Millennials are as influential as the baby boomers once were: a demographic so economically important that advertisers are changing their strategies to target them. According to the U.S. Census Bureau, as of 2019, millennials made up about 25%-27% of the total population, surpassing the baby boomer generation (those born between 1946 and 1964) in numbers. With an estimated U.S. population of 86-88 million, millennials represent a significant market with considerable spending power.
Who Are the Millennials?
Millennials are individuals born between 1981 and 1996, a period recently clarified by the Pew Research Center after years of ambiguity. This generation is sometimes referred to as Generation Me or the Trophy Kids, labels that often carry negative stereotypes, such as being lazy, spoiled, and self-centered.
The perception of laziness might be linked to their status as digital natives who use technology to simplify many tasks. For example, if the television remote is out of reach, they can use an app instead. If they dislike long commutes, they might work remotely. To older generations, it can seem like millennials are doing very little.
Why Do Millennials Matter?
Millennials are cautious with their finances. Growing up in the aftermath of 9/11 and during the Great Recession, they face futures with less wealth compared to previous generations. Several factors contribute to this situation. Millennials invested heavily in higher education, resulting in a significant number of college graduates each year. However, these graduates often face debts averaging about $39,000 per borrower.
Large debts mean millennials can’t live like their parents did. Entry-level salaries are often low, with much of their income going toward debt repayment, credit cards, and living expenses, unless they live with their parents. This leaves little money for non-essential items.
Despite the convenience of online shopping, which might contribute to the lazy millennial stereotype, physical stores remain important. Millennials are accustomed to the instant gratification provided by the Internet, so waiting several days for a product to ship is frustrating when a nearby store has it available immediately.
Why Now?
Why should advertisers focus on this seemingly poor, low-spending group? For one, millennials are very loyal to companies they like. While traditional brands like Sears and Chevrolet (GM) may not attract millennial dollars, companies with strong social media engagement and personalized shopping experiences do.
Furthermore, traditional advertisements are less effective with millennials. They prefer to spend their limited funds on products they believe are worth the money: they research online, test products in stores, and seek honest reviews from peers before making a purchase.
By engaging millennials now through cost-effective methods, companies can make their advertising budgets more efficient as this group gains more financial stability.
The Bottom Line
Millennials may be underemployed and heavily in debt, but they are willing to spend on services, thoroughly researched quality goods, and peer-recommended purchases. They are loyal to companies that treat them as individuals and interact with them on social media. By understanding and catering to their preferences, businesses can effectively tap into this valuable consumer base.