmo, Power Rangers, Pokémon, the next Harry Potter book
or the latest Call of Duty and Halo video games. If a product represents an exclusive experience or gives these consumers bragging rights, they will queue up to be among the first to purchase, a trait Apple has exploited quite well. These are aspects
to carefully consider when crafting marketing programs and
messages aimed at this generation.
Many luxury retailers have revamped their brands to attract
this younger, affluent group. Burberry, Saks Fifth Avenue and
BMW are all examples of legacy brands that have tweaked their
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Insights
AFFLUENT AMERICA
Gen Y represents 31% of consumers (18-64) who live in households with $100,000+ annual income
GEN X
GEN Y
37% OF TOTAL
POPULATION:
71.2 M
AGES: 18-34
YEARS BORN:
1978-1994
21% OF TOTAL
POPULATION: 39.8 M
31%:
16.6 M
AGES: 35-44
YEARS BORN: 1968-1977
22%:
11.9 M
TOTAL HOUSEHOLDS WITH
$100,000 AND OVER ANNUAL
INCOME (18-64):
53.3 M
BOOMERS
42% OF TOTAL
POPULATION:
80.9 M
AGES: 45-64
YEARS BORN:
1948-1967
47%:
24.8 M
TOTAL U.S.
POPULATION:
191.9 million
AGES: 18-64
YEARS BORN:
1946-1994
SOURCE: AMONG ADULTS 18-64. 2011 CURRENT POPULATION SURVEY, U.S. CENSUS BUREAU
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product and molded their marketing to appeal to this demographic—all with resounding success. But many more opportunities abound.
The good news is that affluent members of Generation Y are
willing to try new brands, and will move from label to label
throughout their lifetimes, said Milton Pedraza, CEO of the
Luxury Institute, an affluence research firm that conducted its
own survey on wealthy people ages 21 to 34.
The bad news? “It’s a myth that brands are carried from cradle to grave,” said Pedraza. “A lot of women are in their 30s and
successful in their careers before a brand like Chanel will appeal
to them.”
The key is to not only embrace new technology like mobile
devices and social media, but to also stay focused on the retail
environment. “This group is buying many more products
online and by phone, and they rely heavily on online reviews
and recommendations by way of social media,” said Pedraza.
“The one surprise is that the in-store experience is still sticky.
The retail store is not going away.”
OPTIMISM AND CONFIDENCE
In many ways, this affluent group of Gen Y is just what its
stereotype suggests: These young people are open-minded,
confident and seek professions in creative and meaningful
careers. They are also driven by technology and a need to keep
up with brands. No surprises there.
Cable channel Comedy Central is so invested in reaching
Gen Y that it undertook a survey with TRU Insights and Insight
Research to understand this group’s political beliefs and behaviors leading into 2012’s presidential election. The survey looked
at all of Gen Y, not just the affluent, but the findings do indicate
what their peers believe and what this generation views as
socially acceptable.
What the survey found is that Gen Y’s predisposition to
being part of a group means that its cohorts are more likely to
crave a middle ground and set partisanship aside. When trying to find the right tone for advertising, marketers would do
well to remember Gen Y believes in equality and is predisposed toward solutions that either benefit many, or at least
don’t impose harm on others. This is a generation, after all,
that grew up celebrating Martin Luther King Jr. Day, first
observed as a federal holiday in 1986, when most were still in
grammar school.
Cause marketing and charitable tie-ins also resonate with
this group, which grew up with parents who encouraged
activism and community service. Comedy Central’s survey
found that 53% of this group believe it is their responsibility to
bring about change in the world, while 68% believe their generation has the most power to effect change. Gen Y, however, is
less likely to take to the streets than they are to take to their key-
8 · DECEMBER 10, 2012
boards; 63% would rather protest online than in person and
66% agreed that it was possible to create the most change by
spreading the word online than standing on a street, rallying
and protesting. And in keeping with this group’s optimism and
confidence, 22% believe they’d make a great president.
Digitas found that affluent members of Generation Y are
strongly driven by expectations of future wealth and the products that accompany that lifestyle—a trend researchers attribute
in part to this group’s having grown up in the comfort of a prerecession economic boom.
“Studies show that among young Americans, materialism is
at an all-time high,” said Jean Twenge, author of “Generation Me:
Why Today's Young Americans Are More Confident, Assertive,
Entitled—and More Miserable Than Ever Before,” and professor
of psychology at San Diego State University. “It comes from the
media’s glorification of the rich and famous, yet there is rarely a
backstory about how hard those people worked to get there.”
Digitas found many surprising qualities of Gen Y—perhaps
especially how dramatically their habits differ as affluence
increases, and the source of this group’s money. The groups
whose spending more aligns with middle-class patterns tend to
display very strong family values and live in more Southern and
rural locations. Despite working in traditionally high-paying professions, these segments are not likely to be prime consumers of
luxury products because they are prioritizing family needs above
career advancement.
ASSETS OF PARENTS
By contrast, a large portion of wealthy Generation Y that does
indulge in luxury buying lives at home with their parents, and this
subset spends between two and four times their own income—signifying one of the most important trends of affluent Generation Y,
and one of the most surprising findings. A large percentage of
affluent millennials are not earning their money, but attaining
wealthy status by way of their parents’ assets. If you don’t believe
it, just spend a few minutes browsing the Tumblr titled Rich Kids
of Instagram (richkidsofinstagram.tumblr.com/) for the numerous
pictures of trips on private planes, pool parties at Hamptons
estates, closets full of shoes and hands festooned with jewelry and
expensive watches.
“It’s important not to count out this generation based on their
personal income,” said Digitas’ Scribner. “Many of the younger
affluent Gen Y are grafting their parents income onto their own.”
Currently, this group is influencing their families’ spending, but
whether this is a lifestyle that they can sustain throughout their
own lives remains to be seen. Many have chosen careers that do
not put them on track to acquire their own wealth at a level equal
to their parents. Marketers of luxury goods must balance catering
to this group now with cultivating those who are building their
own wealth and assets as they grow in their careers, and who will
eventually support themselves in the luxury marketplace.
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Insights
THE FIVE SEGMENTS
OF AFFLUENT GEN Y
A millennial currently living in an affluent household
may not necessarily be in one in the next decade
Digitas broke the affluent members of Generation Y into five
subsets defined by income, spending habits and household
structure, as well as examining careers, geography, attitudes and
values. One surprising finding was that Gen Y followed the pattern
of all generations in that $200,000 annual household income is the
minimum threshold for the higher spending and brand preferences
one typically associated with luxury. All other groups might be
better considered on their way to attaining true wealth, while those
age 35 and older who are earning between $100,000 and $199,000
are considered more middle class in their spending habits and
attitudes, and less luxury focused, as the earlier Digitas’ Affluence in
America asserted. (See Affluence in America: 2011, p. 10)
Let’s look at the various characteristics of the five Gen Y
segments:
ASPIRING HEADS OF HOUSEHOLD
This is by far the least wealthy of the Gen Y subsets. With
household incomes of between $100,000 and $199,000, the Gen
Yers in this group tend to be married with children and have a mean
age of 30.
This group highlights the fact that one’s career is not the only
determinant of wealth, as family choices have a prominent impact
on lifetime wealth. There are many overlaps between aspiring
heads of household (the least affluent of all five segments) and
affluent heads of household (the most affluent). Both have mean
ages of 30, tend to be married with children and are established on
“IF A BRAND WANTS TO HAVE
SCALE AMONG GENERATION Y,
THE DISCUSSIONS OF RED VS.
BLUE STATES AND COASTS VS.
SOUTH AND RURAL VS. METRO
ARE ALL VERY MUCH AT PLAY.
THIS GROUP IS NOT ISOLATED
FROM THE DEMOGRAPHIC
PATTERNS OF THEIR PARENTS.”
— George Scribner
Digitas senior VP-account planning
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Insights
A 2011 DIGITAS REPORT FOUND:
$200,000
their career paths. Both groups derive their wealth from their
careers (as opposed to from their parents), and both pursue
careers in technology, financial services and banking.
The vast majority of aspiring heads of household lists family as
their top priority. This could impact future earnings as they tend to
place a greater importance on work-life balance. Aspiring heads of
household are also more likely to live in non-metro areas where
there are fewer professional opportunities and less earning
potential. Moving forward, this large and growing group will
occasionally indulge, but it needn’t be an immediate priority for
luxury marketers.
“This group shouldn’t be counted out, but luxury marketers
should not focus on them,” said Digitas’ Scribner.
ASPIRING CHILDREN
ANNUAL HOUSEHOLD INCOME
MEANS YOU ARE LIVING A CONSISTENTLY
AFFLUENT LIFESTYLE IN AMERICA
IF YOU ARE MAKING
$100,000-$199,000
annual household income
and are 18-34, you are
most likely to attain
an affluent lifestyle and
you are already exhibiting
behaviors and attitudes
of this group
THE “OVER-35s”
making $100,000-$199,000
annual household
income are back to being
middle class
8.8 MILLION
number of head of
households in America
who are truly affluent
CAREER
is the best determinant
and predictor of affluence
BUSINESS
OWNERSHIP
increases with affluence
THE CREATIVE CLASS
that fueled our
innovation economy are
affluent, but not in the
upper tiers of the rich
AFFLUENCE
translates to more
devices owned and more
specialized media
consumption
THE SOUTH
has attracted or grown a
dominant share of affluent
Americans. But, the south
shows the greatest divide
between the “haves” and
“have-nots.”
This group has a mean age of 23 and lives with parents with a
household income of between $100,000 and $199,000. The
personal income of these young adults is modest, but their
expenditures are nearly four times that sum—largely owing to their
parents’ relative wealth and their low living expenses. When
members of this group do work, often in retail positions, they tend
to have jobs as opposed to careers, and those who do have
professional positions tend to be in passion careers like acting and
entertainment.
Among aspiring children, household income is seven times that
which they earn on their own. That said, this group’s buying
patterns tend to be focused on price and value over true luxury
spending. While they enjoy shopping, luxury-spending attitudes
don’t mesh with their earnings or their work attitudes.
EMERGING HEADS OF HOUSEHOLDS
This set’s members have a mean age of 28, are unmarried but
live independently of their parents and have their own
household income of between $100,000 and $199,000.
This is a frugal group with solid income, as they spend just
83% of their income and tend to be in that creative, upwardly
mobile class that is typically associated with Gen Y. In many ways,
this is the younger version of the more established affluent head
of household segment, as they tend to live in urban, coastal
markets and are actively pursuing careers in financial services,
architecture, advertising, real estate development and
technology. Right now their job titles are middle management,
but many are on the path to move up the ranks, and thus likely to
earn their way into a wealthier lifestyle in the next decade.
A common sentiment among this group is that their work life
is all-consuming, and that they have yet to master balancing the
personal with the professional aspects of their lives.
“This group is definitely upwardly mobile—they are in the
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Insights
FIVE SEGMENTS OFAFFLUENT GEN Y HOUSEHOLDS
Green circles indicate increasing levels of attitudes and behaviors that reflect wealthy spending patterns;
blue circles represent more middle-class attitudes and spending patterns.
EMERGING HEADS OF
HOUSEHOLD
AFFLUENT HEADS
OF HOUSEHOLD
6%
■ ANNUAL HOUSEHOLD INCOME:
$100,000-$199,000
■ UNMARRIED
■ MEAN AGE: 28
■ PROJECTED POPULATION: 776,000
■ ANNUAL HOUSEHOLD
INCOME: $200,000+
■ MARRIED WITH CHILDREN
■ MEAN AGE: 30
■ PROJECTED POPULATION:
1,021,000
5%
GEN Y
TOTAL AFFLUENT POPULATION
(ANNUAL HHI OF $100,000+):
PERCENT OF
GEN Y WITH HHI
OF $100,000+:
16.6 MILLION
12%
AFFLUENT
CHILDREN
■ ANNUAL
HOUSEHOLD
INCOME:
$200,000+
■ LIVING WITH
PARENTS
■ MEAN AGE: 23
■ PROJECTED
POPULATION:
1,915,000
29%
ASPIRING CHILDREN
■ ANNUAL HOUSEHOLD
INCOME: $100,000-$199,000
■ LIVING WITH PARENTS
■ MEAN AGE: 23
■ PROJECTED POPULATION:
7,701,000
PERCENT OF GEN Y WITH
HHI OF $100,000+:
48%
■ ANNUAL HOUSEHOLD INCOME: $100,000-$199,000
■ MARRIED WITH CHILDREN
■ MEAN AGE: 30
■ PROJECTED POPULATION: 4,724,000
SOURCES: U.S. CENSUS, DIGITAS,
2012 MENDELSOHN AFFLUENT SURVEY
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Insights
ASPIRING CHILDREN:
have grown accustomed to.
With little household expenses and access to their parents’
significant wealth, this group has the largest amount of
discretionary income to spend on luxury. This segment prefers
designer and luxury brands and is willing to pay a premium for
cosmetics and toiletries. There are clear behaviors associated with
the truly affluent in this group, such as being drawn to luxury
vacation activities like snowboarding, snorkeling and surfing.
“Even though their incomes are low, their vacations reflect
their household income,” said Scribner. “These are all activities
that require buying a package—you can’t just walk out of your
house and do them.”
Retail job rather than career or pursuing “passion”
careers like acting or entertainment
AFFLUENT HEADS OF HOUSEHOLD
CAREER PATHS
Jobs are a good indication of future wealth
ASPIRING HEADS OF HOUSEHOLD:
Technology or finance, but in non-metro region, focused
on family needs first
EMERGING HEADS OF HOUSEHOLD
Creative, upwardly mobile in financial services,
technology, architecture, advertising and real estate
AFFLUENT CHILDREN
“Mission” careers like education, the arts, nonprofits or
counseling with salaries well below their parents
Traditional high-paying careers like medicine, legal and
finance, as well as software design and engineering
Members of this segment are solidly established in their careers
and wealthy in their tastes, spending habits and pastimes. This
group’s mean age is 30, and members tend to be married with
children.
Affluent heads of households work in traditional high-paying
careers including medicine, law and financial services, as well as
technology fields like software design and engineering. Many hold
senior executive titles like CEO, CFO and owner-president. This
group lives mainly on the coasts in major metropolitan areas where
technology and professional services jobs abound. It is also not
surprising that they are likely to say that work dominates their lives.
RED STATE, BLUE STATE
CONTINUED FROM P. 10
right careers, live in the right markets and are ambitious,” said
Scribner.
AFFLUENT CHILDREN
With a mean age of 23, these are the millennials who are living
in homes with household income of at least $200,000, but tend
to have chosen careers that do not at this time put them on a path
to achieve that level on their own.
This group gravitates toward “mission professions” like
education, nonprofits, counseling and the arts. Retail jobs are
also popular.
Still, this is a more important segment for luxury brands.
Despite these low-income careers, affluent children spend nearly
three times what they earn, and their household income for their
families is a surprising 10 times that of their own earnings. We see
the home value and the access they have to a number of homes
rise dramatically for the affluent children compared with other
groups, as these members of Gen Y lean heavily on their parents’
wealth, as opposed to relying on their own careers to provide for
all of their spending.
Because this group’s members have a proven taste for luxury,
they will likely continue to gravitate toward brands at a level they
12 · DECEMBER 10, 2012
Affluent Generation Y is not isolated or monolithic. They are
scattered across the country in rural and urban areas, on both
coasts, in the South and in the heartland. “If a brand wants to have
scale among Generation Y, the discussions of red vs. blue states,
and coasts vs. South and rural vs. metro are all very much at play,”
said Scribner. “This group is not isolated from the demographic
patterns of their parents or other Americans.”
It is surprising to some that the South—spanning from Texas to
Delaware—is the hub of wealth across all generations, with about a
third of each of the five subsets of affluent Gen Y living in this
region. However, the most affluent group—the “affluent heads of
household”—live primarily in the Northeast and on the West Coast.
This can be explained by the fact that their careers determined this
group’s affluence, and their jobs in finance, law, medicine,
technology and media tend to be centered in metro areas on each
coast. (See “Where They Live,” p. 13)
Insight No. 1 Head-of-household income of at least $200,000 is
the minimum threshold of wealth and luxury interest for Gen Y—
just as it is for all generations.
Insight No. 2 There are more affluent households in the South,
but the Northeast and West have a dominant share of Gen Y
affluent heads of household.
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Page 13
Insights
WHERE THEY LIVE:AFFLUENT GEN Y
The most affluent group lives primarily in Northeast and West.
WA
MT
VT NH ME
ND
OR
MN
ID
MA
SD
UT
CA
AZ
CO
PA
IA
IL
KS
OK
NM
TX
NJ
DE
MD
DC
OH
IN
MO
WV VA
KY
CT
NC
TN
SC
AR
MS
AK
RI
MI
NE
NV
NY
WI
WY
AL
GA
LA
HI
WEST
MIDWEST
SOUTH
NORTHEAST
23%
20%
32%
25%
Slightly higher representation of Affluent and
Emerging Heads of
Household, with other
groups evenly
distributed here.
More Aspiring Heads of
Household than any
other Gen Y groups.
Higher representation of
Gen Y groups Aspiring
Heads of Household,
Emerging Heads of
Household and Affluent
Children.
Higher representation of
Gen Y groups Aspiring
Children, Affluent
Children and Affluent
Heads of Household.
DECEMBER 10, 2012 · 13
Insights
12/5/2012
1:18 PM
Page 14
SPENDING PATTERNS
AND DISPOSABLE
INCOME OF GEN Y
Millennials are moving away from glamorous luxury
and moving toward authenticity, utility, nostalgia
One powerful finding is that the members of Gen Y living
with their affluent parents have far more disposable income
than their peers. For example, aspiring children—those living
with their parents—earned one-third of what members of the
aspiring heads of household group did, and yet they spent more
than three times their annual earnings. Meanwhile, the aspiring
heads of household spent slightly less than what they earned.
The group with the largest disposable income overall was the
affluent children, who earned far less than their affluent heads
of household peers, but spent more than any segment. In fact,
the only groups that hit that magic $200,000 point, which signifies truly wealthy behaviors, are affluent children and affluent
heads of household, who rely on a second household income to
achieve that income mark.
It is clear that as levels of affluence increase, so too do affluent attitudes and behaviors. The more disposable income that
members of Generation Y have, the more likely they are to buy
luxury products. An affinity to buy fashion brands, including
Ermenegildo Zegna, Gucci, Marc Jacobs and Burberry,
increased across segments, correlating with increased disposable income. Automotive brands, too, reflected this trend, as
the wealthier the members of Gen Y become, the more likely
they are to buy an Audi, BMW or Infiniti.
But an overriding theme among Gen Y was a move away
from glamorous luxury, and a move toward authenticity, utility
and nostalgia. Ecological concern, a dampening effect of the
14 · DECEMBER 10, 2012
recent economic downturn and the influence of parents with
whom they are close all impact this group’s tastes.
The research can explain different spending habit among
segments. The Aspiring Heads of Household, for example, were
likely favor family oriented brands, prioritizing their family
above status. This group—which again, tends to live in less
urban areas—was drawn to family-oriented activities including
hunting, fishing, boating and festivals.
Meanwhile, the most affluent group—the affluent heads of
household—was willing to pay a premium for luxury cosmetics
and products or experiences that are truly exclusive.
Insight No. 3 In America, millennials are either born into or
merge into affluence. Gen Y luxury consumers are either borrowing the wealth of their affluent parents or leveraging dual
incomes to reach the $200,000 household income threshold.
Insight No. 4 Children segments live well beyond their means
because they can access their parents’ wealth.
AUTHENTICITY AND SELF EXPRESSION
While affluent Generation Y as a whole is attracted to trends
and is as quick to adopt the latest technology and fashion as the
generations that came before them were when they were in
CONTINUED ON P. 16
12/5/2012
1:18 PM
Page 15
Insights
GEN Y SPENDING POWER
Millennials living with parents spend far more than they earn
SPENDING POWER
THEIR FINANCIAL BEHAVIORS
Heads-of-Household segments spend on
home and family expenses.
Heads-of-Household segments are more engaged with their finances.
AVERAGE HOUSEHOLD INCOME
AVERAGE PERSONAL INCOME
AVERAGE EXPENDITURES
I KEEP UP
WITH THE
FINANCIAL
NEWS
I AM ACTIVELY
INVOLVED IN THE
MANAGEMENT OF
MY PERSONAL
FINANCES
I LIVE FROM
PAYCHECK TO
PAYCHECK
IT IS IMPORTANT
TO ME THAT I
MAKE AS MUCH
MONEY AS
POSSIBLE
32%
72%
25%
49%
131
118
99
94
17%
52%
27%
50%
70
85
108
96
35%
73%
18%
65%
141
121
72
124
21%
59%
28%
60%
86
96
112
116
43%
73%
11%
57%
177
120
45
109
ASPIRING HEADS OF HOUSEHOLD:
$132,847
$59,119
INDEX:
$53,968
ASPIRING CHILDREN:
$136,643
$20,440
$70,599
INDEX:
EMERGING HEADS OF HOUSEHOLD:
$138,118
$60,453
$49,995
INDEX:
AFFLUENT CHILDREN:
$451,437
$39,609
INDEX:
$93,397
AFFLUENT HEADS OF HOUSEHOLD:
$341,556
$139,612
$85,813
INDEX:
SOURCE: MENDELSOHN AFFLUENT SURVEY, 2012, GEN Y (18-34)
DECEMBER 10, 2012 · 15
Insights
12/5/2012
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Page 16
CLASSICS – Luxury brands like Burberry, Chanel and YSL have enjoyed a resurgence in past decade.
their formative years, Gen Y is also seeking out the authentic,
the unique and the exclusive. Classic brands like Ray-Ban,
Levi’s, Volvo, Chanel and YSL have enjoyed a resurgence over
the past decade.
“As a result of the recession, one of the biggest shifts is that people are more drawn to classics that will always look amazing, but
never be considered excessive,” said Sara Bamossy, a media planner with Saatchi & Saatchi in New York. “No one wants to be seen
as a show-off.”
Authenticity and self-expression are other themes that drive
this demographic. “This group is drawn to products they feel are
‘ever-cool,’” said Bamossy.
A member of this generation, for example, may drive a beat-up
Toyota pickup truck worth $3,000, but use the vehicle to carry
around a $10,000 mountain bike. “They are selective in being
excessive, and will spend money on things that are most important
to them—not necessarily things that are the latest trend,” she said.
This is the same group that is drawn to revived brands.
Burberry, noted as a wild success with this demographic thanks to
its commitment to its heritage design and quality—but given an
updated look and dedication to reaching younger markets with
social media.
“Younger consumers are drawn to quality and authenticity,
and things that are true to what they are and owning it,” said Maya
Draisin, Wired’s associate publisher of marketing. “They define
that to being what is true to what it is, knowing who you are and
owning that—even they own it in a new way. Burberry didn’t
diverge from who they are, but put out a new look.”
16 · DECEMBER 10, 2012
NOSTALGIA
Nostalgia is another theme, explaining how heritage brands
like Louis Vuitton, Chanel, Lacoste and BMW dominate the luxury brands bought by affluent Gen Y.
Wired’s Draisin said in a high-tech, ever-evolving marketplace,
tech-savvy consumers are drawn to products with a sense of history.
“People are so entrenched with the future, they need something to ground them,” said Draisin.
She pointed to the annual Wired pop-up created in New York
every holiday season to showcase new gadgets and technology.
“Every year, the collection has a nod backwards,” she said. For
example, the 2011 Times Square location featured portraits of
celebrities like Madonna and Jimi Hendrix made from the insides
of cassette tapes, and a 24-karat gold Atari 2600 priced at $6,650.
UTILITY
Saatchi & Saatchi’s Bamossy said another driver of this group
are products that make specific sense to the user. One example:
younger members of affluent Gen Y who have a $900 payment on
a new Audi, but a $500 rent payment because they live in a
shared house with friends—and have no expenses associated with
a spouse or children.
Similarly, many are canceling cable subscriptions, but spending money on the most expensive iPad and premium subscriptions to Hulu, Netflix and HBO on Demand.
“They are willing to spend money on products they will use
and that will make their lives better—and that does not rule out
the inexpensive,” said Bamossy.
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Page 17
Insights
OUTLOOK AND
ATTITUDES
CONFIDENT, CAUTIOUS
Millennials are confident in their opinions
and abilities, but worried about the economy
INSIGHT NO. 5 Heads of household segments are the most
engaged with their personal finances out of necessity, but a
proactive knowledge of financial news is important to affluent
children too.
INFORMATION SEEKERS
on online information. In a recent New York Times article
(http://nytimes.com/2012/03/10/business/younger-shoppersusing-technology-not-salespeople.html?_r+0) about in-store
technology, a 26-year-old Nordstrom shopper in Phoenix
checked competitors’ prices for a pair of Sam Edelman flats
using her smartphone. “In all honesty, because I shop so much,
I feel sometimes I know the brands better than some of the associates,” she said.
Nordstrom found that shoppers were using its app in-store
for product information as opposed to turning to sales associates. To embrace this trend, all Nordstrom stores are now wired
with Wi-Fi to enable easy access to the Nordstrom app, and the
retailer is rolling out charging stations for mobile devices.
That doesn’t mean luxury retailers won’t need sales associates. Milton Pedraza warned that technology cannot replace the
customer experience, and luxury customers still turn to in-store
experiences to learn about products firsthand.
One key finding of the study is that affluent Gen Y is a group
that is very confident in its opinions. And not surprising, they also
have higher expectations—and that confidence and expectation
rise with affluence. “This group is the Google generation,” said
Scribner. “They feel they have the power to find out any kind of
information—and they feel they are more expert than the marketers and salespeople themselves.”
Luxury brands succeeding in the face of this trend are those
that incorporate the in-store experience with Gen Y’s reliance
Regardless of income, affluent Generation Y is concerned
about job security, and its purchasing habits reflect that. The
majority of aspiring children, for example, said they spend
much more cautiously than they used to, while affluent children
are more likely to believe that making a lot of money should be
a priority. Perhaps most significantly, concern over job security
increases with wealth. Emerging heads of household, affluent
INSIGHT NO. 6 There are 2.9 million Gen Yers in America who
are living a truly wealthy and luxury-oriented lifestyle, and
776,000 on their way to living such a lifestyle.
Gen Y is still an emerging market for luxury brands. But that is
projected to change as those on the path to wealth mature and set
up their own households. “Gen Y is not currently the most profitable demographic, but it is the customer of the future,” said
Digitas’ Scribner. But what does this group’s habits, attitudes and
patterns predict about how it will spend in the future?
JOB SECURITY FEARS
DECEMBER 10, 2012 · 17
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Page 18
Insights
“HOW CAN BRANDS MAKE A
PRODUCT APPEAL TO BOTH
THE PARENT [WIELDING THE
PURSE STRINGS] AND THE
ADULT CHILD?”
— Sara Bamossy,
Media planner, Saatchi & Saatchi
children and affluent heads of household segments all ranked
worrying about losing a job as a top concern.
“Today, affluence is not a buffer from financial insecurity,”
said Digitas’s Scribner. “This is an important insight for how
marketers should judiciously approach that target audience.”
Heads of household segments are most engaged with their
personal finances out of necessity. Meanwhile, affluent children
showed a high consumption of financial news.
HIGH EXPECTATIONS FOR FUTURE WEALTH
Emerging and affluent segments especially have high expectations for their continued earning potential, and Scribner
expects this will be realized. This is especially true of affluent
children, who are accustomed to luxury shopping despite also
committing to low-paying professions. Notions of entitlement,
and of having grown up in the pre-recession world may explain
this group’s optimism, not to mention media messages about
overnight success stories of entrepreneurs who made millions
at a young age. A “Next Generation” study from AgencySacks
found that nearly 50% of Generation Y has started a business or
expects to do so—10 points higher than the general population.
(www.nypost.com/p/news/business/to_generation-corporatecubicles_qSIAndzWy2zaMXMN4cAaAL).
“We don’t know the future yet, of course,” said Scribner.
“Affluent children may have enough financial security to
progress in those careers, or they may leave them and go into
more traditionally high-paying careers. In general, however,
people pivot to their self-interests. No one wants to live less well
than their parents.”
EXCLUSIVITY
The more affluent groups say they like buying products
described as standing out from others, and exclusive—and these
18 · DECEMBER 10, 2012
preferences increase with wealth. These attitudes are reflected
in the popularity of exclusive club memberships, including airline lounges and athletic and country clubs, among the wealthy
Gen Y subsets.
“The rich tend to be one-of-a-kind people who broke out personally in their careers and are one-of-a-kind personalities as
well,” said Scribner. “Exclusivity and uniqueness are a very important quality for a luxury marketer to have, whereas popularity may
be more important on the lower level of affluence, where family
and community-oriented attitudes prevail.”
One retail model that successfully bridged the gap between the
desire for exclusivity with that of Aspiring Children’s price-conscious shopping is the flash-sale category and the Gilt Groupe in particular. The retailer offers a limited selection of heavily discounted
designer and luxury products only to those with a membership.
The number of products offered is small, the time they can be held
in a shopping cart is limited to 10 minutes and the number of items
that can be held in the cart is capped at five. A how-to video on the
site features a customer saying Gilt Groupe offers “hand-selected
items by the labels I love.” The five-year-old retailer reports $5 billion in annual sales. As one Gen Y affluent stated to George Scribner
in a focus group, “You have to understand, we’re young; we want
to join everything, as long as it’s exclusive.”
SYMBIOTIC PURCHASING WITH PARENTS
Gen Y’s closeness with their parents can explain some of their
nostalgic tastes, as some products are throwbacks to childhood
or are those their parents prefer. This cross-generational connection provides a great opportunity for marketers, as Gen Y influences $50 billion in purchases in other generations—in addition
to their own spending power. Saatchi & Saatchi’s Bamossy sees
opportunities for big-ticket products like cars to appeal to both
the Gen Y consumer and their boomer parents. “Big-ticket items
are often subject to the approval of both the person who controls
the purse strings and the person doing the wanting,” she said.
“How can brands make a product appeal to both the parent and
their adult child?”
She sees opportunity in the Aspiring Children and the Affluent
Children groups, as their parents are likely to drive luxury vehicles. The right marketing could target existing boomer customers’
children with a younger, hipper message, suggested Bamossy.
But bringing the parents’ influence into the dialogue can be
important for not only the children segments, but also the emerging group, too, as Gen Y overall relies on assurance for their decisions, and often seeks affirmation by way of posting pictures of
potential purchases on Facebook or Twitter, and asking for peer
advice. “Gen Y is often making purchases for the first time with
their own money, and they lack experience for buying big-ticket
items,” said Bamossy. “You could say they’re overly coddled and
can’t make decisions on their own, or you could say that they really value the expertise of their parents.”
12/5/2012
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Page 19
Insights
CAREER PATHS THAT
LEAD TO AFFLUENCE
Technology is a major driver for those in wealthy
households, and influences their spending as well
INSIGHT NO. 7 Financial, legal and medical fields play a role
in achieving affluence, as they do for all generations, but technology industries are a key driver of Gen Y affluence.
INSIGHT NO. 8 Career is not the only determinant of affluence for Gen Y, as it is with other generations. Within the same
industry and career path, family choices and family values have
an impact on earning potential.
INSIGHT NO. 9 Gen Yers still living at home have the free-
dom to pursue mission and passion careers.
Career is not the only driver of affluence among Gen Y. Aspiring
heads of household are often in traditionally high-earning careers
like financial services, yet they often live far from metro centers rich
in jobs, and place a greater importance on work-life balance when
compared with the Emerging and Affluent Heads of Household segments. Not surprising, the top tier Affluent Heads of Household are
those established in traditionally affluent careers like finance, law
and medicine. However, across all segments, technology plays a
major role in career choice. This is important for marketers to
embrace, as the tech culture shapes shopping and spending across
all of the generations. “People working in technology are interested
in being ahead of the curve and what is next,” said Wired’s Maya
Draisin. “If you’re working in tech, you’re involved in creating the
future of the world.”
PROFOUND DIFFERENCES
Not all affluent Gen Yers behave as luxury consumers
NOT LIVING WEALTHY LIFESTYLE
ASPIRING CHILDREN
Annual HHI: $100,000-$199,000
Married with children
Mean age: 30
Annual HHI: $100,000-$199,000
Living with parents
Mean age: 23
NOT YET LIVING WEALTHY LIFESTYLE, BUT ON THE PATH
EMERGING HEADS OF HOUSEHOLD
Annual HHI: $100,000-$199,000
Unmarried
Mean age: 23
ALREADY LIVING A WEALTHY LIFESTYLE
AFFLUENT CHILDREN
Annual HHI: $200,000+
Living with parents
Mean age: 23
Annual HHI: $200,000+
Married with children
Mean age: 30
DECEMBER 10, 2012 · 19
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Insights
Page 20
SUCCESS STORY: BMW 3 SERIES
How the luxury automaker keeps its most iconic vehicle relevant to Gen Y
A BMW is a popular purchase across all the segments of Gen Y
identified by Digitas—a phenomenon that can be attributed to the
automaker’s targeted approach to younger consumers with its
updated 2012 3 Series sedan. The German company tapped into
Generation Y’s affinity for social media, interactive technology and
media preferences to make the model one of its most successful
launches ever, said Trudy Hardy, BMW of North America manager of
marketing communications and consumer events.
DIGITAL SHORTS
Hardy attributes the success of this campaign in part to the 3
Series’ heritage that dates to 1975. “The 3 Series is one of the most
iconic vehicles of all time,” she said. “We don’t have an awareness
problem—we just make sure we target the right person with the
right message in the right medium.”
Tactics included promoting digital shorts that highlighted the
model’s new features, upping its digital and mobile ad buy, and
sponsoring a feature on popular late-night talk show “Jimmy
Kimmel Live.” More than 2,000 amateur filmmakers competed for a
new 3 Series by participating in BMW’s "0 to Desir3 in 5.9 Seconds”
video competition that invited 5.9-second submissions about the car.
The brand has leveraged interactive software to allow potential
BMW owners to “build your own BMW” on the company website,
through an Xbox game and on Facebook. This has proved to be a
powerful marketing device as 26% of users who configure their
dream car through to the end of the program actually purchase the
vehicle, said Hardy. “Younger people are using the social space not
just as a fun info tool, but as a shopping tool as well,” she said. The
software includes pricing information and automatically links the
user to local dealerships.
Getting potential customers physically into the dealership—and
making them feel welcomed when there—is a priority for BMW.
“Boomers shop for cars very differently than younger people,” said
Hardy. Boomers tend to get information from sales associates, while
Gen Yers come in armed with information. “It is often as if the dealer just takes an order,” she said.
BMW has made an effort to welcome younger shoppers who may
not immediately appear to be the typical BMW customer. “It is easy
to prejudge people based on how they’re dressed,” said Hardy.
“People come in from all walks of life.” Sales associates today tend
to wear shirtsleeves and an open collar, whereas a few years ago,
they were probably decked out in a full suit and tie. Showrooms are
equipped with interactive tablets for customers to use independently, or for associates to use as an education tool. A BMW iPhone and
iPad app allows users to interact with all parts of the car in 3-D. A
build-your-own feature allows users to select all options: style, color,
interior, sound system, etc. At the end, users can share their dream
vehicle with their friends via the social-media function, and are then
directed to local BMW dealerships in their area.
The 3 Series now is available in hybrid, diesel and electric vehicles, and the brand recently launched its Drive Now car-sharing program in San Francisco—competing with the likes of Zipcar that are
also popular with affluent Gen Y. “Research tells us that the younger
generation is more easily swayed than other groups,” said Hardy.
“They also want to feel really good about their purchases.”
APP MARKETING—
A BMW
iPhone app
allows users
to select all
options: style,
color, interior,
sound system,
etc.
20 · DECEMBER 10, 2012
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Page 21
Insights
MEDIA HABITS
ENTERTAINMENT IS
DIGITAL, SOCIAL
Affluent millennials not only have the advantage of
their generation’s comfort with all things digital, they
also have the means to purchase the cool new tools
INSIGHT NO. 10 The web is device agnostic for Gen Y across
all segments.
Not surprising, the Digitas report found that media use is
moving toward digital, and younger consumers are early and
frequent adopters of new devices. Whereas earlier analysis
found that youth was a greater indicator of digital behavior,
Digitas found that affluence is a better predictor of device ownership. Therefore, affluent Gen Yers are the most digital of all
possible segments, having both the means to buy devices and
the inclination to use them heavily.
“This means the more money you make, the more likely you
are to buy technology for social capital as well as personal
enjoyment,” said Scribner. “But usage does not necessarily
increase with affluence.”
More affluent groups use social media more in business,
and affluent heads of household score highest for ownership of
digital devices. “New tech behaviors tend to come from people
living a digital lifestyle and use these devices as a means of
entertainment,” said Scribner. Meanwhile, aspiring heads of
household have less time to devote to new technology as a
form of entertainment, and instead devote more time to their
children and careers.
FUTURE OF MEDIA
Gen Y’s use of digital tools will only grow
DIGITAL
Retail is growing at 15% per year, and digital ad spending in
2012 surpassed print spending and will double by 2016.
MOBILE
The year 2012 was when smartphone users became the majority of cellphone users in the U.S., placing an emphasis on locationbased apps like Foursquare and brand-specific apps to be used in
tandem with the in-store experience.
SOCIAL
Twenty-five percent of all page views are social-media page
views. The average engaged social-media user checks Facebook
every 37 minutes, tweets hourly and reviews a product on Yelp
four times weekly.
SOURCE: SINAN ARAL, ASSOCIATE PROFESSOR OF INFORMATION AND
MANAGEMENT SCIENCES AT NYU STERN SCHOOL OF BUSINESS VIA WIRED
CONTINUED ON P. 23
DECEMBER 10, 2012 · 21
Insights
12/5/2012
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Page 22
CASE STUDY: COMEDY CENTRAL
Cable channel taps into millennials seeking out and sharing of entertainment content
Comedy Central homes its marketing focus in on Gen Y, and its
males in particular. “We call Gen Y ‘comedy natives,’” said Walter
Levitt, Comedy Central exec VP-marketing. “They are like no other
group in their relationship with humor. Their self-expression is
shaped by their taste in comedy. Our research has found that for a
30-year-old guy, comedy is more important to his identity than
music, religion, sports teams or political views.”
This affinity for the funny is driven not just by the content, but
by how it’s digested. Sharing and the sense of discovery is critical,
as is the ability to access content on multiple channels: TV, tablet,
smartphone, YouTube, Facebook, Twitter, web download and DVD.
“We don’t launch shows anymore—we launch franchises,” said
Levitt. “This group loves sharing comedy, and they love to feel like
they’re the first to discover something hilarious.”
Take for example “Key and Peele,” the Comedy Central sketchcomedy show that launched early 2012, and built around popular
comics Keegan-Michael Key and Jordan Peele. Months before the
show launched, Comedy Central promoted a series of “Obama
Luther” videos—impersonations of Barack Obama with his “anger
management translator,” Luther, who acted out what the president
supposedly really thinks, despite his cool façade. The videos were
hosted on YouTube, and were marketed heavily via paid search
and social media—building on the individual comedians’ already
established following. Within 36 hours of the first video rolling out,
it had 1 million views—the quickest rollout of content in the network’s history. “It was shared and shared and shared,” said Levitt.
Another successful Comedy Central campaign aimed at young
adults was to take a plot line from hit show “Workaholics,” on
which “Half Christmas” is celebrated June 25. Last summer, the
show invited fans around the country to host Half Christmas parties and send in videos and pics, which the network then aired
throughout the day.
In April, the network launched The Daily Show Headlines App.
The free app for Apple and Android products allows fans to search
past shows by topic—say, Petraeus or the election—or by date to
find relevant clips of the show. “When it comes to serving the
needs of Gen Y, we need to be where they are,” said Levitt. “They
expect funny content to find them.”
FUNNY MEN — Stars of “Key and Peele” sketch comedy show and Jon Stewart of “The Daily Show”
IAN WHITE/COMEDY CENTRAL
22 · DECEMBER 10, 2012
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Page 23
Insights
GEN Y AND BOOMERS ENGAGE WITH MEDIA FOR DIFFERENT PURPOSES
Gen Y is much more likely to use digital tools to seek out entertainment, while boomers are more utilitarian. The red graph
denotes the reach of each segment; the blue graph denotes the liklihood of the segment to participate in that activity.
GEN Y MEDIA USE AND ACTIVITY
BOOMER MEDIA USE AND ACTIVITY
Reach
Reach
Index
Index
NOTE: THE SECOND RING OUTSIDE THE BULLS-EYE REPRESENTS AN INDEX OF 100. THE FOURTH RING REPRESENTS 100% OF THE SEGMENT. SOURCE: DIGITAS
Despite this splicing, Gen Y across the board is increasingly
digital and technology savvy, and turning more toward Smart
TV and tablets for their information and entertainment. “Gen Y
is online and mobile, and that is where brands have to reach
them,” said the Luxury Institute’s Milton Pedraza.
The next wave of technology for this group includes Smart
TV and tablets. Netbook use correlates with age, while smartphone and tablet use correlates with affluence. Smartphones
are becoming a primary source of online access, especially as
communication becomes a secondary product benefit. Social is
prevalent for all affluent segments, and increasingly businessoriented with rising affluence. The web is the primary media
channel across all segments.
Gen Y, however, is digital in a different way than boomers.
Boomers lead in device adoption because they have had the
money to buy them, but Gen Y leads in the adoption of new
applications and creation of new digital consumer behavior. As
digital natives, they are more adventurous, and open to new
digital brands. Gen Y members tend to be heavy consumers of
entertainment content, as illustrated by music and video downloads, and DVR and VOD usage. The disparity is particularly
noticeable when it comes to mobile media. Boomers tend to still
use technology in a utilitarian way. Although heavy users of laptops and smartphones, boomers tend more toward lifestyle
management, rather than pure entertainment. Boomers use
their mobile devices for texting more than for browsing online.
However, boomers are expanding their consumption of digital
content, from news and finance to lifestyle. This shows increasing comfort with digital as a source of personal satisfaction.
That said, they are still heavily reliant on traditional channels
for personal content. They are more likely to turn to traditional
TV, print and radio, even with tablet ownership. The 2012 holiday season is seen as a huge growth opportunity for tablets,
given the projected proliferation of devices expected.
When it comes to social media, boomers tend to use them
mainly for professional reasons, while Gen Y’s connections
are mostly personal.
DECEMBER 10, 2012 · 23
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Insights
JUMPING THE SHARK
The transformation of music, movies, books and shopping in past 10 years is Gen Y normal
It’s time. Gen Y is coming. Gen Y is here. Just as
technology has reinvented—and continues to reinvent—business models and marketing strategies,
so the rising importance of Gen Y demands revolution within corporate America. Why should marketers
care, when boomers still represent the bulk of their
business?
The 1980s ushered in a period of conspicuous consumption, the “affluence of accumulation.” Over the
ensuing years, expressions of affluence shifted to
experiences and social capital. This mirrored the
coming of age, and maturing, of the boomer generation. Now, approaching retirement, boomers will
redefine affluence again. We are entering the period
of the “affluence of well-being.”
This is great news for a limited number of categories, like health care, health insurance, wellness
practices, skin care and perhaps financial services.
But as boomers’ assets and lives become more fixed,
their spending across other categories will drastically
diminish. Apparel, travel, entertainment, among others, will all be affected. This is a business risk that
marketers need to address.
Change is hard, especially when transformation is
required. Why do we think that the shift from
boomers to Gen Y is so drastic?
GEN Y IS THE TECH GENERATION.
Calling them the digital generation diminishes the
impact that technology, as a whole, has on their
lives. Technology—once as distant as the moon and
referred to as “high tech”—is as pervasive as the air
they breathe. It has influenced Gen Y to form values,
beliefs and expectations that transform how marketers must connect and what marketers must do.
Technology has created a bias that challenges all
legacy marketers. Additionally, we’ve learned that
technology-related careers are now a new road to
affluence for this generation.
nesses and brands. Think of how music, movies,
books, intellectual property, customer service and the
path to purchase have changed in the last 10 years
due to digital media, social media and mobile
devices. This is the Gen Y normal.
GEN Y IS ON FAST-FORWARD.
Call them worldly wise. Call them spoiled. Call
them in control. They care about what works now,
what works well, what works pervasively and what
defines the future. They will love their Pebble (getpebble.com) as much as their luxury watch … perhaps more, because it connects to their mobile
device. They will forgo carefully planned purchases
in lieu of capturing a flash-sale novelty. They will
take inspiration from social media and follow the
links to a new niche brand. This means that Gen Y
will likely lose allegiance to any brand that isn’t on
the innovation curve.
WHAT DOES THIS MEAN TO MARKETERS?
Every legacy brand has to adapt or reinvent its
values, offerings and go-to-market strategies to
maintain relevance with an empowered, futurebiased Gen Y consumer as the driver of its core business. It may not be a smooth process. It may look
like destruction or chaos. In fact, it is an essential
recalibration of the business to achieve greater creativity. It’s a time when fresh ideas with direct consumer impact will generate more ongoing business
value than the scale of legacy business practices.
GEN Y WILL
LIKELY LOSE
ALLEGIANCE
TO ANY
BRAND
THAT ISN’T
ON THE
INNOVATION
CURVE.
GEN Y BRAINS ARE DIFFERENT.
They have been wired and fired by universal
access to answers, and the ability to create their own
businesses, establish themselves as media personas,
connect with strangers around the world who have
an expertise or share a passion, check prices in store
aisles and, most important, to circumvent companies’ attempts to “manage” their customers, busi-
24 · DECEMBER 10, 2012
— GEORGE BLAIR SCRIBNER,
senior VP-account planning,
Digitas
12/5/2012
1:18 PM
Page 25
Insights
CONCLUSION
GETTING GEN Y’S
ATTENTION
EMMA JOHNSON
Marketing to millennials
requires new storytelling skills
and shareable content
The next wave of marketing to affluent members of
Generation Y must be considered from a completely different
vantage than in generations past. Luxury is no longer only
defined by price tag, label or design. Today, each product must
tell a story—and part of that story is relevance, ease of use and
accessibility. Brands must find ways to give these young and
affluent consumers information in ways that are meaningful.
This means through mobile devices like tablets and smartphone, both delivered to the consumer’s personal device but
also through the in-store shopping experience. Product information must also be sharable, giving consumers ways to share
their thoughts and opinions with their friends, their network
and through other loyal brand followers. These are perhaps the
most informed customers in the history of luxury, and they
demand choice, à la carte shopping and easy ways to get exactly what they desire. The upside of this evolution is that this is a
group that is easily persuaded—the question is whether brands
will be agile enough to capture its attention.
ABOUT THE AUTHOR
is a New York-based freelance
business journalist. Her credits
include The New York Times,
The Wall Street Journal, Forbes,
MSN Money, International
Herald Tribute, Entrepreneur,
Wired and others. She blogs at
WealthySingleMommy.com.
FIND MORE
ONLINE
This is one in a
series of trend
reports published
by Advertising
Age. To see other
Ad Age reports,
such as 2011’s
“The New Wave
of Affluence,”
and to obtain
additional copies
of this one, go to
AdAge.com/
trendreports
DECEMBER 10, 2012 · 25
12/5/2012
Insights
1:18 PM
Page 26
STRATEGIC PARTNERS
DIGITAS
George Scribner, , senior VP-account planning, is the creator and author of the original
research “Affluence in America: The Next Generation”, as well as the first chapter,
“Affluence in America: The New Consumer Landscape”, developed with a broad team
across Digitas’ capabilities, and in partnership with Ipsos Mendelsohn.
To learn more about “Affluence in America: The Next Generation,” contact him at
[email protected].
Digitas, a digitally-led, integrated global brand agency, builds brands for some of the
foremost companies in the world, including American Express, Delta, Procter & Gamble,
and Sprint. In 2012 Digitas was named OMMA Magazine's Agency of the Year and The
Drum's London Integrated Agency of the Year. Digitas was also the winner of nine Cannes
Lions in 2012. The agency also counts Agency of the Year honors from the Festival of
Media, BtoB Magazine, and Les Agences de l’Année, France, and has been named to the
Advertising Age Digital A-List among its many awards.
For more information on Digitas, please contact: [email protected] or
[email protected].
www.digitas.com | Twitter: @Digitas| Facebook: Digitas Fan Page | Blog: Digitas Distillery
MENDELSOHN AFFLUENT SURVEY, IPSOS MEDIACT
The Mendelsohn Affluent Survey is produced by the Audience Measurement Group
of Ipsos MediaCT, a group widely recognized for its expertise in affluence, luxury and
media use.
Ipsos MediaCT is the media, content and technology specialization within Ipsos, a
publicly traded firm headquartered in Paris that ranks as the third-largest research
firm in the world, with offices in 84 countries.
Stephen Kraus is senior VP and chief insights officer of the Audience Measurement
Group; he is author of two books on affluence and luxury, and writes regularly for
MediaPost’s Engage: Affluent.
26 · DECEMBER 10, 2012
12/5/2012
1:18 PM
Page 27
Insights
Need to know
more about
the affluent
market?
THE NEW WAVE OF AFFLUENCE
For this first report examining the entire affluent market, Ad Age Insights worked
with Digitas and the Mendolsohn Affluent Survey to identify and explain five tiers
of affluent households in the U.S. You’ll learn why true affluence isn’t achieved
until the $200,000 household income level, which demographic is on its way to
the rich life, and why it's time to abandon the idea of mass affluence.
Includes PowerPoint slides
Use code DISC100 when you check out to save $100 on this report:
$99 for Ad Age subscribers; $149 for non-subscribers
Regular price: $199 for Ad Age subscribers; $249 for non-subscribers
Order it here: http://adage.com/trend-reports/report.php?id=47
DECEMBER 10, 2012 · 27
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Page 28
Insights

the next generation

Transcription

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