- The oldest members of Gen Z are gaining their financial independence.
- Big brands are taking big strides to gain their loyalty.
- Gen Z is less cynical than millennials when they engage with brands.
The older members of Generation Z, people born between 1997 and 2012, are starting to achieve financial independence and are hitting milestones like marriage and the start of their careers. Companies as diverse as Sephora, SiriusXM, and The Knot Worldwide are doubling down on their marketing efforts to attract that audience.
In 2021, 64.3 million millennials made online purchases, compared to a projected 64.4 million in 2023, according to Insider Intelligence. By contrast, 37.2 million Gen Zers made online purchases in 2021 compared to a projected 45.5 million in 2023.
“Many brands’ core customer group, which is millennial-focused, have aged up and they want to keep those customers with loyalty programs,” said Sarah Engel, president of the marketing agency January Digital. “But in terms of bringing new customers into a brand, I’m not hearing conversations every week about getting more millennials — it’s ‘Gen Z, Gen Z, Gen Z.'”
Over the next year, one of the most important initiatives for Sephora CMO Zena Arnold is to position the cosmetics company “to be the retailer of choice among customer growth segments like Gen Z,” she told Insider. “This generation inspires us in so many ways and we continue to be engaged in how they approach and shop for beauty.”
What’s tricky about Generation Z is that the way they engage with products and services is very different from previous generations — even millennials, who came of age as the world went digital. And this means brands must recalibrate the types of products and services they offer.
For instance, Gen Z’s thinking on marriage is unique, according to The Knot Worldwide CMO Jenny Lewis.
“Gen Z is focused on the experience they’re creating for their guests,” Lewis told Insider. Gen Z’s perspective on marriage impacts the type of products and services The Knot has on its vendor marketplace, where people planning weddings can find relevant services. That marketplace is a major revenue driver for the company. As Gen Z customers start to plan their marriage, new types of vendors have emerged, Lewis said.
“There’s an emerging category, which is a social media curator on site,” Lewis said.
Other companies, like SiriusXM, have a huge opportunity because their products are heavily favored by Gen Z.
Gen Z, for instance, is the heaviest listener of digital audio of all the generations, according to ad agency Magna’s analysis of studies from Nielsen, Comscore, and Edison Research. Gen Z spends up to 25 hours per person each week listening, according to the findings. And streaming audio makes up about a third of Gen Z’s media time, Magna found.
Streaming audio is a tightly-competitive environment that includes Spotify, SiriusXM’s Pandora, YouTube, and iHeart. SiriusXM will execute a major relaunch of its audio platform this fall, which it’s planning to support with a big marketing offensive to court younger audiences — “anywhere between Gen Z and millennial age groups,” said CMO Suzi Watford.
While Watford’s mandate also includes non-Gen Z millennials, some in the advertising industry have shifted focus onto Gen Z, which is more open to brand messaging, particularly in environments like video games. Super League Gaming builds elaborate branded experiences in video game environments. For instance, it placed Barbie’s Dreamhouse in Roblox last October for its client Mattel.
“In our early days, we were doing more millennial-targeted products,” said Super League Gaming CEO Ann Hand. “We found with millennials, there was a lot of cynicism around brands and brand engagement. With Gen Z, they’re not offended by Barbie’s Dreamhouse. They’re ecstatic about it.”
While brands have always given lip service toward courting younger generations, Hand has noticed investment doesn’t always follow.
“It’s marketing 101: Get them young,” she said. “But it’s taken brands a while to see the audience shift and react accordingly. Unfortunately, these big brand machines are so focused on end-year metrics and getting used to whatever formula worked for the last five years, until they wake up and see a big disconnect.”
But advertisers have also found that Gen Z is unique because when they embrace something, older generations like millennials will follow.
“With Gen Z, there’s an upwards generational impact,” January Digital’s Engel said. “Gen Z establishes trends on TikTok, and millennials pick up those trends a year ahead. So if you’re targeting Gen Z, you’re not just targeting Gen Z.”
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