Generation Z: Who They Are & How They Spend

Last updated: February 21, 2019 | By Dory LeBlanc

By 2020, Generation Z will account for one-third of the U.S. population. You’re probably wondering how this happened. You may be asking where all the millennials went.

Yes, you just spent years trying to figure out how to market to millennials. You still may not have figured it all out. But, it’s time to focus on Gen Z.

Who Is Generation Z?

If millennials were the “generation of entitlement,” Gen Zers are their polar opposite. They’re viewed as thoughtful and hard-working. While some studies show they only have an eight-second attention span, others clarify that it’s due to their ability to process information at a higher rate.

It makes sense, after all. They’ve never known a world without the internet and the oldest of the Gen Zers probably can’t remember what life was like before 9/11.

Gen Z is the “quality over quantity” generation. They want authenticity. They’re frugal. They may be the social media generation, but they know social media has its downsides. And they’re pragmatic. Much more so than their millennial big brothers and sisters. They’re hard workers who want to be known as the opposite of those born before 1994.

Generation Z Age Range

Or is it 1996? There’s a discrepancy with the actual year the generation starts. Some list it as 1995 while others say it’s 1997. Considering there’s a three-year buffer with all generations, either one works. People born within these three-year swings may show characteristics of both.

However, knowing the year they were born is the least of your worries when it comes to getting to know Generation Z. If you’re a Gen Xer, you may look at your 16-year-old daughter and wonder why she can’t have a conversation with you without her smartphone in her hand and her Snapchat open. Snapchat is probably confusing and pointless to you. You wonder why she can’t just use Facebook and Twitter like everyone else.

She has no idea which channel her favorite shows are on. She does know where in the queue she can find them on Netflix, though. She also knows YouTuber PewDiePie’s real name. (It’s Felix Kjellberg, if you were wondering.)

She’s planning on going to college – but not the way you did. She’s looking at community colleges and online courses instead. She doesn’t want to be in student loan debt for the next 10 years. Plus, she has a job and really likes her manager. She doesn’t want to have to transfer stores.

5 Generation Z Characteristics

  1. Purposeful
  2. Industrious
  3. Stable
  4. Quality over Quantity
  5. Consumers with a Cause

You may wonder why we’re focusing on Generation Z. It’s because of the numbers. Yes, they’ll make up one-third of the U.S. population in 2020. However, they’re also the ones spending money now – and it’s only going to increase in the next couple of years.

But how much are they spending and how are they spending it?

Gen Z Media Usage

A study by Think with Google put it best: “Millennials were mobile pioneers; teens are mobile natives.”

They found Gen Zers ages 18-24 got their first smartphones at 16, while 13- to 17-year-olds got theirs at age 12. This has had a profound effect on how they communicate and view the world and their purchase power.

But deeper than that, it’s how they want to be viewed. Their entire lives they’ve heard, read and seen their predecessors as lazy, entitled and selfish. Truth be told, these are largely unfounded myths, perpetrated by classic generationalism. Their parents, the Gen Xers, heard the same thing from baby boomers. In due time, millennials will say the same thing about Gen Zers.

However, the gripes their parents mumbled at dinner – the ones about the new millennial in the office who kicks off his shoes at his cubicle and won’t stop whining about everything – shaped who they are. In short, they want to be the opposite.

They want to work hard for everything they have. They want to make the world a better place. They have interests and hobbies, but do these things offer them a stable financial future? Do they really want to be in debt for the next decade just to have a degree they can’t use? And what will they study? Likely, it won’t be English, art or history. Think more along the lines of accounting, finance and medicine.

Why? Because of their pragmatism. They want a tangible degree that offers benefits, a livable salary and stability.

Gen Zers’ Smartphone Usage

You’ll see Generation Z referred to as “5 screeners” because of the number of devices available to them: smartphone, laptop, television, gaming console and tablet. Out of all of them, they use tablets the least – just 52%, according to Think with Google’s study. Unsurprisingly, they use smartphones the most at 78%, followed by laptops at 69%, TV at 68% and gaming consoles at 62%.

So, what are they all looking at on their devices? Videos, blogs and social media.

The overwhelming favorite among search engines is Google – 89.5%. But, Google’s total global market share is 92% – so what other search engines do Gen Zers use? If you answered “Bing” you’re partially correct. Bing comes in third at 10.5%.  However, behind Google is a blast from Gen Xers’ pasts: Yahoo. 11.7% of those aged 17-24 use Yahoo most often.

Generation Z Social Media Usage

Social media networks have defined Gen Z thus far. Their predecessors will still shudder when they hear the dial-up screech. Gen Zers can’t imagine it taking seconds to connect to the internet, let alone minutes.

71.2% are on YouTube, compared to 54% of all adults. 63.1% use Facebook (compared to 78% of all adults), 60.2% are on Instagram (35.4% of all adults), 59.6% use Snapchat (compared to 22.1%), 47% are on Twitter (33.5%) and 11.8% are on Tinder, opposed to 3.5% of all adults that (admit) they are. 1 If the Tinder stat alarms you, remember that a large portion of Generation Zers are 18-24 years old.

Gen Z and Marketing Strategies

While Gen Z may be capturing life through a digital lens, they still respond to traditional marketing strategies. More than 45% responded to offers they received in the mail in the past year. That number is higher than radio ads (45%), billboards (43%), daily deals like Groupon (42%) and other forms of print ads like newspapers and magazines (40%).1

So, don’t think because they’re mobile natives, you should abandon your print strategies – especially direct mail. You should merge your traditional advertising with digital marketing for the biggest impact.

Who Influences Gen Z?

Fifteen years ago, influencers were movie stars, athletes and other celebrities. Today, influencers look much different. In fact, being an influencer is a career. It didn’t start out that way, mind you. When the social media boom first exploded, people picked up a camera and started blogging their thoughts in video-form and uploading them to YouTube. Hence, vlogging was born.

The more people watched, the more influence the hosts (now called “creators”) had. Let’s go back to PewDiePie. Currently, the Swedish YouTube sensation has the most popular channel with more than 85 million subscribers. To put that number in perspective, around 1 in 90 people on the planet subscribe to his channel. But, not all 7.68 billion people have internet access. In fact, only around 4.1 billion do. So, among people with internet access, the number drops to 1 in 50.

What does that have to do with influence? Over the years, PewDiePie has faced his fair share of controversies. As a result, he was booted from YouTube Premium – the platform’s subscription service, which pays higher ad revenue to creators. That didn’t stop Kjellberg from growing his channel and becoming a top influencer. In July 2018, PewDiePie released his subscriber demographics. At the time, he had over 63 million subs – 44% of which were 18-24 years of age. In other words, the adult members of Gen Z who make and spend the most money.

There’s a caveat, however.

YouTube doesn’t allow children younger than 13 to have an account. As you can imagine, it’s not hard to do some simple fourth-grade math and come up with an age older than 13 – especially when you’re in the fourth grade.

That said, PewDiePie is a major influencer. Along with being the king of YouTube as far as subscribers, he’s also doing well financially. Kjellberg consistently cracks the top 10 of highest earners on the platform, generating $15.5 million in 2018. That’s also why every video he posts is heavily scrutinized. Gen Z – whether they’re 24 or 9, is watching.

Kjellberg isn’t the only social media influencer. Huda Kattan, who has 32.8 million Instagram followers, launched a cosmetics line, Huda Beauty, after Kim Kardashian-West wore some of her false eyelashes. Speaking of Mrs. West, she’s also one of the biggest influencers in the world. Along with her lil’ sis, Kylie Jenner. The 20-year-old (at the time) Jenner was on the cover of Forbes magazine for being worth close to $1 billion.

Gen Z isn’t influenced by the same type of celeb their parents were. Gen Zers gravitate toward the “authenticity” of social media stars – even if it’s not all that authentic.

This is actually a good thing for businesses. In the past, a company would have to set aside a large portion of its marketing budget for a celebrity to endorse its product. Today, a business owner can reach their target audience with a few keystrokes.

In fact, your brand can make money while influencing Generation Z. Despite all the social media influencers out there, Gen Z’s biggest influencer is their peers. If a peer has good things to say about your product – and your message – you’ll see a jump in sales. You’ll likely see a jump in hashtags singing your brand’s praises too.

What Influences Gen Zers

But, don’t be fooled – they’re not easily influenced, period. Gen Z is influenced by what resonates with them, not with the person presenting it.

In other words, if they like your product and message, they’re more likely to give a pass to whoever’s trying to influence them to buy it. A great product is a great product. But what are you trying to say with your product?

If you tell them it’s “lit” and your brand is “woke,” they’ll immediately assume it’s not. They believe, again, that authenticity is important. They can see right through disingenuous marketing ploys.

They’re also more inclined to understand there’s more than one side to a story. This goes back to being digital natives. They’re aware that if Side A says the sky is purple there’s a Side B out there saying it’s blue. They might even happen upon a Side C, who puts up a pretty good argument for it being green. Gen Z will go beyond face value. And, because they’re so internet savvy, they’ll find every side and contemplate each before taking a stance.

Is that idealistic? Yes. But that’s who this generation is: fearless, authentic, informed and determined.

How Much Generation Z Has

Let’s circle back to the gripes Gen Zers hear from their Gen X parents. They know their parents had to put off new cars and vacations until their student loans were paid off. At the same time, they’ve also seen their parents work stable jobs that offer benefits like health insurance and a 401(k). This has influenced how they acquire money now and how they’ll get it in the future.

According to a Packaged Facts report, the young adults of Generation Z (18-24 years) have an aggregate income of $463 billion. Their older teen counterparts (15-17) come in around $17 billion and have parents spending another $25 billion on their clothes, entertainment and personal care.

If the experts are correct and more of this generation ends up in trade schools and community colleges, instead of four-year universities like millennials, they’ll have more spending money in a relatively shorter amount of time. While the majority of their Gen Y counterparts struggled to pay back student loans until they were 35 (sometimes older), many Gen Zers may not incur that particular debt.

Of course, this is if the prognosticators are right. If they are, it’s possible that 19-year-old Jeff, who’s going to trade school to become an electrician, could own a business by the time he’s 35.

How Much Gen Z Spends

The buying power of Generation Z is, in a nutshell, massive. The Packaged Facts report goes on to mention that their buying power exceeds $500 billion. As PR Newswire puts it – that’s comparable to the GDP of Belgium, Poland, Sweden, Thailand and Venezuela.

So, what are they spending on? Things.

Millennials spend money on experiences, but Gen Z is taking it back old school and spending on products. Great news if you’re in the consumables business. Bad news if you invested all your money in a second home in Costa Rica to use as an Airbnb.

Kelley Blue Book and Autotrader conducted a recent survey on car buying among generations. As expected, millennials are environmentally friendly. But, they’re not as cost-conscience as the next generation. 77% of Generation Z said the price of a vehicle was the most important trait when it came to buying a car. They’re willing to give up a lot for a year if it means owning one too. 72% are willing to give up social media, 63% are willing to forego new clothes and 33% brave souls are willing to say goodbye to their cellphones if it means they could own a new car.

Interestingly, they’re not as materialistic as millennials were at their age. When it came to a vehicle’s style, 49% of Gen Z said it was important, compared to 57% of millennials. Brand importance was also higher among millennials – 34% to 23%. One of the biggest discrepancies came from vehicle popularity. Only 13% of Gen Zers felt it was important, while 22% of millennials at the same age did.

How Gen Zers Spend Their Money

Millennials want everything online. They don’t want to talk to a cashier or sales associate. They want to log in to their Amazon Prime account and have their purchases delivered within the next two days.

Gen Z – maybe because having online access to everything isn’t a novelty – shop much differently. Compared to all U.S. adults, Gen Zers are 114% more likely to shop at GameStop, 96% more likely to shop at American Eagle, 61% more likely to shop at Apple Store and 4% more likely to shop at Barnes & Noble. 1

Yes. Barnes and Noble. The brick-and-mortar bookstore.

If you own a small business, don’t think their preference is only for chain retailers. In fact, it’s the complete opposite. 41.4% said they prefer to shop at small, family-owned or independent businesses. 33.9% prefer shopping at national or regional chain stores and a very low 24.7% prefer shopping online.

What Generation Z Really Wants

Honesty. It’s what all generations say they want, but Gen Z demands it. 39.9% will avoid sites with intrusive or inappropriate advertising. 28.6% say they’ll change the channel or turn down the sound when a commercial comes on.

They’re honest too.

18.4% admitted they would switch brands to support a cause or charity, compared to 20.7% of all adults. Only 17.4% avoid buying from companies whose values don’t align with theirs. We say “only” because 23.7% of all adults answered they avoid brands with different values. While 16.2% of all adults said they’d shop at a different store to support an important cause or charity, 15.4% of Gen Zers said they would.

With so much emphasis placed on social media marketing, you may need to rethink your strategy. Organic reach on the platforms has fallen so low, experts say it’s no longer a viable option. Instead, it’s suggested to put some money behind your ads in sponsored content. Keep your organic posts going but know that over 50% of Gen Zers on social media made a purchase based on something they saw in a paid ad on social media.

So, don’t be afraid to go back to your roots. Be authentic. Be honest. Don’t try and wow Generation Z with cool, trendy verbiage. Let your product or service speak for itself.

Generation Z will appreciate it. So will your bottom line.

 

1. 2018 AudienceSCAN®