The advertising industry perennially reinvents itself. Ad agencies adjusted to a new austerity after the 2008 economic crash, embraced smartphone campaigns with a vengeance and mastered HD television commercials in the past decade alone.
One of the newest shifts coming up is a demographic shift. Just as the advertising world largely remade itself for millennials, advertisers are now gearing up to serve Generation Z (that is, people born after 1997). Based on UN data Gen Z has come of age – comprising the largest share of the global population at 32 percent – and ad agencies are preparing for yet another shift in the effort to capture as many under-35 eyes and ears as possible. In comes experiential marketing and artificial scarcity as an asset, out go the targeted Facebook ads.
Early adopters and tech-skeptics
Changing technological habits are one of the largest differentiators between Gen Z and their millennial predecessors.
According to Edison Research, 62 percent of 12- to 34-year-old Americans are Facebook users, a number down from 67 percent in 2018 and 79 percent in 2017. In addition, Gen Z users are more likely to use their smartphones than a desktop web browser — continuing a trend that started with millennials.
Social media use in Gen Z tends to be more fragmented and skews more towards private and semi-private services. These include TikTok, Snapchat, VSCO, Instagram, WhatsApp and other products aimed at interacting with narrower social networks than Facebook or Twitter. Apps like TikTok, Snapchat and Instagram also make it easy for users to change up their profiles or start anew – something that just isn’t possible on a network like Facebook.
Research shows that “the need for social currency and a sense of community are absolutely crucial for Gen Zs.” A 2019 study by Snap Inc. and GlobalWebIndex reported that 73 percent of Gen Z say it’s important to feel respected by their peers. In this case, what seems to drive a lot of their usage of social platforms is the incentive to get more likes, shares, and comments. With platforms like YouTube, Instagram, and TikTok, it’s easier than ever to go viral and be an instant Internet sensation.
The in-person difference
Counterintuitively, the digital natives of Gen Z put a strong emphasis on in-person advertising experiences as opposed to digital-only experiences. The rise of experiential marketing, which includes retail pop-ups, photo-ready experiences, virtual reality, and multimedia installations and roadshows, has been a massive component in the new aesthetic of IRL advertising experiences.
Instagram’s transformation from a niche app that allowed photographers to experiment with filters into a mass-market social network occurred at approximately the same time that Gen Z users began using Instagram en masse. “Instagram traps” such as Dream Machine and the Museum of Ice Cream doubled as tourist attractions and backdrops for Instagram photos.
Advertisers learned from the rise of Instagram experiences and adapted them to their own needs. Refinery29, for instance, has their long-running 29Rooms exhibition and Spotify turned a New York City subway station into a giant David Bowie tribute. Writing in Fast Company, journalist Jeff Beer notes that brands are increasingly focusing on how to make their advertising campaigns Instagram-friendly.
Pop-up stores and artificial scarcity through limited-edition goods are another way brands reach Gen Z customers. In recent years, Supreme’s long standing practice of making products in tiny production runs and relying on social media for amplification has been replicated by a host of small high-end producers and boutiques who rely primarily on Instagram to find new customers.
Julie Arbit, Vice Media’s vice president of insights, writes in The Drum about a recent study her company conducted which found six in ten Gen Z-ers say physical interaction at a store or other experience is necessary for building loyalty and commitment to a brand. Vice also found that only 6 percent of Gen Zers believe it is possible to build loyalty and commitment via online interactions alone. Even direct-to-consumer brands like Glossier and Away host pop-ups in various cities, in addition to their flagship locations.
Technological shifts & transitions
But let’s not forget about digital.
A recent Adobe survey of British consumers finds that 52 percent of Gen Zers say they are receptive to online ads — the highest percentage of any generational group. In addition, the study found that, despite media literacy in schools, Gen Zers are the most likely to be influenced by what they see on the internet. Usage habits are different, however. While 73 percent of boomers are willing to swap their data for a discount or special offer, only 47 percent of Gen Z responded affirmatively.
New technological shifts currently underway are also affecting the way Gen Z interacts with advertising. While the use of VR and AR in advertising is still in its early stages and is more proof-of-concept than massive returns, advertisers are embracing gaming in a big way. Twitch, YouTube and Microsoft’s Mixer are all becoming destinations for advertisers targeting Gen Z gamers. The Information reports that Twitch was on track to deliver about $300 million in ad revenue for 2019.
Advertisers are also exploring new ways to put advertisements into the gaming world. Although an ad-supported “freemium” model is standard in the mobile world, game makers have had a hard time putting advertisements inside console and PC games without them appearing tacky and intrusive. However, brands are exploring alternate methods such as sponsoring esports competitions.
The rise of 5G will also change the way advertisers target Gen Z customers. Because 5G offers significantly more bandwidth and improves mobile reception inside big box stores, warehouses, stadiums and other venues with traditionally poor data access, it offers advertisers a host of new technologies and toolkits to play with. Although the exact forms these tools will take are still unknown, experts predict they will include faster and less buggy successors to video ads, retargeted ads and hyper-targeted ads.
What tomorrow holds
Of course, the future isn’t ironclad. And broad groupings of age cohorts aren’t 100 percent accurate. With that said, research that’s already been conducted on Gen Z customers can offer some hints for the future.
As Gen Z ages and replaces millennials as making up most of the advertiser-vaunted 18-35 demographic, more and more resources and efforts will be targeted at capturing the Gen Z market. There are even agencies exclusively dedicated for targeting Gen Z customers such as JUV Consulting.
In the coming years, advertisers will target the Gen Z market more and more. New technological innovations such as 5G and augmented reality will make it even easier to target them–and we will all see what the future has to offer.