Millennials cannot be approached as one homogenous group, writes Dion Appel, yet there are fundamental and significant differences between the millennials and previous generations.

Millennials, those with birth years ranging from the early 1980s to the early 2000s are now reaching an age of independent consumption, starting to have children and becoming a presence in the workforce.    

In Australia, 15-to-35-year-olds are spending $67 billion every year. In 10 years’ time, these millennials will be between 25 to 45 years old and will make up 75% of the workforce. Their spending will be pushing $100 billion by 2025 so it’s no surprise that marketers want to connect with this group.

Some brands have tripped up by treating millennials as one homogenous group – but I recommend using segmentation criteria beyond a simple age bracket.

Although they are not a homogenous group, there are fundamental differences between this generation and the previous, and as a result the way we make meaningful connections with this group is significantly different.

What are the key differences?

Firstly, millennials have grown up digital. Their on-off switch never goes off and seldom gets switched to silent. Remaining connected is not a conscious thought, it’s just part of their DNA. For them, life is online and that part of their life is very public. All of their experiences are documented and shared on the social media ‘scoreboard’ and this creates high levels of anxiety about how they wish to be perceived.

Captured and shared experiences are the new social currency for this group. They trade experiences and knowledge for social connections or ‘social capital’ as we call it. But the shadow of social media success is social poverty, or insignificance. What if the scoreboard is defeating them? What if the comparisons that they are using to gauge their own self-worth are unrealistic and/or unattainable?

Social connectivity also means that product reviews and endorsements have shifted from companies to the peer group, and this shift has significant implications for marketers.

Millenials’ high levels of personal anxiety extend to feelings of uncertainty about the future. Specifically, they’re worried about global terrorism, career and housing instability, increased exposure to illegal drugs and higher levels of mental health issues such as depression.

They’re staying at home later to save money. And the majority believe that home ownership won’t be possible for them – another source of anxiety for a generation who want the best and want it now. Whether or not they can afford the ‘Australian Dream’ of owning a family home, there’s no denying that the ratio of housing costs to income has increased significantly from one generation to the next. And that’s without considering the suggestion that millennials have also been spoilt by their own high expectations. They are a generation born during the Howard ‘Golden Years’ of affluence, programmed to automatically expect what their parents had, often without seeing the hard work that got them there.

Financial reasons, coupled with high personal expectations of living standards, have pushed the average age to leave home to 26. They’re delaying responsibilities until later in life, but when they do settle down there are significant differences between this group and previous generations with regards to sex-role stereotypes. The millennials believe more deeply in gender balance than their predecessors, with millennial mums and dads sharing responsibilities for school drops and meal preparation.

Millenials value knowledge, experience and social connection above all else. It is their social currency; part of their cultural paradigm. So what do brands need to do to effectively to connect with them?

What are the implications for marketers?

Marketers can start planning now. There are short-term gains to be made with the 25-to-35-year-old age group who already have spending power. And then there’s the younger half, those currently aged 15 to 25, who will mature over the next 10 years. Successful marketers will need a longer-term plan to capture this group.

To be able to make meaningful connections with youth, a brand needs to understand them. And I’m not saying this lightly. For brands to succeed they need to introduce themselves and become part of millenials’ daily lives in lasting, authentic ways. Young Australians won’t accept a brand without meaning and depth. The brand needs to understand where it fits into their broader cultural context; otherwise it’s just a fad.

We call this process ‘cultural infusion’.

Cultural Infusion is the ultimate aim of a brand that wants to become part of millennials’ lives. But it relates to more than a brand’s widespread use. Brands that have achieved cultural infusion also have certain significance and meaning within youth culture that is collectively understood. Apple, Converse and Google have all managed to become a part of the culture and the daily lives of this urban market because they stand for something meaningful that resonates with young people.

So how have these brands become culturally infused? To first gain status among millennials, successful brands have had to engage with them. This has been achieved through many different means, but it’s fundamentally about creating meaningful contact that involves young adults on an emotional, cognitive or experiential level.

Ideally, this engagement is innovative. Millenials live in a fast-paced world that’s always on and have created filters to help them cope with the inundation of information. They’ll simply ignore content that doesn’t provide them with a worthwhile experience and that doesn’t make an effort to challenge them. Bull, Nike and Levis have done this successfully and have increased the enjoyment, longevity and value of their brand-consumer contact.

Good integration is not easy. Successful integration relies on understanding where your brand potentially fits within young adult culture so the brand value can be leveraged and a consumer backlash avoided. The balance between enough exposure for the ‘style surfers’ (who are the key influencers of whether a new product gets into the mainstream) to find you, without looking like you were trying to be found.

Creating a good fit is not just about the functional use of the product. Instead, a good fit relates to the congruity between the values of the brand, content and culture. Again, Red Bull masters this: the product itself is not directly related to action sports (sure, it can help give energy, but it isn’t a necessary requirement of action sports). However, the brand and product represent the ability to “go further, go harder”, which is congruent with the sponsorship and positioning of various extreme sporting events and the shared attitude of many young Australians.

The way millenials respond to brand marketing is also key. It’s part of a two-way process that creates meaning for them.

Many successful brands have been willing to let the ‘style surfers’ discover them (or related content) for themselves. This works because it provides young adults with the ‘social capital’ to impress their peers and contribute to their social world. To enable this discovery, brands now place their content within the increasing array of media used exclusively by young adults. Our model holds that millennials think that millennials are cooler than their parents or older generation. They see themselves as the shapers of popular culture.

Once brands are discovered, it is important they provide opportunities to promote themselves: to become ‘expression enablers’. This is often seen via great product design that promotes conspicuous consumption (the iPhone, for example) or through the ability to pass the brand’s content on to others. This should not be underestimated as it plays to the need of young adults to express who they are and obtain ‘social capital’. It also allows young adults to express their devotion to a brand if successful.

For brands to develop staying power and avoid becoming a fad, they need to become truly infused within millenial culture. This has often been achieved by providing a good initial representation of the underlying values that young adults hold, rather than trying to reflect what is ‘hot’ at the time. Although many brands have allowed young adults the flexibility to define them, they also continually reassess the relevance of the brand and any possible change to its meaning. Because values take a longer time to change (and often do so progressively) the brand is entwined with millenials’ everyday lives, rather than seen as a transient fad.

How will brand marketing evolve?

Now it’s time for the next step in the ladder of brand utopia. We’ve talked about social capital and cultural infusion, but what’s next? How does a brand go above and beyond being part of the vernacular? What is left for your brand once you’re already a verb?

The next step involves relinquishing control even further. The next step involves letting go, backing your commitment to millennials and allowing them to become true advocates. The next step we call ‘supercharged consumer sovereignty’.

This is when your consumers become the influencers. The balance of power shifts from the brand to the consumer. It’s hard for you as a brand – you relinquish control and these people are talking about you online… you’re the marketer, but now you can’t dictate what is being said. It happens on social networks like Instagram and Facebook and Twitter and on the blogs. But if ‘they’ like you, what happens is priceless: The buyer becomes the seller; the consumer becomes the trusted resource of brand knowledge; the content becomes your ad.

There are some key elements of ‘supercharged consumer sovereignty’ that are drawn from the traditional definition of sovereignty:

1. Authority: the source needs to have legitimate and authentic power. This is based on its followers trusting its decisions and this leads to the source being able to command (and be obeyed). This power does not come from wealth, but from social status and social capital – based on trust, legitimacy and a proven track record.
2. Supremacy/absoluteness: the source is more important than any other source of influence. The content outweighs the paid ad, the tweet gives more bang for its buck than the sponsored link. Why? Authenticity and trust. It’s seen as a peer-to-peer trusted endorsement.
3. Territoriality: sovereignty is confined to a defined community within certain borders – in this world of supercharged consumer sovereignty, the community is bound by youthfulness but it is borderless in the geographic sense because it lives and breathes online.
4. Brand aristocracy: In addition to the head of state, this youth world also has its own aristocracy – the elites who reinforce, stabilise and spread the sovereign’s message. These are the bloggers, tweeters, musos, fashionistas. They wield the power of your brand.

The hardest thing about ‘supercharged consumer sovereignty’ is that it’s a naturally evolving process within the hearts and minds of the millenials – it can’t be faked. It’s the authenticity and trust that the bloggers and tweeters have that make their posts so influential. You can’t force it, but there are ways to help it along a little.

First, don’t ignore the chatter – they’re talking about your brand. So don’t be oblivious to it; immerse yourself in it. In fact, welcome it. Not only can you hear how people are talking about you, it can also be a source of outside innovation – if they start a sentence with “if only it… ” or “I wish they did… ” read further!

Second, social media is here to stay – don’t fight it. There will always be a place for good traditional media and big brand ideas, but you simply need to have an online presence too. This is not about cheap and nasty banner ads – go beyond and treat the online space with the marketing respect it deserves. Brands need to learn how to work with this new wave of influence, not against it. It is a paradigm shift. No longer are you solely pushing out the message. You need to work with what is being crafted and delivered in a world that is instant and where the balance of power sits with the consumer.

Third, embrace new ways of connection. The marketplace is constantly evolving with new inventions enabling greatness. Five years ago Uber meant nothing, now the shared economy is powering brands that have grown from zero to a heroic $60 million-plus in rapid speed and they’re far from done.  

With the rise of ‘supercharged consumer sovereignty’, brands need to reconsider their traditional views of return on investment (ROI). The power has shifted and marketers can’t always control what is being said about their brand, so the new approach needs to also include return on relationships (ROR). Today, it’s not just about measuring how much you spend, but also measuring how much you connect and engage. It’s about the value of the intangibles and measuring the depth of engagement (positive and negative). When it comes to measuring your ROR, marketers need to embrace the new online world and monitor what is being said in the online space. You can’t control what gets said, but you can measure it. So don’t fly blind. Success = ROI + ROR.

The wrap

In summary, millennials are a very valuable segment of the market. They cannot be approached as one homogenous group, yet there are fundamental and significant differences between the millennials and previous generations. Brands need to understand those differences if they’re going to make successful connections with this segment.

Rather than blatant broadcasting of a message, understanding the consumer at a grass roots level allows marketers to ‘seed’ an idea to those who are most influential in the relevant cultural pillar. They’ll in turn share their knowledge of this new and meaningful product, and hopefully it then resonates with the values of their tribe. So get amongst it. Commit. The returns will be a greater share of what will be a $100 billion wallet.

 

Dion Appel is managing director of DDB Melbourne and founder of Lifelounge.