Digital marketing and Gen Z: how the new kids on the block are rewriting the rules
Born between 1995 and 2009, the loosely defined segment known as Generation Z is the elusive holy grail of modern-day marketing. Not to be simply dismissed as the “youth” category, Gen Z now makes up a third of the global population and around 27% of the workforce, with an annual spending power of $180 billion and the influence on previous generations (mainly their parents) to part with around $700 billion indirect spending each year, according to Business Insider. But this potent generation presents a significant shift from Millennials and has many brands puzzled. Bray Leino Digital Lead Rhys Gwynne explains how digital technologies offer new and exciting ways for marketers to connect with Gen Z.
At Bray Leino we have supported brands in establishing and nurturing relationships within this segment for many years, from helping Freederm claim the title of number one spot cream brand to putting WKD back into growth by establishing it as the party starter drink with a new Gen Z audience. While we love the challenges that connecting with Gen Z can bring, it is the profound and rapid impact they are having online we find most fascinating. Whether they feature as part of your targeting or not, Gen Z are reshaping the digital landscape and rewriting the rules, and brands need to be aware that we now live in a Gen Z world.
What makes Gen Z so unique?
Whether it’s the political landscape, economic conditions, technical advances or social priorities, each generation provides new challenges for marketers to navigate. Here are just a few of factors that make Gen Z such a unique challenge for brands.
Ability to blend online and offline
Gen Z are the first digitally native, mobile-first generation – this is a defining factor in why they present a challenge to so many brands. Growing up with reliably fast broadband, smartphones, social media and other digital influences has created a shift in attitudes towards technologies. Their familiarity with digital technology is not what makes them unique, but their ignorance of a world before these technologies were universally available has created a fundamentally different attitude to the role it should play in our lives. While much of the commentary focuses on Gen Z and their reliance on their smartphones and the impact this has on both their mental and physical health, what is often overlooked is the comfort the generation has in blending both on and offline experiences that has provided a shift in their attitudes to employment, commerce, communication, and social issues. In fact, around 52% of Gen Z said they felt most like “themselves” in metaverse environments compared to in real life, according to a 2022 report by Vice Media Group.
Value and values driven
Despite the impressive buying power that has made most brands sit up and notice, the segment is also considerably more frugal than previous generations. Fuelled by greater awareness of previous boom and bust economy cycles and uncertainty on both the future in employment and home ownership, Gen Z are fiscally pragmatic and practical with their money. According to McKinsey, price provides around 60% of the influence when considering the brands that they buy from. Even when they do decide to part with their money, their focus turns to seeking out brands that have shared values.
The increased social consciousness of Gen Z demands that brands become more than logos, with values and behaviours becoming a much more visible part of a brand’s personality and communications to demonstrate relevance and form longer term connection with their target audience.
Emphasis on individuality and authenticity
Social consciousness is also having an impact on the generation’s desire to feel unique and construct their own identities. While this behaviour is evident in previous generations, this emphasis within Gen Z goes beyond a desire to stand out and instead is derived more from wanting to distance themselves from the previous mass consumption of preceding generations. They are becoming increasingly uncomfortable in seeking mainstream luxury or designer brands. Instead, they place greater value in products that demonstrate individuality, sustainability and authenticity in the brands they associate with.
How Gen Z are reshaping the marketing landscape
The combination of these unique traits and behaviours means many brands struggle to create and nurture relationships with the same longevity that they experienced with the Millennial generation. These challenges are resulting in the need for radical change in the way brands are using digital to engage with their audience, to provide more connected and personal experiences and communications online. Below are some insights into how the behaviours of Gen Z and the response from brands is reshaping the digital landscape.
A brand is more than a logo
A lot can be taken from a Global Web Index stat that Gen Z is 22 percent more likely to unfollow a brand online than the previous generation. Millennials will amass a considerable list of brands that they follow online, across various social platforms, often with little regard to maintaining a connection to the brand after an initial purchase. But the more socially conscious Gen Z see the list of brands they follow online being a far more considered curation of their social media personality, that provides a representation of their values, ethics, beliefs and lifestyle. While this trend presents socially conscious and relevant brands the opportunity to form a deeper relationship with Gen Z, difficulties arise in maintaining this relationship beyond the short-term – as tends to be the case with youth marketing in general (not just Gen Z), the values, lifestyle and priorities of a young person change considerably between their early teenage years to their mid-twenties. This challenge requires brands to form more indirect relationships with their audience online, providing the opportunity to change the message and method of communication as the audience matures and their needs change. This is having a radical impact on the social media landscape and how brands are using platforms to reach their audience.
Redefining social media
It is no surprise that in 2021 Facebook experienced its first decline in user numbers for 13 years. Recently, the platform has struggled to shake the perception of being “old social media” amongst the Gen Z user segment and has failed to suitably adapt to one of the biggest trends within social media, the rise of social influencers. Gen Z see the influencers they connect with as a reflection of their own personality and consider a product recommendation from an influencer as more trustworthy and authentic and an increasingly important part of purchase considerations.
Platforms focused on video content as the core medium have benefited from the rise in influencer marketing, with Instagram, YouTube and Snapchat claiming the top three spots for platforms that Gen Z check daily. While the fees demanded from A-list influencers have outstretched most marketing budgets, the effectiveness of the channel is seeing many brands switch their focus to Micro or Nano influencers. With follower numbers often well below 100k, this category of influencer’s content often focuses on more specialist or niche content subjects but yields significantly higher engagement levels than their celebrity counterparts, due to a deeper connection with their followers. This increase in choice and affordability will see more brands turning to influencer marketing, driving growth in the industry to over $16 billion in 2022. According to a recent benchmark report, more than 75% of brands are looking to dedicate budget spend to influencer activity this year.
The focus on influencer marketing and a prioritisation of video has seen the lines between video content for entertainment and commerce start to blur. With the impact of influencers, greater priority of video content and demands of Gen Z to do more of what they like, on the platforms they like, the stage is set for the next big trend in social: Social Commerce. It is estimated that over 12% of internet users will make a purchase through Instagram this year, with sales in the US alone reaching $45.74 billion in 2022 (eMarketer, 2022). But to really unlock the full potential of social commerce, brands need to do more than simply allow their products to be purchased directly through social platforms. Live-stream shopping through social is just one method that has seen explosive growth in the past year. Combining social commerce, video content and influencer marketing to create a more experiential retail experience online that appeals to the demands and behaviours of Gen Z, while providing brands with a streamlined buying process, will increase conversion and build relationships through real-time interactivity and engagement with their community.
Buy now, pay later
In June 2022, Apple announced the expansion of its Apple Wallet platform into a Buy Now, Pay Later (BNPL) Service. This move allows users to spread the costs of an online payment through Apple Pay into four interest free monthly payments. This type of service has seen 102% growth in 2021 alone according to Insider Intelligence.
While the growth of BNPL has been accelerated due to the pandemic, the longer-term driving factor is the demands of the Gen Z segment. While price remains a significant factor in a purchase decision, this consideration extends beyond the price competitiveness of a product and includes the ability to pay in a format and time desired by the users. This demand for purchase freedom has seen FinTech companies establish themselves as major players within the short-term credit market, with an emphasis on integration with commerce platforms, allowing vendors to give greater flexibility around payment methods. While this emerging sector has raised concerns by regulators around the potential to fuel problematic borrowing, it is clear from the acceleration of its adoption amongst Gen Z that BNPL is here to stay.
In a recent study, 42% of Gen Z said that data privacy is “very important” to them. While this figure represents a large proportion of the segment, it also represents a 12% drop from the responses of the previous generation. While this decline doesn’t represent an imminent disregard by Gen Z for how data is managed, it does show a deeper understanding of the exchange of value that needs to take place in order to obtain more personalised and tailored communications from brands.
The desire to feel unique and the expectation of brands to deliver an increasingly personalised experience within the segment is driving innovation within marketing technology and social platforms, further fuelled by increased use of AI and machine learning that allows brands to communicate with audiences on a one-to-one basis. This requirement has accelerated the need for brands to develop complex technology stacks ranging from Customer Data, Marketing Automation, Customer Intelligence and Data Science platforms to name a few, allowing brands to build richer understandings of customers at a much more individual level and use this insight for more meaningful online interactions. While this technology provides new challenges and opportunities to bring the personalisation and convenience Gen Z crave, there is still a fine line that brands need to tread in demonstrating trust and transparency around the collection and use of data in the pursuit of personalised experience.
Despite data breaches and other privacy scandals from organisations still being a common media headline, Gen Z are slowly demonstrating that there can be an advantageous balance of data, insights and technology driven communications online, while still maintaining high levels of trust and stewardship around privacy and the security of user data.
Getting Gen Z marketing right
While many brands will continue to struggle to get to grips with the demands, expectations and behaviours of this generation, others are demonstrating the success that adapting to these demands can bring. Brands such as Fortnite, Roblox, and TikTok have been defined by this generation, while other iconic and longstanding brands have adapted to connect with this emerging customer base. According to a 2021 YouGov Brand Index, brands such as Oreo, Dove and Starbucks consistently rank high within the segment, and receive significantly higher recommendation scores within Gen Z audiences than the wider adult population.
While the pace of change is demanding, the success in connecting with Gen Z demonstrated by many established brands proves that adapting to these changes is possible and can yield positive outcomes. Brands who are yet to change need to look to technology to gather meaningful insights on how their audience is behaving across all digital touchpoints and deliver communications and experiences online that are contextually relevant, joined up and timely. This needs to be achieved in addition to providing more flexible and convenient methods of online commerce, while also demonstrating brand personality, values and efforts around social responsibility. The result is the ability to maximise audience value at every touchpoint and create mutually beneficial relationships between brands and Gen Z.
As the new digital landscape that this generation is shaping becomes clearer and brands start to become more comfortable with how to harness technology, data, brand values and more to effectively market to Gen Z, the newest and youngest generational cohort, Gen Alpha, is waiting in the wings, where the “new normal” is their normal, and their ability to blend the lines between the physical and virtual world even further will present fresh opportunities and challenges for brands.
To find out how Bray Leino’s team of digital specialists can help your brand navigate the shifting sands of digital marketing to a Gen Z audience, please contact Adam Holder, Managing Partner.
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