Why Social Media Matters (in Less than 3 minutes)

This video by Tampa Bay agency, 22squared, is the cleverest explanation I have seen on how social media helps consumers find brands -- and how brands find consumers. While this post (my 200th!) isn't strictly about Millennials, it expresses an essential truth of Millennial marketing - what your friends think matters, and now it's far easier to know what your friends think.

Values Shift: Gen Y Sees Things Differently

There is more to this chart than meets the eye.

It is the result of a remarkable 20-year study of values by the Pew Research Center.(download entire pdf here). The latest wave of the study was conducted in April/May of 2009. This chart reveals two important findings: a decline in 'social conservatism' among specific age cohorts over time and progressively lower levels of social conservatism among each younger age cohort.

Here's how the report summarizes this chart:

"Younger age cohorts are less conservative than older ones, with Baby Boomers significantly less conservative than the Silent Generation and its predecessors, and Generation Y considerably less conservative than either the Baby Boomers or Generation X. Within age cohorts, the change over time in social conservatism is very modest, indicating that the societal change in these values is mostly a function of newer generations replacing older ones."

What that means is that Gen Y is distinct in its values from both Gen X and their largely Boomer parents. This finding was widely touted Monday, June 29, in many newspaper and online articles. Here is a sampling:

New York Daily News: "Survey shows widest generation gap among American children and their parents." A survey released Monday by the Pew Research Center shows a widening generation gap on issues ranging from religion to marriage, creating divisions not seen since generational clashes over the Vietnam War, civil rights and women’s rights 40 years ago.

Yahoo News. "Study finds widening generation gap in America." From cell phones and texting to religion and manners, younger and older Americans see the world differently, creating the largest generation gap since the tumultuous years of the 1960s and the culture clashes over Vietnam, civil rights and women's liberation.

MSNBC "Study: Generation gap in U.S. largest since ’60s." A survey Monday by the Pew Research Center highlights a widening age divide after last November's election, when 18- to 29-year-olds voted for Democrat Barack Obama by a 2-to-1 ratio.

Sounds serious! Yet, how can these headlines be reconciled with the common wisdom that Millennials get along famously with their Boomer parents? In the past, 'generation gaps' led to physical and emotional distance, but not so for this generation and their parents. Somehow, the culture wars appear to be, suddenly, over. They have apparently learned to 'mind the gap'. While they may not see eye to eye, these generations have no problem with that fact, and it's not that they are unaware of the differences in outlook; according to the Pew Study, almost eight in 10 people believe there is a major difference in the point of view of younger people and older people today.

The reason also has nothing to do with the nature of the differences or how strongly they are felt. Indeed, most said that the biggest differences concerned issues of morality, religion, and the social values surrounding lifestyle, family, relationships and dating -- hardly minor issues. Older people also cited differences in a sense of entitlement. Those in the middle-age groups also often pointed to a difference in manners.

Instead, the reason appears to have everything to do with a flourishing of 'tolerance', especially among younger people. If there is one value young adults hold above all others, it is tolerance. Apparently, this even goes for their parents.

Gen Y to Marketers: You Are Missing Your Blue Ocean

In 2005, a great business book called "Blue Ocean Strategy" challenged marketers to stop thinking incrementally and looking for 'white spaces' in which to compete. The book, now published in 41 languages urged mraketers to identify latent market needs. The authors maintained that too many marketers were playing a losing game by competing in crowded, fiercely competitive 'red oceans' when they should be looking for wide open blue waters.

Gen Y may present a remarkable blue ocean for many industries. Not only are they big, they purport to want something different and new. And many are literally begging marketers to 'think differently' about them.

Just today, Advertising Age carried an article by, Megan Meagher, a 25-year-old account planner at Taxi, New York titled "Millennials Are Evolving; Are You Keeping Up?" Megan doesn't understand why marketers aren't doing more to win over her age group, especially now when the recession has her retinking her spending priorities and brand preferences:

"I'm a changed person, thanks to this recession. I eat more meals at home and actually pay attention to the price of groceries. Living on my own for the first time, I find myself buying and using more household products, from dishwasher soap to stain remover. As a result, I'm newly receptive to advertising in those product categories. But what surprises me is how few marketers -- outside of clothes, shoe, food-and-beverage and entertainment marketers -- actually pursue my age group. I wonder why that is, when much of what I've learned about brand building in my work in strategic planning suggests that marketers that reach out to Gen Y may find that the payoff lasts decades.

In a few years my generation will be the moms and dads of the world, the major household buyers. Within the next decade, we'll be generating $2.77 trillion dollars per year. It's essential for brands to grab us now and reach out in ways we find meaningful. "

The number of marketers with explicit Gen Y appeals is fairly modest, and most tend to be from entertainment, technology or traditional youth marketing categories. For marketers in food, wine, financial services, travel, appliances, household products and for retailers, this article and others like it should be a wake up call to start sailing in the blue ocean -- before it turns red.

Millennial Wave to Hit Imported Beer and Microbrews

I've never understood why more attention isn't paid to demographics! Thanks to the remarkable efforts of the Census Bureau, we KNOW what the population will look like in 5-, 10- and 15-years (which is, by the way, the reason there is little excuse for overcrowded schools).

Yesterday, I shared SeekingAlpha's conclusion that demographics trends may be unkind to Wal-Mart. Today, I am going to share SeekingAlpha's conclusions about the impact of these same shifts on beer. According to SeekingAlpha.com, Gen Y will " undoubtedly break the beer drinking records set by Boomers in the late 1970s and early 1980s." Here is an editted version of their analysis:

"As 78 million Baby Boomers started to exit the prime 21-34 beer drinking age bracket in the early 1980s, they were replaced by a much smaller potential-beer-drinker cohort, Generation X. This led to years of flat to declining volume in the beer industry. Now, as Generation X ages out of the prime beer drinking age, it is being replaced by the much larger Generation Y. This new generation of potential beer drinkers is currently mostly age 24 and under ... and it is the largest generation in U.S. history. In 2008 alone, more than 3.8 million members of Gen Y turned the legal drinking age of 21, 100,000 more than turned 21 in 2007. Their entrance into the prime beer drinking age bracket may already be making a difference. Industry data indicates that beer consumption has been on the increase since at least 2006."

Which types and brands of beer will benefit most from the shifts? According to their analysis, first and foremost it will be the big U.S. breweries (and their foreign owners), due to their sheer volume - 80% of sales. But the biggest gains will be seen by microbreweries, which are currently just 6% of sales, but already outpacing the rest of the industry. In 2007 the growth rate of microbreweries was estimated at 12 percent, (vs. 1.4 percent for the large domestic brands and imports). In 2008, microbreweries increased volume by another 5.8 percent, and increased sales more than 10 percent.

This analysis brought to mind an email I received from Marty Predd, a twenty-something Research Associate at Brand Amplitude who recently moved to Portland, OR from Indianapolis. He shared this a few months ago when we were working on a project for an imported beer client:

"As you may know, Portland is a mecca for craft beer...we have the most microbreweries of any city in the country, and I can think of about a dozen that are within walking distance of my loft. My girlfriend and I partake regularly and I'm sure we've become beer snobs to some degree. Bars we used to love in the Midwest seem less appealing now when we visit because of their limited selection of mostly huge national beers like Bud or Miller, or mega imported brands like Guinness, Smithwicks, Heineken, etc. With the exception of PBR, which has a nostalgic status in dive bars here, I can't think of the last time we enjoyed a mega beer brand that's not based here in Portland (i.e., Widmer)."

For data geeks like me who want to learn more, Ken Gronbach of SeekingAlpha has written a book,"The Age Curve: How to Profit from the Coming Demographic Storm". I've ordered my copy already.

Can Wal-Mart Survive Generation Y?

I found a post today on a financial analysis blog, SeekingAlpha.com, It is so provocative and insightful, I am going to share it in (nearly) its entirety.

The basic question is whether Millennials will find Wal-Mart's value proposition appealing -- and if they don't, what are the implications for Wal-Mart's future? I don't know whether or not Millennials will or will not embrace Wal-Mart, but as Ken Gronbach, the author of this post points out, it's not a slam dunk. In fact, after I posted the link on Twitter, one of my Gen Y followers replied to the question, "I hope not!"

"(Wal-Mart's) retail concept is not about selection or breadth of assortment and it is certainly not about short runs of anything. This concept, therefore, would struggle with the fashion tastes of a new market and therein lies the problem. Generation Y, born 1985-2004 and currently between the ages of 5-24 and the biggest generation in U.S. history is the new market. And new markets generally have very fickle tastes. If they don’t want something, it doesn’t matter if it is free–they just don’t want it. Wal-Mart is very used to dictating what their customers should buy–large quantities of very cheap retailer’s choice items."

"Wal-Mart is a Baby Boomer-based company. Boomers were born 1945 to 1964, and Wal-Mart has decades of experience catering to the clearly defined tastes of this generation who are currently 45- to 64-years-old. Wal-Mart has figured out what the mature Boomer market buys. They have also refined this demand to the narrowest selection possible, almost telling Boomers what they will buy. Boomers in turn are okay with this because when you are between 45- and 64-years-old you have pretty defined tastes and preferences that influence your buying of stuff. If Wal-Mart does not have what a Boomer really wants, but does have something close at a very low price, the Boomer will buy it."

"So where is the rub? It’s simple. When consumers hit about 50 years old, according to the U.S. Bureau of Labor Statistics, their demand for stuff begins to subside. At 60 years old a person pretty much has all the stuff he or she needs and then some. At 60, one’s body has stopped changing so one can wear clothes longer, a lot longer. If you want to see what was fashionable thirty years ago go to a Miami retirement community. The point here is that the bloom is off the rose of the Boomers’ consumption of things. The Boomer population is a huge bell shaped curve with many Boomers turning sixty at its leading edge and with its very top cresting at 50-years-old in 2007. All of this means that Wal-Mart needs to find a new market fast if it wants to continue doing business."

"But where does Wal-Mart turn? The two U.S. generations over 60 do not have the critical mass to serve their infrastructure, and besides, for the most part they have stopped consuming. The U.S. population now 25- to 44-years-old is a non-homogeneous combination of the small native born Gen. X (nine million fewer than the Boomers) and the free standing market of Latino immigrants."

"So who’s left? It is Gen. Y, the largest and most powerful generation of consumers this nation has ever seen. Will they be the solution to Wal-Mart’s sales problems?"

"No. Gen. Y is an emerging market, a huge bell-shaped curve with its peak at age 19. They are inhaling entertainment products, fashion, food, electronics and transportation. Selection is everything to them. They do not care about low price unless it is exactly the item they want. Their tastes change daily. They don’t know what they will want six months from now. Wal-Mart’s limited selection, low price offering to the Boomer will not and cannot translate to Gen. Y."

"Oh yes, and one more thing. Gen. Y is on track to become the greenest and most humanitarian generation in U.S. history. If one wants to do business with them they had better be very green and very nice to their fellow mankind. And popular perception is that Wal-Mart has a dismal record on both accounts. Perception is reality. This fact could seriously injure Wal-Mart’s business all by itself."

Gen Y: Young and Poor in America?

At my stage of life, with kids in college and in the midst of a recession, I am thinking more of downsizing than upsizing, paying down rather than taking on. I have just about every non-consumable item I'll ever need, and I prefer to 'repair' over 'replace' unless absolutely necessary. The economic engine will have to look elsewhere for a jumpstart.

Several new reports suggest the jumpstart won't come from Millennials. Each analyzed publicly available government information to assess the economic condition of today's young adults relative to past generations at the same age. Warning! The reports make depressing reading. Here are some 'highlights':

Economic State of Young America. This report, by DEMOS, a Washington DC-based research group, takes a comprehensive look at jobs & income, health care, debt and savings, college access and attainment, housing and raising a family. It found 20-somethings in 2005 were worse off than those of 1975 in every area except education, and even the trends for educational access are alarming.

Typical earnings (in constant dollars) for young men have declined over the course of a generation, falling 19 percent between 1975 and 2005 and falling 34% for young men without a college degree. Typical earnings for young women increased a mere 4 percent over the same period. Much of the decline came recently, between 2001 and 2005, despite increases in educational attainment.

The income figures, while bad, don't tell the whole story. There has also been a decline in benefits and job quality. In 2006, 34% of young adults 18-34 years old did not have health insurance coverage. Pension coverage has fallen from 36 percent in 1979 to 18.8 percent in 2004.

Increasing debt levels, both credit card and student loan debt, are handicapping young adults' ability to build wealth. The proportion of young adults with college and the amount of debt has skyrocketed. Although amounts vary by state, in 2006, 58% of students graduated debt that averaged $19,646 nationally. Households age 18 to 34 carrying education-related debt had median financial assets that were 28 percent lower than those households without such debt.

45% of young adults between the ages of 25 and 34 say they use credit cards for day to day living expenses, most likely a result of lower income, student loan debt and the high cost of housing. In 2004, 25-to 34-year olds averaged $4,358 in credit card debt—47 percent higher than it was for Baby Boomers who were in that age group in 1989. Compared to a generation ago, a higher percentage of young people are spending more than 30 percent of their income on rent (designated threshold of affordability). In 2005, 43 percent of 25-to 34-year olds spent more than one-third of their pre-tax income on rent, up from 18 percent in 1970.

"A Generation Apart: Expenditure Patterns of Young Single Adults: Two Recent Generations Compared.". The main source of data used in this article is the Federal government's Consumer Expenditure Survey (CE). The data has been collected periodically for decades, which makes it perfect for generational research. The complexity of the data makes conclusions about income difficult. But it does show clear evidence of changing demographics and spending patterns. There were fewer young adults in the population in 2004–05 than there were in 1984–85, and they were marrying later in life possibly due to financial stress. The report makes much of the quadrupling of tuition prices at a time when overall CPI merely doubled, making education more expensive as a proportion of earnings, or future earnings.

Over the period examined, the proportion of expenditures going to shelter and utilities increased (consistent with the report cited earlier) and the shares for food at home and for food away from home both decreased. The expenditure category showing the biggest decrease by far was travel. The percentage reporting any travel expenditures decreased sharply, from more than half (53 percent) to about one-third (35 percent). Travel as a proportion of total outlays decreased significantly from 5% to 3%.

There is much more here, and I urge anyone marketing to Millennials, particularly discretionary purchases, to take some time to review these reports. It gave me perspective on why the young people I talk to all think of themselves as 'poor'. The reality is maybe they are?

Three Reasons Gen Y Doesn't Get Twitter

I love Twitter, but, my 18-year old daughter still insists she doesn't "get it". She explained it to me yesterday this way: for her, Facebook functions as a general organizing tool, much as Outlook does for me. Facebook is her calendar, contact book, and primary messaging platform. Any communication gaps are filled by GoogleTalk, text messaging, and if all else fails, dialing. Twitter adds nothing meaningful to this mix -- especially since her friends don't use it. Twitter is a hard sell, and I have finally given up.

The data has consistently shown 18-24 year olds lagging in Twitter adoption. Earlier this year we did focus groups among Millennials on Social Media usage ("The Millennial View of Social Media: Why Should I Be Your Friend?". We were especially interested in talking to Twitter users - but they were hard to find. I suspect if we repeated the study today, they would be equally hard to find.

A CNN article by an intern, Sharon Vaknin, titled "Generation Y: We're Just Not That Into Twitter" provides another view. Vaknin agrees with my daughter that Twitter has nothing to add over Facebook, but suggests a second theory for the lack of interest. Picking up on the Theory of Millennial Narcissism, Vaknin says Twitter offers little opportunity for 'self-branding':

Twitter's microblogging platform is what many Gen Y's may describe as "like Facebook, but just the status update." What is the point of that? We like to consolidate, so Nemeth explains that he doesn't "want to join another community, just tell people what (he's) doing." We have everything we need on Facebook. Based on Twenge's theory, a good explanation of my generation's lag in joining the Twitter mania is that there isn't an obvious way to achieve a self-brand on Twitter.Participating on Twitter requires a fan base that knows why you are unique, special, and deserve attention. Fan base aside, the Web site's interface paves a short path for cyberstalking--there is nothing to find past a user's status.

For example, Sally went to a great party last weekend, but where are the photos? Who went with her? These features, which Gen Y's value so much, are missing. As much as I like to know what my friends are doing, updates on Twitter happen so fast there really isn't time to react. More importantly, my friends don't have time to react to my activities.

Largely as a result of the digital communication tools on which we were raised, a big part of my generation wants to know what the cyberworld thinks of us, and we want its inhabitants to pay attention to us. How can they do this if they're following 300 other people? For the Millennials to make the move, Twitter will have to find a way to integrate the self-branding features MySpace gave birth to and Facebook nurtured. Even if they're packaged in 140 characters or less.

I have a third theory for Millennial disinterest. Millennials aren't accustomed to making online friends. For years, parents warned kids and teens against talking to strangers online. The origins of Facebook were that unlike MySpace, you could only have one identity on Facebook and it required a .edu email address. That meant it was 'safer'. The very idea that I am sharing my email address and phone number with people I only know from their 'tweets' is a little creepy to those who were warned from an early age of online predators. How do you know they are who they say they are? Suddenly, it's okay to make friends with people you don't know?

I have no answer for this, and I am a little surprised at the personal risks I have taken. But in my defense, unlike email and online chat rooms, Twitter seems spam-free and offers an unusually civil level of discourse. After all you have control over who you follow and block others from following you (although I have had no real need to do this yet).

Whatever the reason, it is clear that until Twitter offers a compelling value proposition, it is not going to attract younger users. Long live Facebook!