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THE NEXT GENERATION

Insights

TREND REPORT

Which millennials are already luxury consumers andwhich ones will be living large in the next decade? Here’s how

to talk to those spending now, and prepare for the future.

20121210-Affluent.qxp 12/5/2012 1:17 PM

20121210-Affluent.qxp 12/5/2012 1:17 PM

Insights

AD AGE INSIGHTS TREND REPORT DECEMBER 10, 2012 · 3

AFFLUENCE IN AMERICA: THE NEXT GENERATION

A conventional image forming for young adults under age35, known as Gen Y or the millennials, is that they are up totheir ears in student debt; either unemployed or working atpart-time jobs that don’t use their expensive college degrees orat unpaid internships; living in their parents’ basements, delay-ing both marriage and buying their first homes; and generallybesieged on all sides by the tough economic hand they’ve beendealt. However, there is one subset of this group more likely torise above this bleak portrait: those in households making morethan $100,000 a year in annual income.

The affluent Gen Yers are the future consumers of luxurygoods and services, and they differ in important ways from theirbaby boomer and Gen X parents, who experienced very differ-ent economic cues during their formative years. During theboom times of the early years of the past decade, luxury mar-keters targeted “mass affluents,” those consumers who wereaspirational luxury consumers and who were feeling flushthanks to the rising value of their biggest asset, their homes, andwho didn’t mind using credit cards to purchase the signifiers ofa wealthy life. Luxury marketers rolled out more accessibleofferings in order to reach this wider market. But after the hous-ing bubble burst, mass affluent consumers have reverted to the

What the luxury consumersof the future look like today

By Emma Johnson

— Jason Dorsey,chief strategy officer ofthe Center forGenerational Kinetics

“GEN Y ISENTERING THEWEALTH-ACCUMULATIONPHASE, ANDCOMPANIESTHAT ARESTRUGGLINGSHOULD LOOKAHEAD.”

AFFLUENCE IN AMERICA

CONTENTS

INTRODUCTION 3

GEN Y, AFFLUENCE AND LUXURY: Steve Kraus, Ipsos MediaCT 4

GENERATION GAP 6

THE FIVE SEGMENTS OF GEN Y HOUSEHOLDS ($100,000+ HHI) 9

SPENDING PATTERNS 14

OUTLOOK AND ATTITUDES 17

CAREER PATHS LEAD TOAFFLUENCE 19

SUCCESS STORY: BMW 3 SERIES 20

MEDIA HABITS 21

CASE STUDY: COMEDY CENTRAL 22

JUMPING THE SHARKGeorge Scribner, Digitas 24

CONCLUSION 25

CHARTS:

AFFLUENT AMERICA 7

FIVE SEGMENTS OF AFFLUENT GEN YHOUSEHOLDS 11

WHERE DO THEY LIVE: GEN Y 13

GEN Y SPENDING POWER 15

MEDIA USE AND ACTIVITY 23

This document and information contained therein arethe copyrighted property of Crain CommunicationsInc. and Advertising Age (Copyright 2012) and arefor your personal, noncommercial use only. Youmay not reproduce, display on a website, distribute,sell or republish this document, or the informationcontained therein, without the prior written consentof Advertising Age. Copyright 2012 by CrainCommunications Inc. All rights reserved.

PowerPoint slides of chartsand infographics featured in

this report are available for buyersto download. Go to AdAge.com/trendreports

CONTINUED ON P. 5

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AFFLUENCE IN AMERICAInsights

4 · DECEMBER 10, 2012 AD AGE INSIGHTS TREND REPORT

GEN Y:AFFLUENCE AND LUXURYPerspectives from the Mendelsohn Affluent Survey

The Mendelsohn Affluent Survey has been tracking the lives,lifestyles, purchase patterns and media habits of affluent consumersfor more than 35 years. The study gives us a unique perspective onthe dynamics underlying affluence, luxury and generational change.

It’s no secret that the nature of luxury has changed in recent years.In the boom years of 2004 to 2007, affluents felt wealthier than theyactually were, and expected that wealth to increase—and they spentaccordingly. The Great Recession reset those mindsets, ushering in anew perspective on luxury, and a new (more upscale) core target forluxury marketers. (In fact, nearly two-thirds of affluents agree, “Thedefinition of luxury today is not the same as it was five years ago.”)Compared with just a few years ago, luxury today is more personal,more individually defined, more intimate, more subdued, more occa-sional, more value oriented and more concentrated among a smallergroup of truly elite consumers.

MILLENNIALSJust as times have changed, and perspectives on luxury have

changed, so too have generational dynamics. Marketers in a variety ofcategories have targeted baby boomers, literally for decades, as theirhuge numbers, discretionary incomes and willingness to spend madethem attractive prospects. Today, although boomers remain a largeand attractive target for many, they present challenges as well. Manyare delaying and downsizing retirement plans, as they feel the pinchof being sandwiched between caring for elderly parents, and tacklingthe college bills of their children.

Today, many marketers are increasingly setting their sights ontoday’s young adults, often known as Gen Y or millennials, and thisreport by Digitas synthesizes many sources to offer insights on thisgeneration. Although Gen Y lacks the sheer numbers and demograph-ic force of baby boomers, it nevertheless represents substantial num-bers and spending capabilities.

In our work, as we enter the 36th year of the Mendelsohn AffluentSurvey, we have strived to enhance our survey and ensure that we rep-resent Gen Y fully and accurately. Two years ago, we switched from asampling approach based on affluent heads-of-house to a samplingapproach that accurately represents all affluent adults. As a result, wemore fully represent different subsegments of Gen Y, including not onlythose who head their own households, but also those who may be livingwith their parents, but who nevertheless command substantial spendingresources. As this report reveals, segmentation is crucial to understand-ing the opportunities within the diverse generation that is Gen Y.

LUXURY THENA SHARED, COLLECTIVE SENSE OF WHAT

CONSTITUTES “LUXURY”

AN EASY WILLINGNESS TO SPEND AT THE HIGH-END, AND PAY A PREMIUM FOR TRUE LUXURY

A CONSISTENT LIFESTYLE OF HIGH-END CHOICES (OR AT THEVERY LEAST, THE ASPIRATION TO SUCH A LIFESTYLE)

“MASS AFFLUENT” CONSUMERS ENGAGED IN WIDESPREAD “ASPIRATIONAL” SHOPPING BEHAVIOR,AND LUXURY MARKETERS RESPONDING ACCORDINGLY

WITH LOWER-PRICED BRAND EXTENSIONS

LUXURY TODAY89% AGREE, “LUXURY IS IN THE EYE OF THE BEHOLDER”

89% AGREE, “WHEN I DECIDE TO PURCHASE A LUXURY ITEM, I GO OUT OF MY WAY TO FIND THE BEST PRICE POSSIBLE”

92% AGREE, “TO ME, SMALL INDULGENCES CAN BE JUST AS MEANINGFUL AS PURCHASING

A HIGH-END LUXURY PRODUCT”

LUXURY PURCHASES MORE CONCENTRATED AMONG ELITE GROUPS SUCH AS “ULTRA AFFLUENTS”

(THE 2%-3% OF AMERICANS WITH $250,000+ HHI)

SOURCE: MENDELSOHN AFFLUENT SURVEY POINT-OF-VIEW FORUM, “LUXURY IN 2012 AND BEYOND”

—STEPHEN KRAUS, senior VP-chief insights officer,

Audience Measurement Group, Ipsos MediaCT

For an explanation of how the Mendelsohn

Affluent Survey is conducted, see page 5.

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middle class, and are now behaving and spending in a way thatreflects that reality. While mass affluent consumers—such asthose with $100,000 or more in annual household income—were participating significantly in luxury markets in 2005, thedisappearance of aspirational luxury consumers means thattoday’s luxury marketers increasingly have to refine their targetupward, toward those with $200,000 in household income, oreven more.

Ad agency Digitas investigated these Gen Y consumers andtheir approach to luxury. Building on Digitas’ 2011 report,Affluence in America, which looked at all wealthy households,this new report synthesizes data and information from a varietyof sources, including the U.S. Census Bureau, media coverageand interviews with marketers, to examine the next generationof luxury consumers.

The affluent segment of Generation Y, those ages 18 to 34,has the largest current and potential spending for luxury items.

Gen Y’s spending power is almost $200 billion a year, accordingto marketing research firm Kelton Research.

“Gen Y is starting to enter the wealth-accumulation phase,and companies that are struggling should look ahead,” saidJason Dorsey, chief strategy officer of the Center forGenerational Kinetics, a research and consulting firm. “Basedon our and other research, by 2017, Gen Y could outspendboomers. As boomers move on, they’ll be spending less, butGen Y is just getting started.”

The focus on Gen Y has gained urgency due to the post-recession belt tightening that has all income brackets fearful oflosing their jobs and spending more conservatively. The pasttwo years have seen a bit of a “luxury rebound” among those inthe very top income brackets, who have fared well because ofhigh-end real estate holding value and growth in the stock mar-ket. The Gen Y children of these top-earning households havebenefited as well, often by being able to use family assets likereal estate and automobiles that would be out of reach on theirsalaries alone.

Insights



CONTINUED FROM P. 3

MENDELSOHN AFFLUENT SURVEYDigitas used data from this survey to create its segments of Gen Y affluent households

The Mendelsohn Affluent Survey is used by hundreds of organizations for market sizing, consumer insights and media planning. Amongother uses, it serves as a currency study for affluent print advertising, and is an agreed-upon source of audience-measurement data used byagencies, advertisers and media companies in negotiating the cost and placement of advertising. It also serves as a single source of informa-tion about the complete range of affluent media habits across platforms, including television, internet, computers, smartphones and tablets.

The Mendelsohn Affluent Survey uses rigorous sampling and weighting methodologies to ensure the results are truly projectable to the pop-ulation of America’s 59 million affluents, providing accurate audience and market-sizing information. The Mendelsohn Affluent Survey is anannual study, complemented by the bimonthly Mendelsohn Affluent Barometer, which tracks affluent attitudes, optimism and buzz.

THE 2012 MENDELSOHN AFFLUENT SURVEY AT A GLANCE

Definition of “affluent” Adults 18+ with $100K+ household income

Population represented 59 million U.S. affluents

Sampling approach Random probability sample drawn from address-based sample frame

Methodology 28-page mail survey

Conducted March–July 2012

Sample size 13,794

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Why should marketers pay attention to the millennialsnow? They represent the biggest group of consumers to comealong since the baby boom generation, and at 71 million, are37% of adult consumers. In the next decade, this group willmove through their 20s and early 30s, prime years for establish-ing households, building careers and starting families. Thoseliving in households with income above $100,000 number 16.6million already, a sizable target that will likely gain members asits members mature.

When it comes to selling luxury products, marketers need toshift their focus from the boomers, whose consumer patternsfor luxury patterns are evolving as they age. This group—onceluxury brands’ obsession—is slowing its spending on fashion,travel and luxury vehicles. Now, affluent older Americans arespending their money on their children’s college educationsand saving for their retirements. As boomers continue to age, allindications suggest that their spending will grow for health andwellness products when compared with other product cate-gories. “Brands riding the wave of boomers may find that they’llfall off a cliff if they don’t adapt,” warns George Scribner, Digitassenior VP-account planning.

FORCES SHAPING GEN YMeanwhile, the forces shaping Gen Y’s consumer outlook are

very different than the baby boomers, who grew up in a periodwhen conspicuous consumption was celebrated. Gen Y has

grown up during a time when a “green” ethos was ascendant,and terms like “sustainability,” “organic,” “fair trade,” “authen-ticity” and “artisanal” all gained credibility and respect. Gen Yis also of the generation that was raised with praise. They aregenerally eager to chronicle their achievements and get theirrewards for doing so, whether it be with a “like” or a “check-in.”

Having come of age when every house had a VCR and then aDVD player, ATMs have always dispensed cash, and informa-tion, music, movies and TV were often free on the internet ifyou knew where to look, this is also a group that expects to getwhat they want when they want it, and as consumers, usuallydespise being told to wait. Paradoxically, their childhood waspunctuated with carefully orchestrated releases of must-haveitems where they (or their parents) lined up to wait for TickleMe Elmo, Power Rangers, Pokémon, the next Harry Potter bookor the latest Call of Duty and Halo video games. If a product rep-resents an exclusive experience or gives these consumers brag-ging rights, they will queue up to be among the first to pur-chase, a trait Apple has exploited quite well. These are aspectsto carefully consider when crafting marketing programs andmessages aimed at this generation.

Many luxury retailers have revamped their brands to attractthis younger, affluent group. Burberry, Saks Fifth Avenue andBMW are all examples of legacy brands that have tweaked their

GENERATION GAP:BOOMERS VS.MILLENNIALSAs boomers change their spending patterns,luxury marketers need to shift focus to Gen Y

CONTINUED ON P. 8

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Insights



AFFLUENT AMERICAGen Y represents 31% of consumers (18-64) who live in households with $100,000+ annual income

TOTAL HOUSEHOLDS WITH$100,000 AND OVER ANNUAL

INCOME (18-64):

53.3 M

TOTAL U.S.POPULATION:191.9 million

AGES: 18-64

YEARS BORN:

1946-1994

BOOMERS42% OF TOTALPOPULATION:80.9 M

AGES: 45-64

YEARS BORN:

1948-1967

GEN Y37% OF TOTALPOPULATION:71.2 M

AGES: 18-34

YEARS BORN:

1978-1994

SOURCE: AMONG ADULTS 18-64. 2011 CURRENT POPULATION SURVEY, U.S. CENSUS BUREAU

GEN X21% OF TOTALPOPULATION: 39.8 M

AGES: 35-44

YEARS BORN: 1968-1977

31%:

16.6 M

47%:

24.8 M

22%:

11.9 M

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product and molded their marketing to appeal to this demo-graphic—all with resounding success. But many more opportu-nities abound.

The good news is that affluent members of Generation Y arewilling to try new brands, and will move from label to labelthroughout their lifetimes, said Milton Pedraza, CEO of theLuxury Institute, an affluence research firm that conducted itsown survey on wealthy people ages 21 to 34.

The bad news? “It’s a myth that brands are carried from cra-dle to grave,” said Pedraza. “A lot of women are in their 30s andsuccessful in their careers before a brand like Chanel will appealto them.”

The key is to not only embrace new technology like mobiledevices and social media, but to also stay focused on the retailenvironment. “This group is buying many more productsonline and by phone, and they rely heavily on online reviewsand recommendations by way of social media,” said Pedraza.“The one surprise is that the in-store experience is still sticky.The retail store is not going away.”

OPTIMISM AND CONFIDENCEIn many ways, this affluent group of Gen Y is just what its

stereotype suggests: These young people are open-minded,confident and seek professions in creative and meaningfulcareers. They are also driven by technology and a need to keepup with brands. No surprises there.

Cable channel Comedy Central is so invested in reachingGen Y that it undertook a survey with TRU Insights and InsightResearch to understand this group’s political beliefs and behav-iors leading into 2012’s presidential election. The survey lookedat all of Gen Y, not just the affluent, but the findings do indicatewhat their peers believe and what this generation views associally acceptable.

What the survey found is that Gen Y’s predisposition tobeing part of a group means that its cohorts are more likely tocrave a middle ground and set partisanship aside. When try-ing to find the right tone for advertising, marketers would dowell to remember Gen Y believes in equality and is predis-posed toward solutions that either benefit many, or at leastdon’t impose harm on others. This is a generation, after all,that grew up celebrating Martin Luther King Jr. Day, firstobserved as a federal holiday in 1986, when most were still ingrammar school.

Cause marketing and charitable tie-ins also resonate withthis group, which grew up with parents who encouragedactivism and community service. Comedy Central’s surveyfound that 53% of this group believe it is their responsibility tobring about change in the world, while 68% believe their gener-ation has the most power to effect change. Gen Y, however, isless likely to take to the streets than they are to take to their key-

boards; 63% would rather protest online than in person and66% agreed that it was possible to create the most change byspreading the word online than standing on a street, rallyingand protesting. And in keeping with this group’s optimism andconfidence, 22% believe they’d make a great president.

Digitas found that affluent members of Generation Y arestrongly driven by expectations of future wealth and the prod-ucts that accompany that lifestyle—a trend researchers attributein part to this group’s having grown up in the comfort of a pre-recession economic boom.

“Studies show that among young Americans, materialism isat an all-time high,” said Jean Twenge, author of “Generation Me:Why Today's Young Americans Are More Confident, Assertive,Entitled—and More Miserable Than Ever Before,” and professorof psychology at San Diego State University. “It comes from themedia’s glorification of the rich and famous, yet there is rarely abackstory about how hard those people worked to get there.”

Digitas found many surprising qualities of Gen Y—perhapsespecially how dramatically their habits differ as affluenceincreases, and the source of this group’s money. The groupswhose spending more aligns with middle-class patterns tend todisplay very strong family values and live in more Southern andrural locations. Despite working in traditionally high-paying pro-fessions, these segments are not likely to be prime consumers ofluxury products because they are prioritizing family needs abovecareer advancement.

ASSETS OF PARENTSBy contrast, a large portion of wealthy Generation Y that does

indulge in luxury buying lives at home with their parents, and thissubset spends between two and four times their own income—sig-nifying one of the most important trends of affluent Generation Y,and one of the most surprising findings. A large percentage ofaffluent millennials are not earning their money, but attainingwealthy status by way of their parents’ assets. If you don’t believeit, just spend a few minutes browsing the Tumblr titled Rich Kidsof Instagram (richkidsofinstagram.tumblr.com/) for the numerouspictures of trips on private planes, pool parties at Hamptonsestates, closets full of shoes and hands festooned with jewelry andexpensive watches.

“It’s important not to count out this generation based on theirpersonal income,” said Digitas’ Scribner. “Many of the youngeraffluent Gen Y are grafting their parents income onto their own.”

Currently, this group is influencing their families’ spending, butwhether this is a lifestyle that they can sustain throughout theirown lives remains to be seen. Many have chosen careers that donot put them on track to acquire their own wealth at a level equalto their parents. Marketers of luxury goods must balance cateringto this group now with cultivating those who are building theirown wealth and assets as they grow in their careers, and who willeventually support themselves in the luxury marketplace.

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Insights



— George ScribnerDigitas senior VP-account planning

“IF A BRAND WANTS TO HAVESCALE AMONG GENERATION Y,THE DISCUSSIONS OF RED VS.BLUE STATES AND COASTS VS.SOUTH AND RURAL VS. METROARE ALL VERY MUCH AT PLAY.THIS GROUP IS NOT ISOLATEDFROM THE DEMOGRAPHICPATTERNS OF THEIR PARENTS.”

Digitas broke the affluent members of Generation Y into fivesubsets defined by income, spending habits and householdstructure, as well as examining careers, geography, attitudes andvalues. One surprising finding was that Gen Y followed the patternof all generations in that $200,000 annual household income is theminimum threshold for the higher spending and brand preferencesone typically associated with luxury. All other groups might bebetter considered on their way to attaining true wealth, while thoseage 35 and older who are earning between $100,000 and $199,000are considered more middle class in their spending habits andattitudes, and less luxury focused, as the earlier Digitas’ Affluence inAmerica asserted. (See Affluence in America: 2011, p. 10)

Let’s look at the various characteristics of the five Gen Ysegments:

ASPIRING HEADS OF HOUSEHOLD This is by far the least wealthy of the Gen Y subsets. With

household incomes of between $100,000 and $199,000, the GenYers in this group tend to be married with children and have a meanage of 30.

This group highlights the fact that one’s career is not the onlydeterminant of wealth, as family choices have a prominent impacton lifetime wealth. There are many overlaps between aspiringheads of household (the least affluent of all five segments) andaffluent heads of household (the most affluent). Both have meanages of 30, tend to be married with children and are established on

THE FIVE SEGMENTS OF AFFLUENT GEN Y

A millennial currently living in an affluent householdmay not necessarily be in one in the next decade

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their career paths. Both groups derive their wealth from theircareers (as opposed to from their parents), and both pursuecareers in technology, financial services and banking.

The vast majority of aspiring heads of household lists family astheir top priority. This could impact future earnings as they tend toplace a greater importance on work-life balance. Aspiring heads ofhousehold are also more likely to live in non-metro areas wherethere are fewer professional opportunities and less earningpotential. Moving forward, this large and growing group willoccasionally indulge, but it needn’t be an immediate priority forluxury marketers.

“This group shouldn’t be counted out, but luxury marketersshould not focus on them,” said Digitas’ Scribner.

ASPIRING CHILDREN This group has a mean age of 23 and lives with parents with a

household income of between $100,000 and $199,000. Thepersonal income of these young adults is modest, but theirexpenditures are nearly four times that sum—largely owing to theirparents’ relative wealth and their low living expenses. Whenmembers of this group do work, often in retail positions, they tendto have jobs as opposed to careers, and those who do haveprofessional positions tend to be in passion careers like acting andentertainment.

Among aspiring children, household income is seven times thatwhich they earn on their own. That said, this group’s buyingpatterns tend to be focused on price and value over true luxuryspending. While they enjoy shopping, luxury-spending attitudesdon’t mesh with their earnings or their work attitudes.

EMERGING HEADS OF HOUSEHOLDS This set’s members have a mean age of 28, are unmarried but

live independently of their parents and have their ownhousehold income of between $100,000 and $199,000.

This is a frugal group with solid income, as they spend just83% of their income and tend to be in that creative, upwardlymobile class that is typically associated with Gen Y. In many ways,this is the younger version of the more established affluent headof household segment, as they tend to live in urban, coastalmarkets and are actively pursuing careers in financial services,architecture, advertising, real estate development andtechnology. Right now their job titles are middle management,but many are on the path to move up the ranks, and thus likely toearn their way into a wealthier lifestyle in the next decade.

A common sentiment among this group is that their work lifeis all-consuming, and that they have yet to master balancing thepersonal with the professional aspects of their lives.

“This group is definitely upwardly mobile—they are in the

AFFLUENCE IN AMERICAA 2011 DIGITAS REPORT FOUND:

IF YOU ARE MAKING

$100,000-$199,000annual household income

and are 18-34, you are most likely to attain

an affluent lifestyle andyou are already exhibiting

behaviors and attitudes of this group

THE “OVER-35s”making $100,000-$199,000

annual household income are back to being

middle class

8.8 MILLIONnumber of head of

households in Americawho are truly affluent

CAREERis the best determinant

and predictor of affluence

$200,000

ANNUAL HOUSEHOLD INCOME MEANS YOU ARE LIVING A CONSISTENTLY

AFFLUENT LIFESTYLE IN AMERICA

BUSINESS OWNERSHIP

increases with affluence

THE CREATIVE CLASSthat fueled our

innovation economy are affluent, but not in theupper tiers of the rich

AFFLUENCEtranslates to more

devices owned and morespecialized media

consumption

THE SOUTHhas attracted or grown a

dominant share of affluentAmericans. But, the southshows the greatest dividebetween the “haves” and

“have-nots.”

CONTINUED ON P. 12

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Insights



FIVE SEGMENTS OF AFFLUENT GEN Y HOUSEHOLDSGreen circles indicate increasing levels of attitudes and behaviors that reflect wealthy spending patterns;

blue circles represent more middle-class attitudes and spending patterns.

EMERGING HEADS OFHOUSEHOLD ■ ANNUAL HOUSEHOLD INCOME:

$100,000-$199,000■ UNMARRIED

■ MEAN AGE: 28■ PROJECTED POPULATION: 776,000

ASPIRING HEADS OF HOUSEHOLD■ ANNUAL HOUSEHOLD INCOME: $100,000-$199,000■ MARRIED WITH CHILDREN

■ MEAN AGE: 30■ PROJECTED POPULATION: 4,724,000

AFFLUENT HEADSOF HOUSEHOLD■ ANNUAL HOUSEHOLD

INCOME: $200,000+■ MARRIED WITH CHILDREN

■ MEAN AGE: 30■ PROJECTED POPULATION:

1,021,000

AFFLUENTCHILDREN■ ANNUAL

HOUSEHOLD

INCOME:

$200,000+■ LIVING WITH

PARENTS

■ MEAN AGE: 23■ PROJECTED

POPULATION:

1,915,000

GEN Y TOTAL AFFLUENT POPULATION

(ANNUAL HHI OF $100,000+):

16.6 MILLION

SOURCES: U.S. CENSUS, DIGITAS, 2012 MENDELSOHN AFFLUENT SURVEY

ASPIRING CHILDREN■ ANNUAL HOUSEHOLD

INCOME: $100,000-$199,000■ LIVING WITH PARENTS

■ MEAN AGE: 23■ PROJECTED POPULATION:

7,701,000

PERCENT OFGEN Y WITH HHI

OF $100,000+:

29%

PERCENT OF GEN Y WITH HHI OF $100,000+:

48%

6%

5%

12%

20121210-Affluent.qxp 12/5/2012 1:18 PM



right careers, live in the right markets and are ambitious,” saidScribner.

AFFLUENT CHILDREN With a mean age of 23, these are the millennials who are living

in homes with household income of at least $200,000, but tendto have chosen careers that do not at this time put them on a pathto achieve that level on their own.

This group gravitates toward “mission professions” likeeducation, nonprofits, counseling and the arts. Retail jobs arealso popular.

Still, this is a more important segment for luxury brands.Despite these low-income careers, affluent children spend nearlythree times what they earn, and their household income for theirfamilies is a surprising 10 times that of their own earnings. We seethe home value and the access they have to a number of homesrise dramatically for the affluent children compared with othergroups, as these members of Gen Y lean heavily on their parents’wealth, as opposed to relying on their own careers to provide forall of their spending.

Because this group’s members have a proven taste for luxury,they will likely continue to gravitate toward brands at a level they

have grown accustomed to. With little household expenses and access to their parents’

significant wealth, this group has the largest amount ofdiscretionary income to spend on luxury. This segment prefersdesigner and luxury brands and is willing to pay a premium forcosmetics and toiletries. There are clear behaviors associated withthe truly affluent in this group, such as being drawn to luxuryvacation activities like snowboarding, snorkeling and surfing.

“Even though their incomes are low, their vacations reflecttheir household income,” said Scribner. “These are all activitiesthat require buying a package—you can’t just walk out of yourhouse and do them.”

AFFLUENT HEADS OF HOUSEHOLD Members of this segment are solidly established in their careers

and wealthy in their tastes, spending habits and pastimes. Thisgroup’s mean age is 30, and members tend to be married withchildren.

Affluent heads of households work in traditional high-payingcareers including medicine, law and financial services, as well astechnology fields like software design and engineering. Many holdsenior executive titles like CEO, CFO and owner-president. Thisgroup lives mainly on the coasts in major metropolitan areas wheretechnology and professional services jobs abound. It is also notsurprising that they are likely to say that work dominates their lives.

RED STATE, BLUE STATEAffluent Generation Y is not isolated or monolithic. They are

scattered across the country in rural and urban areas, on bothcoasts, in the South and in the heartland. “If a brand wants to havescale among Generation Y, the discussions of red vs. blue states,and coasts vs. South and rural vs. metro are all very much at play,”said Scribner. “This group is not isolated from the demographicpatterns of their parents or other Americans.”

It is surprising to some that the South—spanning from Texas toDelaware—is the hub of wealth across all generations, with about athird of each of the five subsets of affluent Gen Y living in thisregion. However, the most affluent group—the “affluent heads ofhousehold”—live primarily in the Northeast and on the West Coast.This can be explained by the fact that their careers determined thisgroup’s affluence, and their jobs in finance, law, medicine,technology and media tend to be centered in metro areas on eachcoast. (See “Where They Live,” p. 13)

Insight No. 1 Head-of-household income of at least $200,000 isthe minimum threshold of wealth and luxury interest for Gen Y—just as it is for all generations.

Insight No. 2 There are more affluent households in the South,but the Northeast and West have a dominant share of Gen Yaffluent heads of household.

CAREER PATHSJobs are a good indication of future wealth

ASPIRING HEADS OF HOUSEHOLD:Technology or finance, but in non-metro region, focused

on family needs first

ASPIRING CHILDREN: Retail job rather than career or pursuing “passion”

careers like acting or entertainment

EMERGING HEADS OF HOUSEHOLD Creative, upwardly mobile in financial services,

technology, architecture, advertising and real estate

AFFLUENT CHILDREN“Mission” careers like education, the arts, nonprofits or

counseling with salaries well below their parents

AFFLUENT HEADS OF HOUSEHOLDTraditional high-paying careers like medicine, legal and

finance, as well as software design and engineering

CONTINUED FROM P. 10

20121210-Affluent.qxp 12/5/2012 1:18 PM

Insights



WHERE THEY LIVE: AFFLUENT GEN YThe most affluent group lives primarily in Northeast and West.

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NJDE

MDDCKY

TN

WI

IL

MI

WEST MIDWEST NORTHEASTSOUTH

Slightly higher represen-tation of Affluent andEmerging Heads ofHousehold, with othergroups evenly distributed here.

More Aspiring Heads ofHousehold than anyother Gen Y groups.

Higher representation ofGen Y groups AspiringHeads of Household,Emerging Heads ofHousehold and AffluentChildren.

Higher representation ofGen Y groups AspiringChildren, AffluentChildren and AffluentHeads of Household.

23% 20% 32% 25%

20121210-Affluent.qxp 12/5/2012 1:18 PM



One powerful finding is that the members of Gen Y livingwith their affluent parents have far more disposable incomethan their peers. For example, aspiring children—those livingwith their parents—earned one-third of what members of theaspiring heads of household group did, and yet they spent morethan three times their annual earnings. Meanwhile, the aspiringheads of household spent slightly less than what they earned.The group with the largest disposable income overall was theaffluent children, who earned far less than their affluent headsof household peers, but spent more than any segment. In fact,the only groups that hit that magic $200,000 point, which sig-nifies truly wealthy behaviors, are affluent children and affluentheads of household, who rely on a second household income toachieve that income mark.

It is clear that as levels of affluence increase, so too do afflu-ent attitudes and behaviors. The more disposable income thatmembers of Generation Y have, the more likely they are to buyluxury products. An affinity to buy fashion brands, includingErmenegildo Zegna, Gucci, Marc Jacobs and Burberry,increased across segments, correlating with increased dispos-able income. Automotive brands, too, reflected this trend, asthe wealthier the members of Gen Y become, the more likelythey are to buy an Audi, BMW or Infiniti.

But an overriding theme among Gen Y was a move awayfrom glamorous luxury, and a move toward authenticity, utilityand nostalgia. Ecological concern, a dampening effect of the

recent economic downturn and the influence of parents withwhom they are close all impact this group’s tastes.

The research can explain different spending habit amongsegments. The Aspiring Heads of Household, for example, werelikely favor family oriented brands, prioritizing their familyabove status. This group—which again, tends to live in lessurban areas—was drawn to family-oriented activities includinghunting, fishing, boating and festivals.

Meanwhile, the most affluent group—the affluent heads ofhousehold—was willing to pay a premium for luxury cosmeticsand products or experiences that are truly exclusive.

Insight No. 3 In America, millennials are either born into ormerge into affluence. Gen Y luxury consumers are either bor-rowing the wealth of their affluent parents or leveraging dualincomes to reach the $200,000 household income threshold.

Insight No. 4 Children segments live well beyond their meansbecause they can access their parents’ wealth.

AUTHENTICITY AND SELF EXPRESSIONWhile affluent Generation Y as a whole is attracted to trends

and is as quick to adopt the latest technology and fashion as thegenerations that came before them were when they were in

SPENDING PATTERNSAND DISPOSABLEINCOME OF GEN YMillennials are moving away from glamorous luxuryand moving toward authenticity, utility, nostalgia

CONTINUED ON P. 16

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Insights



GEN Y SPENDING POWERMillennials living with parents spend far more than they earn

AVERAGE HOUSEHOLD INCOME I KEEP UP WITH THE FINANCIAL

NEWS

I LIVE FROM PAYCHECK TO

PAYCHECK

SPENDING POWERHeads-of-Household segments spend onhome and family expenses.

THEIR FINANCIAL BEHAVIORS Heads-of-Household segments are more engaged with their finances.

70

17% 52% 27% 50%85 108 96

86

21% 59% 28%96 112

131

32% 72%118

141

35% 73%121

177

43% 73%120

65%124

60%116

SOURCE: MENDELSOHN AFFLUENT SURVEY, 2012, GEN Y (18-34)

25%99

49%94

18%72

11%45

57%109

ASPIRING HEADS OF HOUSEHOLD:

$53,968

$59,119

$132,847

ASPIRING CHILDREN:

$20,440

$70,599

$136,643

EMERGING HEADS OF HOUSEHOLD:

$60,453

$49,995

$138,118

AFFLUENT CHILDREN:$451,437

$39,609

$93,397

AFFLUENT HEADS OF HOUSEHOLD:

$85,813

$139,612

$341,556

I AM ACTIVELYINVOLVED IN THE

MANAGEMENT OFMY PERSONAL

FINANCES

IT IS IMPORTANTTO ME THAT I

MAKE AS MUCHMONEY AS POSSIBLE

AVERAGE PERSONAL INCOME

AVERAGE EXPENDITURES

INDEX:

INDEX:

INDEX:

INDEX:

INDEX:

20121210-Affluent.qxp 12/5/2012 1:18 PM



their formative years, Gen Y is also seeking out the authentic,the unique and the exclusive. Classic brands like Ray-Ban,Levi’s, Volvo, Chanel and YSL have enjoyed a resurgence overthe past decade.

“As a result of the recession, one of the biggest shifts is that peo-ple are more drawn to classics that will always look amazing, butnever be considered excessive,” said Sara Bamossy, a media plan-ner with Saatchi & Saatchi in New York. “No one wants to be seenas a show-off.”

Authenticity and self-expression are other themes that drivethis demographic. “This group is drawn to products they feel are‘ever-cool,’” said Bamossy.

A member of this generation, for example, may drive a beat-upToyota pickup truck worth $3,000, but use the vehicle to carryaround a $10,000 mountain bike. “They are selective in beingexcessive, and will spend money on things that are most importantto them—not necessarily things that are the latest trend,” she said.

This is the same group that is drawn to revived brands.Burberry, noted as a wild success with this demographic thanks toits commitment to its heritage design and quality—but given anupdated look and dedication to reaching younger markets withsocial media.

“Younger consumers are drawn to quality and authenticity,and things that are true to what they are and owning it,” said MayaDraisin, Wired’s associate publisher of marketing. “They definethat to being what is true to what it is, knowing who you are andowning that—even they own it in a new way. Burberry didn’tdiverge from who they are, but put out a new look.”

NOSTALGIANostalgia is another theme, explaining how heritage brands

like Louis Vuitton, Chanel, Lacoste and BMW dominate the luxu-ry brands bought by affluent Gen Y.

Wired’s Draisin said in a high-tech, ever-evolving marketplace,tech-savvy consumers are drawn to products with a sense of his-tory.

“People are so entrenched with the future, they need some-thing to ground them,” said Draisin.

She pointed to the annual Wired pop-up created in New Yorkevery holiday season to showcase new gadgets and technology.“Every year, the collection has a nod backwards,” she said. Forexample, the 2011 Times Square location featured portraits ofcelebrities like Madonna and Jimi Hendrix made from the insidesof cassette tapes, and a 24-karat gold Atari 2600 priced at $6,650.

UTILITY Saatchi & Saatchi’s Bamossy said another driver of this group

are products that make specific sense to the user. One example:younger members of affluent Gen Y who have a $900 payment ona new Audi, but a $500 rent payment because they live in ashared house with friends—and have no expenses associated witha spouse or children.

Similarly, many are canceling cable subscriptions, but spend-ing money on the most expensive iPad and premium subscrip-tions to Hulu, Netflix and HBO on Demand.

“They are willing to spend money on products they will useand that will make their lives better—and that does not rule outthe inexpensive,” said Bamossy.

CLASSICS – Luxury brands like Burberry, Chanel and YSL have enjoyed a resurgence in past decade.


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Insights



INSIGHT NO. 5 Heads of household segments are the mostengaged with their personal finances out of necessity, but aproactive knowledge of financial news is important to affluentchildren too.

INSIGHT NO. 6 There are 2.9 million Gen Yers in America whoare living a truly wealthy and luxury-oriented lifestyle, and776,000 on their way to living such a lifestyle.

Gen Y is still an emerging market for luxury brands. But that isprojected to change as those on the path to wealth mature and setup their own households. “Gen Y is not currently the most prof-itable demographic, but it is the customer of the future,” saidDigitas’ Scribner. But what does this group’s habits, attitudes andpatterns predict about how it will spend in the future?

INFORMATION SEEKERSOne key finding of the study is that affluent Gen Y is a group

that is very confident in its opinions. And not surprising, they alsohave higher expectations—and that confidence and expectationrise with affluence. “This group is the Google generation,” saidScribner. “They feel they have the power to find out any kind ofinformation—and they feel they are more expert than the mar-keters and salespeople themselves.”

Luxury brands succeeding in the face of this trend are thosethat incorporate the in-store experience with Gen Y’s reliance

on online information. In a recent New York Times article(http://nytimes.com/2012/03/10/business/younger-shoppers-using-technology-not-salespeople.html?_r+0) about in-storetechnology, a 26-year-old Nordstrom shopper in Phoenixchecked competitors’ prices for a pair of Sam Edelman flatsusing her smartphone. “In all honesty, because I shop so much,I feel sometimes I know the brands better than some of the asso-ciates,” she said.

Nordstrom found that shoppers were using its app in-storefor product information as opposed to turning to sales associ-ates. To embrace this trend, all Nordstrom stores are now wiredwith Wi-Fi to enable easy access to the Nordstrom app, and theretailer is rolling out charging stations for mobile devices.

That doesn’t mean luxury retailers won’t need sales associ-ates. Milton Pedraza warned that technology cannot replace thecustomer experience, and luxury customers still turn to in-storeexperiences to learn about products firsthand.

JOB SECURITY FEARS Regardless of income, affluent Generation Y is concerned

about job security, and its purchasing habits reflect that. Themajority of aspiring children, for example, said they spendmuch more cautiously than they used to, while affluent childrenare more likely to believe that making a lot of money should bea priority. Perhaps most significantly, concern over job securityincreases with wealth. Emerging heads of household, affluent

OUTLOOK ANDATTITUDESCONFIDENT, CAUTIOUSMillennials are confident in their opinionsand abilities, but worried about the economy

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children and affluent heads of household segments all rankedworrying about losing a job as a top concern.

“Today, affluence is not a buffer from financial insecurity,”said Digitas’s Scribner. “This is an important insight for howmarketers should judiciously approach that target audience.”

Heads of household segments are most engaged with theirpersonal finances out of necessity. Meanwhile, affluent childrenshowed a high consumption of financial news.

HIGH EXPECTATIONS FOR FUTURE WEALTH Emerging and affluent segments especially have high expec-

tations for their continued earning potential, and Scribnerexpects this will be realized. This is especially true of affluentchildren, who are accustomed to luxury shopping despite alsocommitting to low-paying professions. Notions of entitlement,and of having grown up in the pre-recession world may explainthis group’s optimism, not to mention media messages aboutovernight success stories of entrepreneurs who made millionsat a young age. A “Next Generation” study from AgencySacksfound that nearly 50% of Generation Y has started a business orexpects to do so—10 points higher than the general population.(www.nypost.com/p/news/business/to_generation-corporate-cubicles_qSIAndzWy2zaMXMN4cAaAL).

“We don’t know the future yet, of course,” said Scribner.“Affluent children may have enough financial security toprogress in those careers, or they may leave them and go intomore traditionally high-paying careers. In general, however,people pivot to their self-interests. No one wants to live less wellthan their parents.”

EXCLUSIVITY The more affluent groups say they like buying products

described as standing out from others, and exclusive—and these

preferences increase with wealth. These attitudes are reflectedin the popularity of exclusive club memberships, including air-line lounges and athletic and country clubs, among the wealthyGen Y subsets.

“The rich tend to be one-of-a-kind people who broke out per-sonally in their careers and are one-of-a-kind personalities aswell,” said Scribner. “Exclusivity and uniqueness are a very impor-tant quality for a luxury marketer to have, whereas popularity maybe more important on the lower level of affluence, where familyand community-oriented attitudes prevail.”

One retail model that successfully bridged the gap between thedesire for exclusivity with that of Aspiring Children’s price-con-scious shopping is the flash-sale category and the Gilt Groupe in par-ticular. The retailer offers a limited selection of heavily discounteddesigner and luxury products only to those with a membership.The number of products offered is small, the time they can be heldin a shopping cart is limited to 10 minutes and the number of itemsthat can be held in the cart is capped at five. A how-to video on thesite features a customer saying Gilt Groupe offers “hand-selecteditems by the labels I love.” The five-year-old retailer reports $5 bil-lion in annual sales. As one Gen Y affluent stated to George Scribnerin a focus group, “You have to understand, we’re young; we wantto join everything, as long as it’s exclusive.”

SYMBIOTIC PURCHASING WITH PARENTS Gen Y’s closeness with their parents can explain some of their

nostalgic tastes, as some products are throwbacks to childhoodor are those their parents prefer. This cross-generational connec-tion provides a great opportunity for marketers, as Gen Y influ-ences $50 billion in purchases in other generations—in additionto their own spending power. Saatchi & Saatchi’s Bamossy seesopportunities for big-ticket products like cars to appeal to boththe Gen Y consumer and their boomer parents. “Big-ticket itemsare often subject to the approval of both the person who controlsthe purse strings and the person doing the wanting,” she said.“How can brands make a product appeal to both the parent andtheir adult child?”

She sees opportunity in the Aspiring Children and the AffluentChildren groups, as their parents are likely to drive luxury vehi-cles. The right marketing could target existing boomer customers’children with a younger, hipper message, suggested Bamossy.

But bringing the parents’ influence into the dialogue can beimportant for not only the children segments, but also the emerg-ing group, too, as Gen Y overall relies on assurance for their deci-sions, and often seeks affirmation by way of posting pictures ofpotential purchases on Facebook or Twitter, and asking for peeradvice. “Gen Y is often making purchases for the first time withtheir own money, and they lack experience for buying big-ticketitems,” said Bamossy. “You could say they’re overly coddled andcan’t make decisions on their own, or you could say that they real-ly value the expertise of their parents.”

— Sara Bamossy,Media planner, Saatchi & Saatchi

“HOW CAN BRANDS MAKE APRODUCT APPEAL TO BOTHTHE PARENT [WIELDING THEPURSE STRINGS] AND THEADULT CHILD?”

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Insights



CAREER PATHS THATLEAD TO AFFLUENCE

INSIGHT NO. 7 Financial, legal and medical fields play a rolein achieving affluence, as they do for all generations, but technol-ogy industries are a key driver of Gen Y affluence.

INSIGHT NO. 8 Career is not the only determinant of afflu-ence for Gen Y, as it is with other generations. Within the sameindustry and career path, family choices and family values havean impact on earning potential.

INSIGHT NO. 9 Gen Yers still living at home have the free-dom to pursue mission and passion careers.

Career is not the only driver of affluence among Gen Y. Aspiringheads of household are often in traditionally high-earning careerslike financial services, yet they often live far from metro centers richin jobs, and place a greater importance on work-life balance whencompared with the Emerging and Affluent Heads of Household seg-ments. Not surprising, the top tier Affluent Heads of Household arethose established in traditionally affluent careers like finance, lawand medicine. However, across all segments, technology plays amajor role in career choice. This is important for marketers toembrace, as the tech culture shapes shopping and spending acrossall of the generations. “People working in technology are interestedin being ahead of the curve and what is next,” said Wired’s MayaDraisin. “If you’re working in tech, you’re involved in creating thefuture of the world.”

Technology is a major driver for those in wealthyhouseholds, and influences their spending as well

PROFOUND DIFFERENCESNot all affluent Gen Yers behave as luxury consumers

NOT LIVING WEALTHY LIFESTYLE

ASPIRING HEADS OF HOUSEHOLD ASPIRING CHILDRENAnnual HHI: $100,000-$199,000 Annual HHI: $100,000-$199,000Married with children Living with parentsMean age: 30 Mean age: 23

NOT YET LIVING WEALTHY LIFESTYLE, BUT ON THE PATH

EMERGING HEADS OF HOUSEHOLD Annual HHI: $100,000-$199,000UnmarriedMean age: 23

ALREADY LIVING A WEALTHY LIFESTYLE

AFFLUENT CHILDREN AFFLUENT HEADS OF HOUSEHOLDAnnual HHI: $200,000+ Annual HHI: $200,000+Living with parents Married with childrenMean age: 23 Mean age: 30

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A BMW is a popular purchase across all the segments of Gen Yidentified by Digitas—a phenomenon that can be attributed to theautomaker’s targeted approach to younger consumers with itsupdated 2012 3 Series sedan. The German company tapped intoGeneration Y’s affinity for social media, interactive technology andmedia preferences to make the model one of its most successfullaunches ever, said Trudy Hardy, BMW of North America manager ofmarketing communications and consumer events.

DIGITAL SHORTSHardy attributes the success of this campaign in part to the 3

Series’ heritage that dates to 1975. “The 3 Series is one of the mosticonic vehicles of all time,” she said. “We don’t have an awarenessproblem—we just make sure we target the right person with theright message in the right medium.”

Tactics included promoting digital shorts that highlighted themodel’s new features, upping its digital and mobile ad buy, andsponsoring a feature on popular late-night talk show “JimmyKimmel Live.” More than 2,000 amateur filmmakers competed for anew 3 Series by participating in BMW’s "0 to Desir3 in 5.9 Seconds”video competition that invited 5.9-second submissions about the car.

The brand has leveraged interactive software to allow potentialBMW owners to “build your own BMW” on the company website,through an Xbox game and on Facebook. This has proved to be apowerful marketing device as 26% of users who configure theirdream car through to the end of the program actually purchase thevehicle, said Hardy. “Younger people are using the social space notjust as a fun info tool, but as a shopping tool as well,” she said. Thesoftware includes pricing information and automatically links theuser to local dealerships.

Getting potential customers physically into the dealership—andmaking them feel welcomed when there—is a priority for BMW.“Boomers shop for cars very differently than younger people,” saidHardy. Boomers tend to get information from sales associates, whileGen Yers come in armed with information. “It is often as if the deal-er just takes an order,” she said.

BMW has made an effort to welcome younger shoppers who maynot immediately appear to be the typical BMW customer. “It is easyto prejudge people based on how they’re dressed,” said Hardy.“People come in from all walks of life.” Sales associates today tendto wear shirtsleeves and an open collar, whereas a few years ago,they were probably decked out in a full suit and tie. Showrooms areequipped with interactive tablets for customers to use independent-ly, or for associates to use as an education tool. A BMW iPhone andiPad app allows users to interact with all parts of the car in 3-D. Abuild-your-own feature allows users to select all options: style, color,interior, sound system, etc. At the end, users can share their dreamvehicle with their friends via the social-media function, and are thendirected to local BMW dealerships in their area.

The 3 Series now is available in hybrid, diesel and electric vehi-cles, and the brand recently launched its Drive Now car-sharing pro-gram in San Francisco—competing with the likes of Zipcar that arealso popular with affluent Gen Y. “Research tells us that the youngergeneration is more easily swayed than other groups,” said Hardy.“They also want to feel really good about their purchases.”

SUCCESS STORY: BMW 3 SERIESHow the luxury automaker keeps its most iconic vehicle relevant to Gen Y

APP MARKETING— A BMWiPhone appallows usersto select alloptions: style,color, interior,sound system,etc.

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Insights



MEDIA HABITS ENTERTAINMENT ISDIGITAL, SOCIAL

INSIGHT NO. 10 The web is device agnostic for Gen Y acrossall segments.

Not surprising, the Digitas report found that media use ismoving toward digital, and younger consumers are early andfrequent adopters of new devices. Whereas earlier analysisfound that youth was a greater indicator of digital behavior,Digitas found that affluence is a better predictor of device own-ership. Therefore, affluent Gen Yers are the most digital of allpossible segments, having both the means to buy devices andthe inclination to use them heavily.

“This means the more money you make, the more likely youare to buy technology for social capital as well as personalenjoyment,” said Scribner. “But usage does not necessarilyincrease with affluence.”

More affluent groups use social media more in business,and affluent heads of household score highest for ownership ofdigital devices. “New tech behaviors tend to come from peopleliving a digital lifestyle and use these devices as a means ofentertainment,” said Scribner. Meanwhile, aspiring heads ofhousehold have less time to devote to new technology as aform of entertainment, and instead devote more time to theirchildren and careers.

Affluent millennials not only have the advantage oftheir generation’s comfort with all things digital, theyalso have the means to purchase the cool new tools

DIGITALRetail is growing at 15% per year, and digital ad spending in2012 surpassed print spending and will double by 2016.

MOBILE The year 2012 was when smartphone users became the majori-

ty of cellphone users in the U.S., placing an emphasis on location-based apps like Foursquare and brand-specific apps to be used intandem with the in-store experience.

SOCIAL Twenty-five percent of all page views are social-media page

views. The average engaged social-media user checks Facebookevery 37 minutes, tweets hourly and reviews a product on Yelpfour times weekly.

SOURCE: SINAN ARAL, ASSOCIATE PROFESSOR OF INFORMATION AND MANAGEMENT SCIENCES AT NYU STERN SCHOOL OF BUSINESS VIA WIRED

FUTURE OF MEDIAGen Y’s use of digital tools will only grow

CONTINUED ON P. 23

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Comedy Central homes its marketing focus in on Gen Y, and itsmales in particular. “We call Gen Y ‘comedy natives,’” said WalterLevitt, Comedy Central exec VP-marketing. “They are like no othergroup in their relationship with humor. Their self-expression isshaped by their taste in comedy. Our research has found that for a30-year-old guy, comedy is more important to his identity thanmusic, religion, sports teams or political views.”

This affinity for the funny is driven not just by the content, butby how it’s digested. Sharing and the sense of discovery is critical,as is the ability to access content on multiple channels: TV, tablet,smartphone, YouTube, Facebook, Twitter, web download and DVD.“We don’t launch shows anymore—we launch franchises,” saidLevitt. “This group loves sharing comedy, and they love to feel likethey’re the first to discover something hilarious.”

Take for example “Key and Peele,” the Comedy Central sketch-comedy show that launched early 2012, and built around popularcomics Keegan-Michael Key and Jordan Peele. Months before theshow launched, Comedy Central promoted a series of “ObamaLuther” videos—impersonations of Barack Obama with his “anger

management translator,” Luther, who acted out what the presidentsupposedly really thinks, despite his cool façade. The videos werehosted on YouTube, and were marketed heavily via paid searchand social media—building on the individual comedians’ alreadyestablished following. Within 36 hours of the first video rolling out,it had 1 million views—the quickest rollout of content in the net-work’s history. “It was shared and shared and shared,” said Levitt.

Another successful Comedy Central campaign aimed at youngadults was to take a plot line from hit show “Workaholics,” onwhich “Half Christmas” is celebrated June 25. Last summer, theshow invited fans around the country to host Half Christmas par-ties and send in videos and pics, which the network then airedthroughout the day.

In April, the network launched The Daily Show Headlines App.The free app for Apple and Android products allows fans to searchpast shows by topic—say, Petraeus or the election—or by date tofind relevant clips of the show. “When it comes to serving theneeds of Gen Y, we need to be where they are,” said Levitt. “Theyexpect funny content to find them.”



CASE STUDY: COMEDY CENTRALCable channel taps into millennials seeking out and sharing of entertainment content

FUNNY MEN — Stars of “Key and Peele” sketch comedy show and Jon Stewart of “The Daily Show”IAN WHITE/COMEDY CENTRAL

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Insights



Despite this splicing, Gen Y across the board is increasinglydigital and technology savvy, and turning more toward SmartTV and tablets for their information and entertainment. “Gen Yis online and mobile, and that is where brands have to reachthem,” said the Luxury Institute’s Milton Pedraza.

The next wave of technology for this group includes SmartTV and tablets. Netbook use correlates with age, while smart-phone and tablet use correlates with affluence. Smartphonesare becoming a primary source of online access, especially ascommunication becomes a secondary product benefit. Social isprevalent for all affluent segments, and increasingly business-oriented with rising affluence. The web is the primary mediachannel across all segments.

Gen Y, however, is digital in a different way than boomers.Boomers lead in device adoption because they have had themoney to buy them, but Gen Y leads in the adoption of newapplications and creation of new digital consumer behavior. Asdigital natives, they are more adventurous, and open to new

digital brands. Gen Y members tend to be heavy consumers ofentertainment content, as illustrated by music and video down-loads, and DVR and VOD usage. The disparity is particularlynoticeable when it comes to mobile media. Boomers tend to stilluse technology in a utilitarian way. Although heavy users of lap-tops and smartphones, boomers tend more toward lifestylemanagement, rather than pure entertainment. Boomers usetheir mobile devices for texting more than for browsing online.However, boomers are expanding their consumption of digitalcontent, from news and finance to lifestyle. This shows increas-ing comfort with digital as a source of personal satisfaction.That said, they are still heavily reliant on traditional channelsfor personal content. They are more likely to turn to traditionalTV, print and radio, even with tablet ownership. The 2012 holi-day season is seen as a huge growth opportunity for tablets,given the projected proliferation of devices expected.

When it comes to social media, boomers tend to use themmainly for professional reasons, while Gen Y’s connectionsare mostly personal.


GEN Y AND BOOMERS ENGAGE WITH MEDIA FOR DIFFERENT PURPOSESGen Y is much more likely to use digital tools to seek out entertainment, while boomers are more utilitarian. The red graphdenotes the reach of each segment; the blue graph denotes the liklihood of the segment to participate in that activity.

GEN Y MEDIA USE AND ACTIVITY

ReachReach

Index

Index

BOOMER MEDIA USE AND ACTIVITY

NOTE: THE SECOND RING OUTSIDE THE BULLS-EYE REPRESENTS AN INDEX OF 100. THE FOURTH RING REPRESENTS 100% OF THE SEGMENT. SOURCE: DIGITAS

20121210-Affluent.qxp 12/5/2012 1:18 PM



JUMPING THE SHARKThe transformation of music, movies, books and shopping in past 10 years is Gen Y normal

It’s time. Gen Y is coming. Gen Y is here. Just astechnology has reinvented—and continues to re-invent—business models and marketing strategies,so the rising importance of Gen Y demands revolu-tion within corporate America. Why should marketerscare, when boomers still represent the bulk of theirbusiness?

The 1980s ushered in a period of conspicuous con-sumption, the “affluence of accumulation.” Over theensuing years, expressions of affluence shifted toexperiences and social capital. This mirrored thecoming of age, and maturing, of the boomer genera-tion. Now, approaching retirement, boomers willredefine affluence again. We are entering the periodof the “affluence of well-being.”

This is great news for a limited number of cate-gories, like health care, health insurance, wellnesspractices, skin care and perhaps financial services.But as boomers’ assets and lives become more fixed,their spending across other categories will drasticallydiminish. Apparel, travel, entertainment, among oth-ers, will all be affected. This is a business risk thatmarketers need to address.

Change is hard, especially when transformation isrequired. Why do we think that the shift fromboomers to Gen Y is so drastic?

GEN Y IS THE TECH GENERATION. Calling them the digital generation diminishes the

impact that technology, as a whole, has on theirlives. Technology—once as distant as the moon andreferred to as “high tech”—is as pervasive as the airthey breathe. It has influenced Gen Y to form values,beliefs and expectations that transform how mar-keters must connect and what marketers must do.Technology has created a bias that challenges alllegacy marketers. Additionally, we’ve learned thattechnology-related careers are now a new road toaffluence for this generation.

GEN Y BRAINS ARE DIFFERENT. They have been wired and fired by universal

access to answers, and the ability to create their ownbusinesses, establish themselves as media personas,connect with strangers around the world who havean expertise or share a passion, check prices in storeaisles and, most important, to circumvent compa-nies’ attempts to “manage” their customers, busi-

nesses and brands. Think of how music, movies,books, intellectual property, customer service and thepath to purchase have changed in the last 10 yearsdue to digital media, social media and mobiledevices. This is the Gen Y normal.

GEN Y IS ON FAST-FORWARD. Call them worldly wise. Call them spoiled. Call

them in control. They care about what works now,what works well, what works pervasively and whatdefines the future. They will love their Pebble (get-pebble.com) as much as their luxury watch … per-haps more, because it connects to their mobiledevice. They will forgo carefully planned purchasesin lieu of capturing a flash-sale novelty. They willtake inspiration from social media and follow thelinks to a new niche brand. This means that Gen Ywill likely lose allegiance to any brand that isn’t onthe innovation curve.

WHAT DOES THIS MEAN TO MARKETERS?Every legacy brand has to adapt or reinvent its

values, offerings and go-to-market strategies tomaintain relevance with an empowered, future-biased Gen Y consumer as the driver of its core busi-ness. It may not be a smooth process. It may looklike destruction or chaos. In fact, it is an essentialrecalibration of the business to achieve greater cre-ativity. It’s a time when fresh ideas with direct con-sumer impact will generate more ongoing businessvalue than the scale of legacy business practices.

— GEORGE BLAIR SCRIBNER,

senior VP-account planning,Digitas

GEN Y WILLLIKELY LOSEALLEGIANCETO ANYBRANDTHAT ISN’TON THEINNOVATIONCURVE.

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Insights



CONCLUSION GETTING GEN Y’SATTENTION

The next wave of marketing to affluent members ofGeneration Y must be considered from a completely differentvantage than in generations past. Luxury is no longer onlydefined by price tag, label or design. Today, each product musttell a story—and part of that story is relevance, ease of use andaccessibility. Brands must find ways to give these young andaffluent consumers information in ways that are meaningful.This means through mobile devices like tablets and smart-phone, both delivered to the consumer’s personal device butalso through the in-store shopping experience. Product infor-mation must also be sharable, giving consumers ways to sharetheir thoughts and opinions with their friends, their networkand through other loyal brand followers. These are perhaps themost informed customers in the history of luxury, and theydemand choice, à la carte shopping and easy ways to get exact-ly what they desire. The upside of this evolution is that this is agroup that is easily persuaded—the question is whether brandswill be agile enough to capture its attention.

EMMA JOHNSON is a New York-based freelance business journalist. Her creditsinclude The New York Times,The Wall Street Journal, Forbes,MSN Money, InternationalHerald Tribute, Entrepreneur,Wired and others. She blogs atWealthySingleMommy.com.

ABOUT THE AUTHOR

Marketing to millennialsrequires new storytelling skillsand shareable content

This is one in aseries of trendreports publishedby AdvertisingAge. To see otherAd Age reports,such as 2011’s“The New Waveof Affluence,”and to obtainadditional copiesof this one, go to AdAge.com/trendreports

FIND MOREONLINE

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DIGITAS George Scribner, , senior VP-account planning, is the creator and author of the original

research “Affluence in America: The Next Generation”, as well as the first chapter,“Affluence in America: The New Consumer Landscape”, developed with a broad teamacross Digitas’ capabilities, and in partnership with Ipsos Mendelsohn.

To learn more about “Affluence in America: The Next Generation,” contact him [email protected].

Digitas, a digitally-led, integrated global brand agency, builds brands for some of theforemost companies in the world, including American Express, Delta, Procter & Gamble,and Sprint. In 2012 Digitas was named OMMA Magazine's Agency of the Year and TheDrum's London Integrated Agency of the Year. Digitas was also the winner of nine CannesLions in 2012. The agency also counts Agency of the Year honors from the Festival ofMedia, BtoB Magazine, and Les Agences de l’Année, France, and has been named to theAdvertising Age Digital A-List among its many awards.

For more information on Digitas, please contact: [email protected] [email protected].

www.digitas.com | Twitter: @Digitas| Facebook: Digitas Fan Page | Blog: Digitas Distillery

STRATEGIC PARTNERS

MENDELSOHN AFFLUENT SURVEY, IPSOS MEDIACT The Mendelsohn Affluent Survey is produced by the Audience Measurement Group

of Ipsos MediaCT, a group widely recognized for its expertise in affluence, luxury andmedia use.

Ipsos MediaCT is the media, content and technology specialization within Ipsos, apublicly traded firm headquartered in Paris that ranks as the third-largest researchfirm in the world, with offices in 84 countries.

Stephen Kraus is senior VP and chief insights officer of the Audience MeasurementGroup; he is author of two books on affluence and luxury, and writes regularly forMediaPost’s Engage: Affluent.

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Insights



THE NEW WAVE OF AFFLUENCEFor this first report examining the entire affluent market, Ad Age Insights workedwith Digitas and the Mendolsohn Affluent Survey to identify and explain five tiersof affluent households in the U.S. You’ll learn why true affluence isn’t achieveduntil the $200,000 household income level, which demographic is on its way tothe rich life, and why it's time to abandon the idea of mass affluence.

Includes PowerPoint slides

Use code DISC100 when you check out to save $100 on this report:

$99 for Ad Age subscribers; $149 for non-subscribers

Regular price: $199 for Ad Age subscribers; $249 for non-subscribers

Order it here: http://adage.com/trend-reports/report.php?id=47

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20121210-Affluent.qxp 12/5/2012 1:18 PM

the next generation - ad age 12 10 affluence in america gen y.pdfthe affluent segment of generation...

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