Millennials will command a cumulative $1.4 trillion in spending power by 2020 (Source: Direct Marketing News) — but how they’re spending their money may be a surprise to marketers. Millennials are often miscast by older generations as superficial and spend thrifty, but for a generation coming of age post the 2008 recession, they are focused on saving their money rather than spending it, and a recent poll by Harris Interactive proves it.
According to Harris Interactive, if given $100,000, 58 percent of Millennials would pay off any existing debts and loans whereas 14 percent of Millennials would treat themselves to something that they would not normally spend money on. Furthermore, 43 percent of Millennials would save for a rainy day fund and unexpected expenses, more than two times the amount of Millennials who would go on vacation. These findings suggest that this generation is financially risk averse and just don’t buy quite as much.
So what does Millennials’ frugally-focused behavior mean for marketers?
1. Function over fashion: Marketers might consider positioning their brand’s products in advertisements as lifelong necessities by playing up function over fashion. Harris Interactive’s results indicate that while Millennials save versus spend, they will spend money on what they deem to be good investments. When researching products prior to purchase, this generation will likely take to messaging that emphasizes practicality, durability and authenticity.
2. Go mobile: It is worth noting how the Harris Interactive results reflect Millennial behavior as it correlates to spending habits. This generation is staying in more than going out during the week to save money, and leisure activities at home are when they’re most likely to use mobile and most receptive to advertising (Source: ABI Research). This presents marketers with an opportunity to target Millennials with contextually relevant messaging on their mobile in real-time. The key here is to ensure every piece of content is optimized for mobile as to maximize reach and accessibility across devices.
3. Reward their lifestage: When executing Millennial-driven campaigns, marketers should heavily consider integrating a sweeps or rewards-based program. Knowing that this generation is frugal with their spending and prefer to firstly pay off debts, free stuff is plenty incentive to enter. Furthermore, rewards that aim to help Millennials achieve their life goals versus win a vacation are more likely to resonate.
There is no question that Millennials are invaluable to the marketing world. Previously, marketers have targeted this generation based on the faulty misconception that they’re privileged and materialistic. However Harris Interactive polling results of US Internet users sheds new light on this segment; those who save versus those who spend. Given this fact, it is important that marketers consider the above implications in order to drive purchase among this generation.
Cover photo via The Huffington Post