GenY affluents

Gen Y
Affluents:
Media Survey
SCOT T G A L LO W AY
N Y U S tern December 16, 2010

A Think TAnk
for DiGiTAL innOVATiOn

© L2 2010 L2ThinkTank.com

Gen Y Affluents: Want to know more about your brand and Gen Y?
Media Survey COnTACT US

inTRODUCTiOn

The End of the Beginning
Reshaping Prestige in Zeros and Ones:
Millennials’ Media Consumption and its Effect on Brands
Generation Y—the future of prestige—has a strong preference for digital content and social interaction.
The affluent slice of millennials we surveyed is brand conscious, educated, and upwardly mobile. They
regularly engage with prestige brands through a variety of media, from newspapers to micro-blogs.

But digital is trouncing traditional channels with this critical cohort and is gaining momentum. Luxury
brands continue to fight tanks with cavalry, devoting the bulk of their marketing dollars to print and analog.
Brands that continue to under-invest in digital risk losing mind share of the largest U.S. consumer group—
Generation Y.

Fortunately, brands are catching on; it’s the “end of the beginning” of a dramatic shift in ad spending from
traditional formats to digital. Deft marketers are recognizing the value of investing in their own sites, social
media platforms, and mobile apps. Those that don’t embrace the digital migration risk joining Blockbuster
on the dust heap of great brands that hoped the Internet would just go away.

© L2 2010 L2ThinkTank.com 2


inTRODUCTiOn ABOUT ThE SURVEY

L2 surveyed nearly 1,000 high-achieving and high-earning Gen Y adults. Refined to a
The Headlines panel of 535, on average this sample set is on a trajectory to earn more than $100,000
FACEBOOk, hAnDS DOwn: in the short term and double their income within the next five years.

81% of millennials use Facebook every day—nearly
twice as many as those who watch TV or read
newspaper content. The Panel: The Questions:
• 535 individuals; average age 27 • Respondents answered questions on modes of
BLOGS SCALE ThE GATES OF ThE FOURTh ESTATE: • 56% female; 44% male media consumption, frequency of use, devices used,
and brand interaction within the various media
Nearly 1/2 read blogs every day, as many as those • From 41 countries including the U.S. (76%),
• Before scoring the brands, respondents were asked
India (4%), China (3%), Canada (1%), Hong
reading newspaper content. unprompted for their five favorite prestige brands
Kong (1%), Mexico (1%), South Korea (1%),
and Germany (1%) • Respondents scored sentiment for 100 iconic
nEwS BRAnDS ThRiVE—iT’S PAPER ThAT’S DYinG: prestige brands
• 75% expect to make more than $80,000 per
4 out of 5 of those who access newspaper content year in the short term (next 24 months) • Ten industry categories: Auto, Beauty & Skincare,
daily do so digitally. Department Store, E-tailer, Fashion Brand, Flash Site,
Men’s Fashion Brand, Shoes & Leather Goods, Travel
DiGiTAL kiLLED ThE TV SET: & Hospitality, Watches & Jewelry
.4%
.2%

42% watch TV shows online; 27% watch movies online. .2% .6%
.4% 0.4% 40%+
0.2%
11.7%
.4% 41.5%
1.9% .4%
ThE UPwARDLY MOBiLE GO MOBiLE: 0.4% 0.2% 1.5% 0.6%
20 – 40%
40%+
1.9% 11.7%
25% use mobile to access social media, and 1 in 8 .2%
0.4%
5.2% 2%
.2%
1.9%
41.5% 3.2%
.7%
0.4%
10 – 20%
20 – 40%
1.5% 5 –10%
watched a video on mobile in the past 24 hours. 6.3% .2%
.9%
1.9%
9.5%
2.2%
3.2% 10 – 20%
0.2% 1– 5%
0.2% 5.2% 2% 0.7%
4.3% 5 –10%
6.3% 0.2% .4% 2.2%
9.5%
DiGiTAL SOCiAL BRAnDinG iS PARAMOUnT: 0.9% .2%
0 –1%
1– 5%

63% use social media to engage with brands, and
4.3% 0%
0.4%1.1%
0 –1%
0.2%
more than 50% say that Facebook, blogs, and brand 2.2%
1.1% 0%

videos affect their opinions about products. 2.2%
.2%

0.2%
wEBSiTES ARE FLAGShiPS, TOO:

Websites are as influential as physical
stores in shaping Gen Y sentiment, second only to
friends’ opinions.



kEY FinDinGS SOCiAL MEDiA: FREqUEnCY OF USE
Respondents’ Usage by Platform

Facebook Is Fundamental
100%
With more than 550 million active users, Facebook dominates the
social media landscape. In the past ten years, the number of
page views recorded for the top ten websites in the U.S. = MORE THAN
5 TiMEs A DAY
increased from one third to three quarters of total page views on-
= DAiLY
line; as the Internet matures people are focusing on fewer sites.1
= WEEKLY
This is especially true in the case of Facebook, whose share of = MONTHLY
75%
the Internet continues to grow. The behemoth’s success comes
= sEvERAL
at the expense of other portals as well as traditional channels TiMEs A YEAR

that brands have relied on for marketing. Websites remain impor- = NEvER

tant, particularly for e-commerce, but brands will increasingly fol-
low their customers, making their content available on Facebook.

50%

GEn Y MEDiA COnSUMPTiOn
% who access the following media daily

25% = UsEs pLATFORM
ONCE A DAY
OR MORE

Facebook Blogs Newspapers TV Shows
81% 45% 45% 44%

0%

1. “The Web is Dead. Long Live the Internet,” Chris Anderson and Michael Wolff,
Facebook YouTube Twitter Hulu Geo-Platform Flickr
Wired, August 17, 2010.



kEY FinDinGS
M O D E S O F A C C E S S i n G C O n T E n T: n E w S PA P E R S
Blogs on Par with Newspapers % who access via the following:

If baby boomers are the TV generation, then Gen Y is the blog 2%
2%
generation. Nearly half of Gen Y affluents read at least one
blog daily, making blogs as popular as newspapers with this 12% = TRADiTiONAL
cohort. Blogs associated with such traditional media organiza- (print)

tions as The New York Times and ESPN are as popular as those = ONLiNE
19% (Desktop or Laptop
focused on a niche. Millennials’ favorite specialty blogs include Computer)
Mashable and The Sartorialist. Micro-blogging is even more = ipAD / E-READER
(Kindle, Nook)
pervasive; two thirds of affluent Gen Y’s use Twitter, with one in
= MObiLE
four checking their account in the past 24 hours. 65% (phone, ipod)

= i DON’T ACCEss THis
Newspaper Content Commands as Much sORT OF MEDiA

Attention as TV
On a daily basis, Gen Y affluents are as likely to read newspaper
content as they are to watch TV, and they would rather have the
content on a screen. In fact, four of five readers access news-
papers digitally, and one in eight do so using a mobile device.
M O D E S O F A C C E S S i n G C O n T E n T: M A G A Z i n E S
% who access via the following:
Magazines Are Getting ‘Facebooked’ 2%
1%
Facebook could do to magazines what Google did to newspa- 2%
pers, providing easier access to a vast array of content. Gen Y
= TRADiTiONAL
affluents are avid magazine readers, but magazines have not (print)
yet figured out the transition to digital. = ONLiNE
(Desktop or Laptop
24% Computer)
Nine in ten Gen Y affluents read at least one magazine per
= ipAD / E-READER
month, but only a quarter of them access magazines online,
71% (Kindle, Nook)
and almost none receive that content on an iPad, e-reader, or
= MObiLE
smartphone. The iPad has been a force for innovation, but so (phone, ipod)

far magazine content repackaged for iPads is not compelling = i DON’T ACCEss THis
sORT OF MEDiA
enough for this cohort.



kEY FinDinGS
R E L AT i V E A U D i E n C E : R E A C h V i A FA C E B O O k & C i R C U L AT i O n
Apple iTunes & Burberry vs. wall Street Journal & The new York Times
Renting Versus Owning (November 19, 2010)
Brands’ ability to establish direct relationships (en masse)
could dramatically alter the media landscape. Power will shift Apple iTunes
as brands cultivate authentic relationships via Facebook, Facebook Likes: 8,525,195

creating cohorts whose sizes dwarf media brands’ subscriber
bases, along with an opening to circumvent the traditional
publisher network.

In sum, it’s a great time to be a digitally deft brand ... and a
precarious time to be in ad-supported media. This graph illus-
trates the relative sizes of the cohorts versus subscriber bases
of iconic brands and media properties, respectively.
Burberry
Facebook Likes: 3,050,057

The new York Times
Circulation: 876,638

Facebook Likes: 930,138

wSJ
Circulation: 2,061,142

Facebook Likes:
165,720



kEY FinDinGS
T R A D i T i O n A L T V V S . D i G i TA L V i D E O

Digital Video Rising in the last 24 hours, i watched:

Millennials love TV programs and movies, though affection for More than one hour of TV 60% Traditional Tv
television sets and theaters is waning. Instead, affluents are
watching online and on mobile devices. Indeed, one in eight re-
ports watching a video on a mobile device in the past 24 hours. in the last 24 hours, i watched a video via:

YouTube 56%
Geo-Local: The Mouse That Roars
Location-based services garner major buzz, though we have Online
(other than Hulu, YouTube) 21%
yet to see what this technology can really offer. About one in Digital video
five Gen Y affluents report using Foursquare in the past 24 Hulu 19%
hours, though a recent Pew study indicated that adult use of
location-based services declined slightly between May and
Mobile Device 13%
September of 2010.2 Usage could increase dramatically, how-
ever, as new platforms such as Facebook Places and Google
0% 25% 50% 75% 100%
Hotpot launch with built-in potential user bases.

iPhOnE VS. BLACkBERRY
Smart, Smarter, Smartest = CURRENTLY OWN
Current and Expected Ownership
The mobile content-delivery revolution is underway. One in four = EXpECT TO OWN
1 icon = 1%: = CURRENTLY OWN
Gen Y affluents access Facebook using a mobile device, and
= EXpECT TO OWN
one in five read newspapers using mobile. Not surprisingly,
the “fruit” brands dominate the smartphone market. About
one third own a BlackBerry and slightly more own an iPhone.
Meanwhile, a whopping 71 percent say they expect to own an
iPhone in the future.

2. Pew Research Center’s Internet & American Life Project, “4% of online Americans
use location-based services” <http://www.pewinternet.org/Reports/2010/ iPhone Blackberry
Location-based-services.aspx>



kEY FinDinGS
which of the following best describes your level of

Big on Brands BRAnD AwAREnES S?

1%
Gen Ys are both brand aware and eager to interact. Three quarters
of respondents have an affinity for brands and one in eight are
self-proclaimed brand “devotees.” Early adopters—those who 12% = i FOLLOW A FEW GOOD
bRANDs
use mobile devices and e-readers to access media—may be
= i GET THE OCCAsiONAL
particularly valuable to luxury brands. Seventy-nine percent of bRAND CRUsH
12%
these technophiles expect to make $100,000 per year or more 43% = i’M A bRAND DEvOTEE
in the near term. In other words, cutting-edge innovation is
= i’M bRAND AGNOsTiC
important to the most affluent among Gen Ys. This wealthier (i can take them or leave them)
bunch also skews slightly higher on brand awareness. 32% = i DON’T bELiEvE iN LAbELs

Social Media and the Brand Funnel
The majority of Gen Y affluents use social media to connect
with brands. Many do so to receive promotions or offers and
one quarter engages because they have an affinity for a brand. which statements best describe why you engage with
Nearly one in eight simply like the content brands provide. brands or products using SOCiAL MEDiA?

24% 15% 26%

10% 37%

20%
38%
28%

= i DON’T UsUALLY ENGAGE WiTH bRANDs OR pRODUCTs UsiNG sOCiAL MEDiA
= i HAvE AN AFFiNiTY FOR THE bRAND OR pRODUCT
= i LiKE THE CONTENT THE bRAND pROviDEs
= i WANT TO RECEivE pROMOTiONs AND OFFERs



kEY FinDinGS

Building on Brick-and-Mortar FA C E B O O k i n T E R A C T i O n
The majority of respondents are likely to purchase prestige Frequency of Sharing, Comments, and Likes
brands in-store, though nearly half anticipate making pur-
chases through a brand’s website. In a given 24-hour period, 75%
however, more respondents visit a website than a physical
store. As investments follow the consumer, there’s likely to be 54%
a massive increase in the allocation of capital to brands’ online
50%
stores from their terrestrial counterparts. 38%
30%
Vis-à-Vis Facebook
25%
With the majority of Gen Y opting in to brand newsletters and
updates, email remains a powerful tool for interaction. But
Facebook is becoming the new word of mouth. More than half
0%
of respondents have “liked” a brand in the past month, and
Facebook Facebook Facebook
about one third have “shared” brands with their networks. “SHARE” “COMMENT” “LIKE”

Brand Websites Are as Influential as
Newspapers and Glossies BRAnD wEBSiTES ALMOST AS POPULAR AS BFFs

Word of mouth is still the most important force shaping Gen Y % of respondents who have interacted with brands in the past 24 hours

brand perceptions, but websites tie for second place with news-
papers and magazines—brands’ traditional marketing weapons
In-person discussion 83%
of choice. Three quarters of Gen Y affluents visited brand sites with friends
in the past 24 hours, though most firms still allocate a dispro-
portionate percentage of their marketing budgets to analog
Brand website visit 76%
channels. Digital media receives only a fraction of the dollars that
consumers’ behavior suggests they should.
Brick-and-mortar
73%
store visit

0% 25% 50% 75% 100%



CASE STUDiES

WIRED: Unplugged
Wired is head of the pack when it comes to offering a compelling
format for magazine content on the iPad. The Wired app was
downloaded an impressive 100,000 times in June, its first month.
Not surprisingly, downloads dropped more than a third in each
successive month through September after its core readership
signed on.

It’s too early to tell if the honeymoon is already over or if the real
marriage of magazines and apps is forthcoming.

iPads still aren’t commonplace, despite their remarkable growth.
But the real bottleneck for magazines is design. Wired’s app is
among the best, but no magazine has really tapped the social
and interactive potential of the tablet format. Most magazine Wired magazine’s
iPhone app
apps could still pass for PDFs of the print version. As such,
accessing magazine content on an iPad may seem more like
heavy petting than anything else in the near term.



CASE STUDiES

FACEBOOK: Media’s Walmart FA C E B O O k FA C T S

Facebook is growing at a blistering rate, doubling its U.S. user
base in the 12 months through October. The ubiquitous platform
Facebook boasts 550 million users, roughly
is quickly becoming the Walmart of media, able to vanquish 1 out of 12 people on the planet.
competition by replicating its services at scale.

This year saw the launch of Facebook Places and Facebook
People spend more than 700 billion minutes per month
on Facebook—that’s more than 13,000 years, roughly the amount
Deals in the geo-local space, as well as Facebook Messages,
of time between the present day and the glacial ice age.
which aims to integrate email, text, and chat. Facebook also
officially broke out of social networking in 2010 to become one
of the most powerful media companies in the world, surpassing Facebook accounts for 25% of all U.S. page views;
Google News in referral traffic to news and media sites. In July, in the second week in November the platform enjoyed
Facebook launched its “Facebook + Media” page, engaging 5x more page views than Google.com.
media companies directly to identify ways to drive more traffic to
their sites.
200 million users are accessing Facebook
using mobile, which is 3x the number of people who
FA C E B O O k U n i q U E U S E R S : U. S . voted for President Obama in the 2008 election.
(October 2009 - October 2010)

150
The average user is connected to 80 community
151.13 pages, groups, and events.
An increase of 55%
over the last year
Users share more than 30 billion pieces of content
100 (web links, news stories, blog posts, notes,
97.37
photo albums, etc.) each month.
millions

50 2/3 of comScore’s U.S. Top 100 websites and half of comScore’s
Global Top 100 websites have integrated with Facebook.

3. Glaciation of Wisconsin, Lee Clayton, John W. Attig, David M. Mickelson, Mark D. Johnson, and Kent M. Syverson, University
0 of Wisconsin, Department of Geology.
2009 2010 4. “Facebook Accounts for 25% of All U.S. Pageviews,” Jolie O’Dell, Mashable, November 19, 2010, <http://mashable.com/
2010/11/19/facebook-traffic-stats/>.
5. “President,” CNN.com’s Election Center 2008, November 17, 2008, <http://www.cnn.com/ELECTION/2008/results/president/>.



CASE STUDiES

M-COMMERCE: Sudden Impact
eBay has emerged as the clear leader in mobile commerce.
The company expects to make $1.5 billion from mobile transac-
tions in 2010, up from $600 million in 2009. Version 2.0 of its
phone app, released in November, offers comparison shopping
by scanning bar codes.6 eBay also launched a fashion app in
2010, which lets users browse for clothes, access exclusive
sales, and “try on” outfits by snapping pictures with the iPhone’s
camera. Users can then share their outfits with friends on
Facebook and Twitter.7 eBay’s Fashion
app
Amazon has found success on mobile as well, reporting more
than $1 billion in sales in the 12 months ended June 30, fol-
lowing the launch of its 1-Click checkout feature.8 Amazon also
released a price comparison app in November.9

In many ways, fashion has led the way for luxury firms. Ralph
Lauren was among the first to offer mobile shopping, followed
by Diane von Furstenberg, Marc Jacobs, Donna Karan, and oth-
ers. And with the success of e-tailers such as Net-a-Porter and
flash sales site Gilt Groupe, traditional luxury retailers such as
Neiman Marcus are following suit.10
net-a-Porter
iPhone app
6. “eBay Releases All-in-One Buying, Selling & Scanning iPhone App,” Lauren
Indvik, Mashable, November 22, 2010, <http://mashable.com/2010/11/22/
ebay-mobile-iphone-app/>.
7. “eBay Helps You Dress Better with New iPhone App,” Lauren Indvik, Mashable,
July 16, 2010, <http://mashable.com/2010/07/16/ebay-fashion-iphone-app/;
http://mashable.com/2010/07/22/2010-mobile-commerce-trends/>.
8. “Amazon.com Announces Second Quarter Sales up 41% to $6.57 Billion,”
<http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-newsArticle&ID=
1451041&highlight=>.
9. “Amazon’s Price Comparison App for iPhone Falls Just Short of Great,” Lauren
Indvik, Mashable, November 22, 2010, <http://mashable.com/2010/11/22/
amazon-price-check-iphone/>.
10.“How Fashion Brands Can Make the Most of M-Commerce,” Lydia Dishman,
BNET, November 4, 2010, <http://www.bnet.com/blog/publishing-style/how-
fashion-brands-can-make-the-most-of-m-commerce/937>.



CASE STUDiES
Burberry’s shoppable spring/
summer 2011 runway show
BURBERRY: Luxury’s Digital Darling was streamed live on its site,
in-store, and via iPad
Once synonymous with “British” and “plaid,” Burberry can now
add “innovation” to its core associations as the firm blurs the
line between brand and media company. With executive support
for digital experimentation and a rock star public relations team,
Burberry has soaked up the limelight with initiatives such as its
shoppable live-streaming runway shows, projected live in-store
and via iPad.

Further shedding its former stodgy image, Burberry tapped Harry
Potter leading lady Emma Watson as its spokesperson and
dedicates portions of its site and Facebook page to highlighting
new musicians. Connecting online and with Gen Y has proved re-
warding for Burberry—digital sales have doubled and Facebook
“likes” have jumped to more than 3.4 million.11

Burberry’s site features
interviews and videos that
take visitors behind the
scenes of campaign photo
shoots with Emma watson

11. “Burberry’s Bewitching Formula: China, Digital, Harry Potter,” Caroline Smith,
BrandChannel, November 18, 2010, <http://www.brandchannel.com/home/
post/2010/11/18/Burberrys-Bewitching-Formula-China-Digital-Harry-Potter>.


Media Survey AFFLUENTS’ TOP 20 COnTACT US

newspapers & Magazines

1 1 Respondents were asked to write in their
favorite newspapers and magazines,
2 2 blogs, TV shows, apps, and
prestige brands.
3 3 The following are the top 20
4 4 responses to these questions.

5 5
6 6
7 7
8 8
9 9
10 10
11 11
12 12
13 13
14 14
15 15
16 16
17 17
18 18
19 19
20 20


Blogs

prestige brands.

5 5
6 6
7 7
8 8
9 9
10 10
11 11
12 12
13 13
14 14
15 Blogs 15
16 16
17 17
18 18
19 19
20 20


TV Shows

prestige brands.

5 5
6 6
7 7
8 8
9 9
10 10
11 11
12 12
13 13
14 14
15 15
16 16
17 17
18 18
19 19
20 20


Favorite Apps

Respondents were asked to write in their
blogs, TV shows, apps, and
prestige brands.

The following are the top 20
responses to these questions.

Responses are for all operating systems and smart phones.



Last Prestige Brand Purchase

prestige brands.

5 5
6 6
7 7
8 8
9 9
10 10
11 11
12 12
13 13
14 14
15 15
16 16
17 17
18 18
19 19
20 20


Prestige Brands Aspired to Own

prestige brands.

5 5
6 6
7 7
8 8
9 9
10 10
11 11
12 12
13 13
14 14
15 15
16 16
17 17
18 18
19 19
20 20


TEAM

SCOTT GALLOwAY MAUREEn MULLEn ChRiSTinE PATTOn
Professor of Marketing, NYU Stern L2 Creative Director, L2
Founder, L2 Maureen leads L2’s research and advisory group
Christine is a brand and marketing consultant with
Scott is a Clinical Associate Professor at the NYU and has benchmarked and/or developed digital and
more than 15 years of experience creating brand
Stern School of Business where he teaches brand social media initiatives for more than 300 prestige
identities and marketing communications for aspi-
strategy and luxury marketing and is the founder of brands. She began her career at Triage Consulting
rational and luxury brands. She began her career at
L2, a think tank for digital innovation. Scott is also Group in San Francisco. At Triage, she led several
Cosí, where she developed the brand and oversaw
the founder of Firebrand Partners, an operational managed care payment review and payment bench-
its evolution from concept through growth to 100
activist firm that has invested more than $1 billion in marking projects for hospitals, including UCLA Medi-
restaurants. Since then she has provided creative
U.S. consumer and media companies. In 1997, he cal Center, UCSF, and HCA. She has gone on to lead
direction for a wide array of clients, including the
founded Red Envelope, an Internet-based branded research and consulting efforts focused on digital
launch of Kidville and CosmoGIRL! magazine. Most
consumer gift retailer (2007 revenues: $100 million). media, private banking, M&A, insurance industry risk
recently, she led creative services at ELLE during
In 1992, Scott started Prophet, a brand strategy management, and renewable energy economics for
the most successful years of the magazine’s history,
consultancy that employs more than 120 profession- professional firms and academics. Maureen has a
developing innovative integrated marketing programs
als in the United States, Europe, and Asia. Scott was B.A. in Human Biology from Stanford University and
for advertisers. Christine received a B.A. in Econom-
elected to the World Economic Forum’s “Global Lead- an M.B.A. from NYU Stern.
ics and Journalism from the University of Connecticut
ers of Tomorrow,” which recognizes 100 individuals
and an M.B.A from NYU Stern.
under the age of 40 “whose accomplishments have kATE BARnETT
had impact on a global level.” L2
Scott has served on the boards of directors of Eddie Kate is an associate in L2’s Research and Advisory
Bauer (Nasdaq: EBHI), The New York Times Company practice. She started her career as a retail consultant,
(NYSE: NYT), Gateway Computer, eco-America, and initially for the C.O.O. of Steve & Barry’s and later as
UC Berkeley’s Haas School of Business. He received an associate at Lightship Partners, specializing in
a B.A. from UCLA and an M.B.A. from UC Berkeley. product development and supply chain optimization.
Before joining L2, Kate worked with Marvin Traub,
the former C.E.O. and chairman of Bloomingdale’s,
ROBERT MERTZ
conducting research on prestige brands in emerging
McKinsey and Company
markets. Kate received her A.B. in Government from
Robert is a senior editor at McKinsey and Company Harvard University.
where he edits journals focused on microfinance
and climate change, runs a digital business ideas
newsfeed, and works with industry and functional
practices to manage their knowledge. He has a B.A.
in Literature from the University of Michigan and PhD
in Literature from SUNY at Buffalo.


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GenY affluents

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GenY affluents