$137.8B U.S. ad spend for top 200 advertisers
In their endless quest to decode millennial behavior, marketers have placed a microscope on millennials' spending habits, hoping to glean patterns for how their behavior differs from previous generations. Good luck cracking that one.
We're a long way from anyone being able to proclaim that they've "figured out the millennial consumer," but we have gathered some valuable research. For example, millennials eschew luxury goods for sustainable ones; prefer buying organic and fair trade; and they're a lot more willing to shell out money on experiences that enhance their lives (and their Instagram and Snapchat feeds) rather than on material things.
The thing is, it isn't just millennials. The interesting trend I'm seeing is that these traits are bleeding beyond this demographic. Millennials are proving to be cultural trailblazers for older and newer generations. Consumers today are broadly catching on to the notion that experiences make you happier and are as valuable ‐‐ or more ‐‐ than buying fancy things.
Various psychological studies are showing that all people -- not just millennials -- are happier when their money is spent on living, rather than on having. Mintel's 2015 American Lifestyles report projects that over the next five years, total spending will grow by nearly 22%, with the so‐called "non‐essential" categories, including vacations and dining out, expected to see the greatest gains.
At the Global Retailing Conference in May, Sarah Quinlan of MasterCard's Market Insights unit, said she's been seeing subtle shifts indicating consumers are less worried about spending money and more concerned with using it to enhance their lives. People pick their kids up from soccer practice and drive past home, out to a restaurant for dinner because they want the quality time with family, she said. Restaurant sales growth outpaces other categories, underpinning the idea of the "experiential consumer."
I can't help but think of Chipotle's success. Much of the attention has been focused on the chain's ability to efficiently serve up fresh, relatively healthy fast food. That's well and good, but I'd argue that Chipotle has managed to eat share (last I checked its revenue was growing at a 20% clip) from more established competitors like Taco Bell, McDonald's and Burger King for another reason: It's an experience restaurant where consumers know they can always get a customizable meal. Chipotle is always ahead of the curve; it has created a festival called "Chipotle Cultivate," designed to drive consumer loyalty, engagement and education. That investment is probably working harder than an ad unit could.
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Experiences are also what people increasingly use to define themselves across social channels. Take a spin through your Instagram and Facebook feeds, and you're more likely to see a friend's trip to Angkor Wat or pictures of their baby on the beach in Tulum versus photos of a Vuitton bag or new pair of Louboutins.
With this backdrop of shifts in how consumers spend their money, it follows that marketing budgets should shift, too. Advertisers are thinking beyond channels like TV or outdoor or online, and starting to focus on how to create moments of enjoyment for their customers.
It's critical, though, to not look at experiential marketing efforts as stunts. In order to maximize the experience, this form of marketing should be thought of as a way to stay in step with changing consumer behavior. Here are three tips for brands to create meaningful experiences:
1. You don't need to create large‐scale, complex experiences. If done right, small experiences can create truly sticky content. If executed properly, and documented well, your brand experience will drive your consumers and the press to tell your story better, and more authentically. The recent Converse Chuck 2 campaign demonstrated how a shoe that has not changed in years was inspired by the way the product was organically behaving on social media, thanks to its loyal consumers.
3. Don't believe the hype around why certain retailers had a flat quarter. It doesn't signal that consumer confidence levels are waning or that humans have less discretionary spending. It merely points to a culture that is starting to spend time and money differently. What would you prefer, a brand new TV or a trip to Cuba? Yep, me too. Consumer‐centric culture means act human -- you know, the way your consumers behave. And that requires understanding that they are willing to spend, sometimes more than something is worth, if they value the experience as an overall part of the product.