Diversity, connectivity, and brand-agnosticism are key factors redefining marketing as Generation Z grows up.
Marketers have been so focused on millennials, but a new generation is coming of age and will soon comprise 40% of all consumers. The growing ranks of Gen Z, people born in the mid to late 90s, should cause brands to sit up and take notice.
Generation Z — aka Gen Z, iGen, post-millennials, or plurals — will be remarkably different than the millennials that precede it. At roughly 25% of the population, half of this age group has a minority status, making multiracial children the fastest growing youth group in the U.S. today. Collectively, Gen Z already wields $44 billion in purchasing power, and they make up the largest demographic among TV-watching households.
Marketers must prepare to shift strategies based on this demographic’s preferences, which will dictate the media and marketing landscape in just a few years. Data on preferences and behavior are key guides in doing so.
Here are six of the profound ways that marketing will have to adapt for brands to meet the needs of this large and uniquely diverse demographic.
1. Gen Z Considers Digital Media an Essential Resource
Many sociologists consider millennials “digital natives,” but many of that generation remember an era without internet connections or smartphones. Most Gen Zers, on the other hand, have literally grown up with connected devices in their hands and can’t imagine a world without them.
Forty percent of Gen Zers say that working Wi-Fi is more important than working toilets, and 50% say they “can’t live without” YouTube. They are heavy digital media users, using smartphones three hours per day on average.
Their methods of media consumption differ from ours, too. Fifty-nine percent of all consumption takes place via over-the-top (OTT) services such as YouTube and Netflix. Seventy percent of Gen Zers watch over two hours of YouTube each day on average. These habits differ from those of millennials, who still watch a fairly even mix of OTT/digital video and traditional television.
Watching user-generated online videos is a go-to source of information for these individuals, many watching exclusively through mobile devices.
As smartphones are practically an extension of Gen Zers’ hands, mobile friendliness — including design, speed, and experience — is of utmost priority for brands. Since Gen Z consumers also tend to move seamlessly across digital channels when they consume content, brands seeking their business must have a presence on all channels and coordinate an omnichannel strategy to effectively relay messaging.
2. “Point of Purchase” Becomes Irrelevant
Many millennials remember the days when e-commerce was a novelty, but Gen Z members increasingly tend to overlook a large swath of brands’ brick-and-mortar stores when considering their retail options.
Given their reduced dependency on physical stores and the spread of digital storefronts across multiple channels, finding Gen Z consumers near the point-of-purchase using traditional techniques can be difficult. Brick-and-mortar strategies, like increasing basket size with low-cost impulse items placed by check-out, don’t always translate 1:1 in digital environments. Additionally, brands cannot expect sales to take place on a single reliable channel, even when considering dominant e-commerce players.
Personalized content delivered programmatically helps solve this problem by connecting people with relevant ads no matter where they are. Additionally, customer journeys must become more nuanced. Online, buying an 88-cent candy bar may require almost as much consideration as an $88 pair of sneakers. Getting people to increase basket sizes requires longer consideration phases, making product awareness and communicating product value that much more important.
If Gen Z members understand the value and appeal of an $80 board game, for instance, seeing it on discount for $55 could trigger an instant purchase. Additionally, suggestion algorithms keep people considering add-on products more frequently. They may buy the board game and see “customers who bought this item also bought” appear automatically, turning a one-time or single item purchase into an ongoing consideration for what to buy next.
Data-driven suggestion matching and audience-finding technology will thus become even more crucial when targeting a generation with a need for information and relevance before they consider buying.
3. Influencers Truly Influence Them
Gen Z does not distinguish between people who are “internet famous” versus traditional celebrities covered on legacy-established media outlets. In fact, 63% of Gen Zers actually say they prefer seeing “real people” like influencers in advertisements rather than figures from movies, TV, sports, and entertainment.
“Influencers have magnetic personalities and built-in distribution, but they also have a deeply personal relationship with their fans, which allows them to create storylines they already know will resonate with their audience,” says Nelson Granados of Pepperdine’s Graziadio School of Business.
Understanding this dynamic could directly influence product sales. According to one survey, Gen Zers are 1.3 times more likely to try a product suggested by an influencer than a TV or film star. Companies like Hasbro are already recognizing the power influencers have to generate sales. YouTube videos of products like the game Pie Face can dramatically boost sales.
“In the old days it was about brands putting their product out there and telling consumers what they should feel or do with it,” says Hasbro SVP of Digital Marketing Victor Lee. “Now consumers are becoming the creation and the marketing platform.”
The significance of Gen Z’s reliance on influencers only intensifies when you consider No. 4 and No. 5 below.
4. Established Institutions Have Less Inherent Value
While plenty of Gen Zers recognize brands with centuries-old legacies, they also say that brand or publisher authority must be earned, not taken for granted. In an all-digital consumption world, centuries-old journalism institutions sit alongside memes and personality quizzes on social media timelines. Similarly, established department stores show up online next to upstart boutique e-retailers, and each is judged on its merits.
Competition among e-commerce players is likely to grow fierce as a result. Fifty-five percent of Gen Zers 18-and-under say they would rather purchase their clothes online than in a store, and 53% say the same about books and electronics.
Adding to the complexity of earned authority, Gen Z members see themselves as entrepreneurs more so than any other generation. A recent study revealed that 72% of current high school students and 64% of college students intend to start their own business. This self-sufficiency could lead the traditional brand-consumer relationship to evolve from one of sellers and buyers to peers that all participate in commerce together. That, too, will challenge the advantage that entrenched brands have long enjoyed.
5. Authenticity Matters Most
“Gen Z doesn’t want to hear about how much of an ‘industry leader’ you are. They judge with their eyes first,” asserts author and Gen Z member Deep Patel. To earn their trust, polish and professionalism must send the appropriate signals. “Your website needs to work on a cell phone — and work well. Your profile picture needs to look recent. Your header image needs to be crisp and clean.”
Accordingly, an ongoing roll of fresh, relevant content from brands is more important than established brand names. Marketers need to provide proof of value rather than relying on authority, and they must speak in a voice that rings true for Gen Z to take notice and not reject messaging.
To do so, brands can give consumers a deeper look at their values and principles through owned media. “[B]rands must share their story, their purpose and details about their supply chain and production processes, so that Gen Z can determine if the brand’s values match their own,” writes one research professional. In turn, owned media and paid media must reinforce this narrative and repeat value signals that Gen Zers identify with.
6. They’re More Diverse Than Ever
While few marketers would admit it, their assumption of an “average” consumer is overwhelmingly likely to be middle-class and white. These assumptions could soon cause messaging to sound tone-deaf or irrelevant to Gen Z, which represents more diversity in race, background, and experience than any prior generation.
Marketers should be prepared to study the unique values of their target audience to ensure that messages resonate. For instance, 88% of young Hispanics cite family as “the most important part of their lives.”
Cultural awareness, audience studies, targeting, and segmentation will become among the most important competitive differentiators for brands in the years to come. Brands that learn to speak in a multicultural voice through thorough research, listening to consumers, and hiring a diverse team will help them go further — while brands that continue to assume the norm will fall flat.
Marketers able to sit up and take notice of these rising trends will be better-equipped to prepare for the coming consumer shifts as Generation Z matures and becomes an economic powerhouse unto its own.