The Challenge of Marketing to Generation Rent is One Worth Rising To
It is notoriously difficult to reach millennial consumers through traditional marketing channels. Being the first generation of true digital natives, they are never far from their smartphones. However, when it comes to consuming content they’re a discerning bunch – woe betide any brand that impinges on their personal space with the wrong ad at the wrong time. They have shifting and contradictory feelings towards brand marketing and their transitory lifestyle is another challenge for marketers. Dubbed ‘Generation Rent’, they are far less likely to own their own home than their predecessors. A recent report from CBRE looking at UK millennials identifies that the ratio of average house prices to average annual earnings has risen from around 5.3 in 2002 to nearly 9 by 2016 (and higher in some locations such as London and the South East).
The report also highlights the dramatic increase in the typical deposit amount required for first time buyers, moving from around 5% in the 1990s to 20% – 25% today, making it near impossible for millennials to get on the property ladder.
However, when you delve a little deeper, it’s not simply the financial challenges holding this generation back from buying. Sure, they may lack the resources to raise the capital for a deposit, but for many, renting is a conscious choice. For a start it allows them to enjoy a better lifestyle with more disposable income at their fingertips. They are a generation of experience hunters who are always planning their next activity, whether that’s visiting a new restaurant, going camping or buying tickets to a gig. Add to that their transient nature – the desire to be able to take off at a moment’s notice should they get the chance to go travelling or when they’re offered their dream job in another city – and you can see why according to the CBRE research nearly two thirds of millennials are choosing to rent (that’s if the’re not living with their parents!)
While they may be facing financial challenges and have debts racked up from student loans, millennials are certainly not holding back when it comes to splurging. In fact according to CBRE’s findings, they spend almost 50% of their disposable income on leisure – going out, non-food shopping and other non-essential items. We know they have a need for instant gratification and value experiences over material needs, reflected in their love of food on the go.
What’s also interesting, however, is that although they are renting, it doesn’t stop millennials from making their house a home. More than £12 billion is spent by people in the UK each year on moving into a new home and millennial renters are a huge part of that picture. Unlike their older cohorts who are likely to be well set up when it comes to homeware, millennials are just starting to build their living space. They spend more on homeware than they do on clothes, with home electronics taking up a significant share of their budget.
Using life stage data, it’s possible to identify millennials who have moved or are just about to move into a new rental property. This layer of information qualifies a brief into a highly valuable window of opportunity for marketers to target them with the product they want at the exact moment that they need it. Their ‘I want it now’ attitude means that millennials are more likely to make a decision on the fly, so adding this kind of factual context to advertising campaigns can maximise the relevance of offers and have a massive impact on ROI. In fact in our experience at TwentyCi, what we describe as ‘marketing in the moment’ results in a return of £12-£28 for every £1 spent.
This approach can be invaluable when marketing to millennial customers; their instant decision making means retargeting often isn’t an option – you may only have one shot at getting it right. What’s interesting is the variety of market sectors that can benefit from insight into these changes of behaviour triggered by life events. Fast food deliveries, for example, are a must-have for millennials, particularly when they first move into a new rental property. Within the first month they’re likely to be in the market for quality furniture with electronics and gaming devices also high on the agenda. Armed with this information, brands can create marketing campaigns that hit customers at the right moment, reaching millennials when their need is highest.
The more bespoke you can makes these offers, the better. A phone company or broadband supplier knowingly marketing to a millennial could structure an offer around the generation’s thirst for travel by offering a contract with global benefits. Likewise a utilities company may highlight its green credentials to tap into the millennial’s altruistic nature. A supermarket chain that provides an irresistible introductory delivery offer just at the time a new renter is looking to fill their fridge is more likely to gain their ongoing brand loyalty than one displaying a generic ad.
It’s not necessarily about money saving offers. A millennial renter buying electronics is likely to go for a top of the range brand, so if you’re a headphone manufacturer, for example, you want to make sure you’re front of mind when they start thinking through their purchases. Timing is key when targeting millennials because they make their decisions quickly and stick with them.
By using deterministic data to identify and track the key moments in the millennial renter’s life, brands can deliver tailored messaging across multiple digital channels to reach these elusive customers at the precise moment when the need for their product is at its peak. While millennials may be hard to reach, once you have won them over, they are fiercely loyal and great advocates of the brands they love. The time and effort that brands put into understanding their motivations and creating content and communications that talk their language could buy them a customer for life.
Paul Hickey, Director of Digital Solutions at TwentyCi