January 18, 2011
With the success of flash sales site Gilt Groupe and etailers such as Net-A-Porter, Generation Y is emerging with strong media consumption habits, and it is imperative that luxury brands keep up.
Brands should keep in mind young, affluent consumers' desire to shop via digital and social channels. Learning how to reach young consumers is key for luxury brands.
According to Robert Mertz, senior editor at McKinsey & Co., total mobile commerce revenue is set to exceed the $50 billion mark by 2014.
Why Gen Y?
Generation Y is considered to be the largest consumer group in U.S. history with an estimated 70 to 80 million people. It is roughly 25 percent of the U.S. population.
According the Mr. Mertz, Generation Y is better informed than its predecessors and uses social media to shape brand perceptions.
The Generation Y’s annual spending power already exceeds $200 billion, and by the year 2017, spending power will eclipse the Baby Boomer generation.
Facebook, hands down
More than three-quarters of the Generation Y population use Facebook every day, which is nearly two times as many that watch television or read newspaper content daily.
Apparel and accessories brand Hugo Boss has excelled in using Facebook as a viable marketing channel (see story).
Facebook’s messaging platform combines SMS, chat, email and traditional Facebook messages into one unified inbox. This channel can provide a luxury brand a way to reach affluents with a personal touch.
According to L2 Think Tank’s Gen Y Affluents study, 63 percent of Generation Y affluents use social media to engage with brands.
Fifty percent say that Facebook and brand videos affect their opinions about products.
Early adopters are considered to be those who use mobile devices and ereaders to access media may be valuable to luxury brands.
Generation Y believes that cutting-edge innovation is extremely important for them. In that case, luxury brands should make sure their social media platforms are up to par.
Survival of the fittest
In order to succeed in this social-media dependent world, brands will have to shift ad spend from traditional formats to digital.
According to Mr. Mertz, brands will have to align spending with consumers’ preferences for digital by increasing resources dedicated to brand Web sites, Facebook, mobile and other channels.
He also believes that brands should give consumers a voice. They should enable affluents to share and comment about the brand.
Mr. Mertz believes brands should integrate efforts across media and channels such as Facebook, blogs, Twitter, geo-local and traditional media.
Finally, brands should provide compelling, quality content, particularly video.