Teenagers and young adults have slowly crept in front of the baby boomers as the largest consumer group in America. However, are marketers ready to tango with Generation Y?

By Patrick Cauley

They watch MTV and they may even still have acne, yet Generation Y is a unique consumer group that has a purchasing power and presence unlike generations before them. Gen Y encompasses young Americans age 12 to 24. In terms of consumer numbers, Gen Y is some 80 million strong, surpassing the baby boomers as the biggest consumer group. "Gen Y is 35 percent non-white, making them the most diverse and tolerant generation ever," says Sarah Casalan, vice president of information technology for Ecko in New York City, a full-scale global fashion and lifestyle company aimed at Gen Y.

The always engaged Gen Y is a tricky group for marketers to reach successfully. Providing social networking tools and encouraging user-generated content is a good place to start. As Gen Y evolves and grows as the industry's main consumer target, marketers would be wise to begin laying the groundwork for life long brand loyalty. Their (Gen Y) knowledge of technology places them at the top of the consumer food chain, allowing them to influence the purchasing decisions of other target markets. As Gen Yers continue to infiltrate the workforce, their purchasing power will only grow.

GEN Y DEFLATES THE BOOMERS, INFLATES SOCIAL NETWORKING
This diverse group is not shy about spending their money. Gen Y spends upwards of $170 billion annually, a number that is certain to catch the eye of many marketers. "There are more people in that age bracket than there have been since the boomers," says Samantha Skey, senior vice president of strategic marketing for Alloy Media and Marketing in New York City, which focuses on targeted media and promotional programs. "We're living in a much more densely populated time."

The boomers, who once held reign over the market, may continue to see a downward shift in their importance. Skey explains that it's the Gen Yers who are influencing their parents' purchasing decisions, as technologies grow more complicated. A report from the National Retail Federation (NRF) agrees. The report found that Gen Yers influence 81 percent of their family's apparel purchases and 52 percent of car choices. "Technology has grown quickly, the boomers have left educated children with great technology," says Skey. The obvious next question is: how can marketers reach this particularly important consumer group?

Joe Lichtenberg vice president of marketing and business development for Eluma in Tewksbury, Mass., notes that ROI for TV is down, which is a great metric that the hard-to-control Gen Yers are, in fact, spending their money on a variety of channels. Eluma is the brandable desktop application that drives customer loyalty and incremental revenue through the power of social communities.

According to reports issued by Forrester Research, "if the dot-com boom was a defining experience for Gen Xers, the explosion of social media marks Gen Yers' coming of age."

The Gen Yers who are planning to buy multichannel are the ones already utilizing available technologies, such as Second Life or MTV Overdrive. They are comfortable living in the digital space, making online purchases more likely. Lichtenberg says that marketers should make content available on their websites that make it possible for Gen Yers to have a personal experience on the site. "The more time they spend on a site, the more revenue they generate," he says. "User-generated content as a theme is an important space for marketers and advertisers to integrate to," says Skey. As an example of just how powerful some of these social sites can be, major companies have reversed their decisions about copyright infringements with regards to YouTube. Last spring, NBC saw a ratings spike on "Saturday Night Live" after one of its skits was shared between people and became very popular on YouTube.

Other marketers have had a variety of success when properly integrating into social sites. American Apparel, a popular clothing store based in Los Angeles, has opened up a boutique in the virtual world Second Life, where avatars actually can buy and wear American apparel clothing. Volkswagen has successfully integrated into MySpace with its character Helga, who with 9,246 current friends on the site, is clearly helping to promote the brand in the social networking space.

Consequently, the challenge for marketers comes into play because of the social differences that live within Gen Yers. "[Gen Yers are] savvier in general. They know when they're being advertised to. It makes it harder, but the good marketer does it on [Gen Yers'] terms," says Lichtenberg. Their e-mail use is down, as some Gen Yers prefer to send MySpace or Facebook messages instead. "If I need to tell a friend something really quick, I'm much more likely to get on MySpace and send them a message or wall posting, as opposed to an e-mail," says Rory Docherty, a young professional from Arlington, Va.

In fact, a study from the Center for Media Research shows that nine out of the top 10 teen sites either offered content or tools for social networking site profiles, or were actually social networking sites. Marketers can use some of these changes to their benefit. Lichtenberg argues that the most loyal users are hungry for more interaction with the marketer. He adds that loyal users would be willing to participate actively in new ways, such as taking a branded desktop download.

MARKETING TO GEN Y IS RISKY, BUT VALUABLE
However, marketers walk a tight rope when they venture into the lion's den of MySpace, Facebook and YouTube. "College students look to their friends above any other influence for guidance and approval. The increase in 'friend' access, and the evolving definition of 'friend' affords peer networks greater importance than ever," says Skey.

"They're (Gen Y) good users of media. Integrate DR into the relevant flow of their content. But, don't interrupt their path to connect with friends," adds Skey, as she cautions against marketing in an intrusive way. She explains that a smart tactic may be positioning oneself on the sidelines of Facebook and MySpace, visible, but able to wait till they're pausing. Well-qualified, truly opt-in e-mail is another way Skey proposes reaching Gen Yers. But, she is quick to caution against spam-like e-mail that Gen Yers can smell a mile away.

Both Skey and Lichtenberg also agree that marketers must consider different approaches to cross-platform marketing. "What is appropriate for TV is not relevant for the web," says Skey.

Lichtenberg explains that while YouTube is a great place to reach new consumers, hosting a conversation around one's content on their own site would be a great way to retain the consumer they've already attracted. Skey adds, "The iPod is a great example of cross-platform messages. They used each platform appropriately and it worked."

The bottom line is Gen Yers must be in control, which may be a difficult concept for some marketers who are use to having total control over their promotions. According to a report from Forrester Research, "smart retailers and brands won't interfere but instead will design their promotions to become part of the action by enabling teens to SMS (text) promotions from the web to their friends in a store, share promotions on cell phones, and generally control the flow." Skey's analysis goes hand in hand with Forrester as she says, "the Holy Grail for a brand is to integrate into a peer-to-peer experience."

Marketers would be smart to begin paying more attention to this group sooner rather than later. As media channels continue to blend, the generation that "gets it" will become an increasingly important asset to the innovative marketer.

We would appreciate your feedback. To submit comments, please e-mail the magazine at editors@retailing.