For the majority of the last decade, millennials lagged behind previous generations.
Plagued by student loan debt, stagnant wages and poor job prospects in the wake of the 2008 Great Recession.
As this generation takes its place at the center of the U.S. economy, it is critical that advertisers and business owners understand why millennials are so disruptive.
Millennials grew up experiencing large shifts in U.S. society and culture and we are seeing the effects play out in real time.
In an effort to sort through the disruption, this article uses survey data to understand the historical events that influence millennial buying behavior.
Using this information, we make an effort to explain the erosion of brand trust and conclude with examples of how to attract millennials with authenticity.
The first section presents the definition of millennials that we will use and reviews the relevant data on how they live, communicate and shop.
Defining Millennials
Millennials live, shop and communicate differently than every generation before them.
To understand why we must consider the generation-shaping conditions that affect Millennial’s life choices and buying habits:
- Sheer size of cohort
- Ethnic and Racial Diversity
- Political
- Economic
- Technology
Size
Naturally, the size of each generation affects its influence on macroeconomics.
As described in a number of Pew Research Center reports, Millennials are individuals born between 1981 and 1997, with ages ranging from 23 to 39 in 2020.
The latest population data available from the U.S. Census Bureau estimates that 72.1 million people fit within that generation.
72.1 million people in comparison to Boomers (71.6 million) and Generation X (65.2 million) are sure to shake things up a bit.
But they have not always been the majority. As the figure shows, millennials overtook the baby boomer generation in 2015 to become the United State’s largest generation.
This is a major shift – as the baby boomer generation had been the largest population for the previous 60 years.
Diversity
Research highlights not only the sheer size of Millennials but also the racial and ethnic diversity.
The United States has become racially diverse over time. Meaning the white population share has declined while the population share of other racial backgrounds has increased.
Many factors are responsible for the increasing diversity: immigration, interracial marriage, and differential birth rates.
As seen in figure 2, each generation is gradually more racially diverse than the generation that came before it.
Today it is documented that 50% of millennials are white, this is a notable shift from the 70% share of the Baby Boomers Generation.
Political
Millennials are old enough to remember and comprehend the historical significance of the 9/11 terrorist attacks.
The tragic events of September 11th gave a renewed sense of purpose and strengthened the concept of public service.
A generation already actively engaged in their communities became even more involved.
This is extremely important to understand because it is this community activism millennials need to see from brands they buy from.
Millennial students came of age in an era of political scandal and severe criticism of government.
Growing up amidst the Iraq and Afghanistan wars, developed a different view of political parties and a natural distrust of the establishment.
During the 2008 election, millennials harnessed their collective voice helping to elect the first black president.
Economic Recession
Beyond politics, most Millennials entered the workforce during an economic recession. Creating a greater disparity in social classes and a “slow start” for Millennials.
The severity of the Great Recession left a lasting impression on millennials, much like the Great Depression left a lasting impression on the Greatest Generation.
In Learning from Inflation Experiences, Malmendier and Nagel show that the economic conditions that an individual has experienced in their lifetime can have permanent effects on investment decisions and inflation expectations.
“Using data from the Survey of Consumer Finances from 1960 to 2007, we find that individuals who have experienced low stock market returns throughout their lives so far report lower willingness to take financial risk.”
The effects of coming to age during the Great Recession may have permanently changed attitudes toward saving and spending for millennials more so than for generations that were more established at that time.
Technology
Millennials’ life choices and buying habits have been shaped by these historical events in a way that was not the case for older generations.
Technology, specifically the rapid evolution of how people communicate and interact, is of great influence.
Television changed baby boomers’ lifestyles and Gen X grew up as computers were taking hold.
But it is Millennials that felt the explosion of the freedom of information – the internet.
The Internet has given consumers the ability to become their own researchers. Prior to the World Wide Web, consumers made their own conclusions about brands’ claims.
Today within a few clicks, nearly every statement can be contradicted.
Now, this information would not mean much if the millennial generation consisted of free-living college students, binging on Netflix and taking selfies at Coachella.
But that’s not the truth.
Millennials make up a majority of the workforce and are very close to becoming the majority of entrepreneurs.
Millennials are in control now, they are the number one market influencer displacing Baby Boomers who have been in control for the last 60 years.
Brands have to stop advertising and speak to their new audience – one that focuses on people over profits.
Millennials want authentic brands, meaning authentic messages and interactions.
Given this information, there are two paths forward.
You can brush it off as the nonsensical ramblings of a millennial – or you can acknowledge the increasingly crucial role millennials play and do something about it.
If you choose to ignore millennials, you can stop reading and wait for your company to collapse.
If you are smart, you will continue reading this article and learn how to make your brand authentic to attract millenials.
How Millennials Make Buying Decisions
As millennials enter the next stage of life, the oldest among them will turn 39 this year (2020), a clearer picture of the sheer power of their generation is coming into view.
To attract Millennials to your brand, keep in mind the generation-shaping considerations that produced the disruptive Millennial buying decisions:
- Distrust the establishment
- Freedom of information
- Diversity & Activism
- Recession minded
Millennials Distrust Brands
Steve Jobs famously said, ‘A brand is simply trust’. He recognised the critical importance of trust to brand loyalty.
Trust between consumers and brands has been on a downward slope for the past few years.
It is necessary to understand this distrust of institutions if brands are going to repair their image and attract the new buying super power – millennials.
After millennials became the majority, the Edelman Trust Barometer recorded an unprecedented decline in the trust of business – from 45% in 2016 to 33% in 2017.
This erosion of trust between consumers and brands has become so severe that according to a poll of young people conducted by Harvard University’s Institute of Politics, only the military and the scientific community receive positive support.
In response to the Covid-19 Pandemic the Edelman Trust Barometer did a 2020 Spring Update revealing a significant shift in just 4 short months.
The 2020 Spring Update shows that during the pandemic, the government became the most trusted institution for the first time in 20 years, increasing by 11 points to an all time high of 65%.
Despite the increased trust in government, the pandemic shown a spotlight on systemic inequality:
- 50% believe business is doing poorly – completely failing at putting people before profits.
- Less than half believe that companies are protecting employees from Covid-19 sufficiently.
The negative trust rating of business during the Covid-19 crisis is further amplified by the assessment of CEOs.
Only 29% said CEOs are doing a good job responding to the pandemic. When compared to scientists (53%) and government leaders (45%) – yikes, there is a lot of work to be done to repair brand image with consumers.
Freedom of Information
A great contributor to millennials distrust is that brands are viewed as part of an unfavorable “establishment” rather than an individual entity.
“Nobody actually wants to be friends with a toothbrush; they want to be friends with a person.” – Matt Britton of MRY said.
To explain this concept, he references an ad campaign for Adobe Creative Cloud as an example.
Rather than the traditional advertising method and have Adobe tell everyone how great they are – they had real students use Adobe products and show their peers how great Adobe is.
The difference between being sold to and buying into a brand is in how the content is presented.
Advertising yells, “BUY THIS because it’s better, faster, stronger,” while content enriches a consumer’s life and positions the business as a reliable source of information.
Remember, millennials came of age during a freedom of information explosion, the internet.
The Internet provided consumers the ability to become their own researchers – and they are researching.
“Just do it” is the infamous Nike tagline.
“Just Google it” may be the Millennial’s tagline.
Invest time into conducting an audience analysis and combine this information with search data to discover what questions potential customers are searching for organically.
Provide this information freely.
Do not hide it behind a gateway, asking for something first. The point here is to provide more value than what you take.
This idea is so basic, give.
Helping people makes them want to help you. It is the law of reciprocity, talked about in popular business books by Cialdini and Bob Burg.
Attracting Millennials with Activism
The relationship between millennials and brands goes deeper than general disdain and distrust.
They start and stop relationships with companies based on the companies’ positive or negative impacts on society.
Trust is second only to price as a top brand attribute when deciding whether or not to make a purchase.
81% said they must be able to trust a brand to do the right thing.
Similarly, a study by IPSOS Connect found that 37% will stop purchasing from a brand because of its unethical behavior.
Be a visionary.
Millennials know brands have a louder voice and hold extreme clout. They want brands to educate their followers, influence what is acceptable behavior and advocate for systemic change.
An overwhelming 60% of consumers in the United States want brands to invest in addressing the root causes of racial inequality.
Brands with clear and simple messaging that actively invests resources into social and environmental efforts are beginning to solidify brand loyalty.
We’ve seen a number of visionary brand marketing in recent months.
“We’re not in advertising mode right now. “That’s the most important thing. We’re acting on a relevance and action kind of mode.” – Marcel Marcondes, CMO of Anheuser-Bush
Customers are so saturated by traditional advertising, the only way to stand out is to connect on a human level.
It is less about selling products and more about making it worth their time to interact with your brand.
Recession Minded
The effects that the Great Recession may have had on millennial spending habits was beginning to come into view when the pandemic covid-19 hit.
The pandemic has made such a
In Learning from Inflation Experiences, Malmendier and Nagel show that the economic conditions that an individual has experienced in their lifetime can have permanent effects on investment decisions and inflation expectations.
This primarily is going to affect investment type purchases like homes, stocks and retirement planning.
You will see them seek jobs that align more with values and passions than a focus on the paycheck.
Brand Example
Millennials combine their internet savvy with their strength in numbers to produce a collective online community activism known as “call-out culture.”
This is the act of calling someone out online, meant to hold individuals and companies accountable for their actions or inaction.
Millennials (and GenZ) are capable of producing a swell of social media outrage that can take a post or a tweet down, gather thousands of online petition signatures and even boycott a company.
A current brand example, would be the crumbling Victoria’s Secret empire.
It has only been 2.5 years (November 2018) since the famous Vogue interview with then chief marketing officer, Ed Razek.
“…It’s like, why doesn’t your show do this? Shouldn’t you have transsexuals in the show? No. No, I don’t think we should. Well, why not? Because the show is a fantasy. It’s a 42-minute entertainment special. That’s what it is.
Razek went on to say why plus-sized models are not embraced by the brand.
“We attempted to do a television special for plus-sizes [in 2000]. No one had any interest in it, still don’t.”
Reaction to Razek’s remarks was swift and heated.
Notable LGBTQ models and plus-size stars took to social media to share their disappointment, encouraging a boycott of all VS products.
Shareholders wrote a fiery letter to CEO Les Wexner, urging him to update the brand’s image and switch up its predominantly male board of directors.
In the letter, Barington Group CEO James A. Mitarotonda pointed to the recent collapse in L Brands’ share price, including three years of sliding sales at Victoria’s Secret.
Note: Sales began sliding in 2016. A year after millennials became the largest population. In 2016, millennials were between the ages of 19 and 35.
“We recommend that the Company take swift action to improve the performance of Victoria’s Secret, by, among other things, correcting past merchandising mistakes and ensuring that Victoria’s Secret is communicating a compelling, up-to-date brand image that resonates with today’s consumers.”
During this social fire storm, a monitoring tool recorded and analyzed data surrounding Victoria’s Secret.
Figure 3. Mentions Over Time
Figure 3 shows a significant spike in online mentions of Razek after his interview was published. Mentions decrease for a week or two and reignite the conversation after the show aired on December 2nd.
Figure 4. Sentiment Analysis
Figure 4 as you would expect, people were not happy about Razek’s Vogue interview. The sentiment analysis shows an overwhelming number of negative mentions, 95.9%.
Here comes the part that trips up large brands.
Despite public outcry for change the company still had largely positive online sentiment.
After the 2018 show aired, brand mentions spiked on social media by 5,0475%.
79.5% of those mentions were positive, while only 8.5% were negative.
Figure 5. Brand Mention Sentiment by Channel
Figure 5. Shows the majority of brand mentions are positive.
Now, why would Victoria’s Secret continue to have a positive sentiment online amidst a PR crisis and years of declining sales?
The answer is the difference between real-life and online sentiment.
Online, people are mostly admiring the models. For some, watching the Victoria’s Secret fashion show became an annual tradition.
However, admiration does not directly translate into actually purchasing the product.
Especially if the admirers do not fit the image that the brand promotes.
The fall out has been swift. Victoria’s Secret fashion show was officially cancelled in November of 2019 in response to declining ratings.
And this spring, it’s private equity buyer, Sycamore Partners, said it is no longer interested in buying the company – yikes.
This is what happens when a brand is completely tone-deaf and fails to evolve with its new consumer base – (ahem Millennials).
Update: 2021 Planters Mr. Peanut Ad
You may remember Super Bowl 2020 when Planters killed off Mr. Peanut.
He’s back with an authentic statement.
Instead of spending $5 million on a Super Bowl Ad, Mr. Peanut is supporting people who are helping make the world “a little less nutty.”
The #anutabove campaign is the exact type of marketing that can rebuild brand loyalty and attract Millennials who demand brands put people before profits.