If consumers don’t have spending power, the entire economy takes a hit. Right now, Millennials and younger generations have reasons to feel good about their financial future, which bodes well for advertisers and brands of all sizes.
However, young people have a few things working against their long-term spending power, and one of them is social media. Today, we’ll explore how Millennials spend on social and how advertisers can incorporate that knowledge in their campaigns.
Millennials Are Financially Confident, but Social Media Encourages Spending
Early in February, Allianz Life Insurance Company released findings from its Generations Ahead Study. As we might expect, the study focused a great deal on Millennials.
The study found that 77 percent of Millennials feel financially confident and, more importantly, they have solid reasons for that confidence:
- Forty-one percent set aside money each month, compared with just 36 percent of Gen Xers.
- Seventy-one percent use tools to make saving easier, such as multiple savings accounts for various needs and wants (daily expenses, loans, vacation savings, etc.).
Further, Millennials are less likely than Gen X to rack up credit card debt or take out loans for housing and auto needs, according to a report from TransUnion.
Yet, Millennials (and those coming behind them – Generation Z or the Pivotals) face a challenge to financial progress that older generations didn’t at their age: social media. Social media is like a constant, incredibly alluring advertisement, not only for physical products and commercial services, but also for experiences.
Millennials are bombarded daily with friends’ fun experiences on Facebook and other channels, and report the following reactions to that exposure (from the Allianz study above):
- Fifty-five percent say they have a fear of missing out (FOMO).
- Fifty-seven percent spent money they hadn’t planned to after seeing something in their feeds.
- Eighty-eight percent think social media makes it easier to compare one’s finances and experiences with others’.
- Sixty-one percent feel inadequate after looking at social media.
- Fifty percent admits spending more on going out than on the mortgage or rent.
Allianz Life speculates that Millennials are acting on two major forces in this space of social media and spending: greater confidence due to responsible saving habits and liberal spending due to FOMO.
So, while Millennials aren’t spending on things like homes, cars and children the way previous generations did, they’re still influenced by what their peers are buying.
According to reporting from Forbes, 72 percent of Millennials have purchased beauty and fashion products after seeing an Instagram post. Seventy-one percent are more likely to buy something online if someone recommends it (which often happens through social media).
Influencers – the best influencers – are a big part of this. Forbes goes on to report that just 5 percent of social media influencers drove 45 percent of social influence. This is especially true in the fashion and beauty industries, where social media posts heavily drive Millennials to make purchases.
Including Millennials in Your Advertising Strategy
Millennials are a force to be reckoned with in terms of consumer spending power. This Forbes article cites that in 2018, Millennials will have the most spending power of any generation.
Adweek offers some advice when it comes to overcoming the challenges of reaching this generation on social media:
Use videos and images rather than text. Millennials don’t want you to tell them about your brand; they want you to show them who you are. Video is far more inviting in this respect.
Scale up on Snapchat as you scale down on Facebook. Younger Millennials often choose social media that isn’t used by their parents and grandparents.
Ignore Pinterest and Google+. Despite both sites having respectable numbers of users, they aren’t places attracting large swaths of Millennials.
Pay for social media advertisements; don’t leave it to organic searches. This is a way to get specific with targeting and reach beyond your followers.
To learn even more about how to tap into this special segment, check out articles we’ve written previously on the topic:
- Millennials and Advertising: What You Need to Know.
- Advertise to Millennials, Not Millennial Stereotypes.
- Ad Endorsement: Opt for Influencers Over Celebrities.
- How Small Business Can Make the Most of Social Media Advertising.
Millennials have confidence in their earning and saving power, but are vulnerable to the endless spending opportunities presented on social media. If the ad industry promotes experiences and true Millennial values in its content, and partners with the right influencers to develop it, the results can be great for advertisers and consumers alike.