Why Teens Are the Most Elusive and Valuable Customers in Tech
If Facebook's $19 billion Whatsapp acquisition can be attributed to one single instigator, it's teenagers.
Having lost its $3 billion bid for Snapchat, and with teens consistently fleeing Facebook by the millions each year, it's clear that Facebook was willing to pay just about any price to get them back. When the world's largest social network and a major purveyor of data considers this demographic priceless, you pay attention.
Today's teens are at the center of a massive turf war that's roiling the tech industry. The question is: why? What's so important about this age group and, perhaps more importantly, what are new emerging tech companies doing to lure them away?
One thing's for certain: today's teens are not doing business as usual, and in order to keep them happy, you need to do a lot more than get an endorsement from Justin Bieber. To compete for teen's attention, you have to rethink your business's strategy from the ground up.
Why Teens Matter
Teenagers have always been important to brands because they tend to be early adopters and because, traditionally, their brand preferences aren't yet firmly defined. The difference with today's teenagers, however, is that they're not listening to what the media and older generations are telling them is cool. While older millennials looked to television shows like MTV's Total Request Live to tell them what was in style, today's teens are discovering trends and deciding for themselves.
"Twenty years ago, you had magazines, broadcasters, and record labels controlling the flow of trends downward to teens," says Oliver Pangborn, senior youth insights consultant at the market research firm The Futures Company. "Teenagers have now become the gatekeepers to modern trends. With the internet and social media, teenagers have more access to that information than ever before."
Teens also wield significant purchasing power. According to a 2013 Nielsen survey, 29 percent of teens live in homes where household income is $100,000 or higher. These teens aren't just buying for themselves, either. According to Mary Leigh Bliss, trends editor at YPulse, a youth-focused market research firm, "Teens are now passing technology down to their parents, not the other way around."
Bliss adds,"We hear from teens that they were the ones telling their parents to buy iPhones and tablets. They were the driving force behind their family's technology switch."
Another reason teens these days are a desirable target audience: there's no learning curve for businesses to overcome. "If millennials were pioneers hacking through the wilderness of this teen landscape, today's teens were born there. They were the first generation inherently attuned to this," says Rob Callender, also of The Futures Company. "They didn't have to adapt their lifestyle to it, so they're more fluent in new technology."
It's no surprise, then, that teens lead the way on mobile technology, with a recent Pew Research survey showing that 25 percent of teens access the Internet primarily through mobile phones. By contrast, 15 percent of adults are mobile-first. That means businesses like Facebook which believe, and rightfully so, that mobile is the future would be well-served by focusing on teens.
The challenge with this generation of teens becoming the new gatekeepers, however, is that they're less loyal to brands and businesses than the generations that came before them. "It's an accelerated rate of nostalgia," says Bliss. "They've grown up in an era where just months after you've purchased the latest, greatest thing, the next best thing is around the corner. They tend to be loyal to the best in class, rather than the brand, itself."
What They Want
So what does this critical demographic look for in new technology? To get an idea of what the kids are into these days and, more importantly, why they're into it, I decided to ask one of the smartest, most self-aware teenagers I know: my cousin Lucy, who is, as she told me recently "15 going on 30."
Our lightly edited text conversation went as follows:
Me: "For research: do you use Snapchat more than Facebook?"
Me: "How come?"
Lucy: "Because it's more instantaneous and personalized. I have over 1,000 Facebook friends, so most of the time, I don't really care about looking through my feed. With Snapchat, I know everyone I'm friends with personally, so looking at their stories is funny/interesting to me."
Me: "You use Tumblr at all?"
Lucy: "Tumblr is still popular. I just ended up deleting mine last year because I felt pressured to perfect it. With Tumblr, I felt like I had to project an image by following cool blogs and posting generally relatable/relevant photos in order to gain followers. On the other hand, my Tumblr prime was 8th grade, and I was much more insecure. I kept it a secret for a while. I actually had a lot of fun with it when no one knew I had it. But people at my old school would make fun of each other's, and I didn't want anyone asking about my personal posts."
What I found so fascinating about this conversation is that it suggests, anecdotally of course, that teens are not as fickle as described. There is a clearly defined rhyme and reason to their seemingly unpredictable tastes. It's not just about which technology is cool. It's about which technology is safe, private, and will enable the most authentic connections.
What's even more impressive is that Lucy's tastes tracked completely with what several market researchers told me. "Younger millennials have never seen Facebook as a peer-only place," says Bliss. "They're moving away from platforms where everyone's in one place toward using several apps for several reasons.
Bliss also stressed teens' interest in anonymity, claiming that Whisper, a new app that allows people to post a secret anonymously, is becoming huge with teenagers.
Another key selling point for this age group? Value. Teens of this generation, the researchers say, are products of the tumultuous economic times during which they were raised. The recession hit during their formative years, making them especially circumspect about spending.
"It's not that they're not spending," says Callender, "it's just that you're going to have to convince them with a value proposition millennials didn't need."
"This generation will do research," adds Pangborn. "They'll look for reviews and at social media. Marketers need to be prepared and have a place where that value proposition is explained."
Pangborn notes Samsung as a model brand for this generation. "They're offering a high-quality product at a lower price," he says, "and that appeals to that demand for value."
This trend extends offline as well. Look no further than Abercrombe & Fitch's steep decline in the market over recent years, due largely to the fact that it's tough to sell teens of this generation on a $108 pair of "destroyed" jeans. During my talk with Lucy, she said that high-end thrift stores like Buffalo Exchange are the new go-to shopping destination for her friends.
How to Give It to Them
The No. 1 rule of marketing to teens? Don't market to teens. Condescension and gimmicks won't do you any favors with this group. The brands and services that tend to thrive with teens are the ones that do it organically by meeting teens on their turf.
Pheed, for instance, is a Twitter-like service that allows users to share photos, videos, text, voice notes, and live broadcasts. It flourished with West coast teens after its founders hosted a series of events at its headquarters, and invited a bunch of professional skate boarders to drop by. The app, which launched in November 2012, now has 10 million users, 80 percent of whom are between 14 and 19 years old.
We Heart It, an image-based social network similar to Pinterest, never intended to become a teen-centric network, and yet today, more than 50 percent of its 25 million members are teens. They were attracted to the app, says CEO Ranah Edelin, because it's mobile-friendly, image driven, and doesn't allow comments.
"Comments sections can really devolve into derisive, unhealthy conversations," says Edelin, noting that 80 percent of We Heart It's users say they've been bullied at some point on Facebook. On We Heart It, the only actions you can take are to "heart" an image, repost it on your own profile, or follow that user. "That way," says Edelin, "they can share without fear of backlash or criticism from others."
Another important feature: We Heart It users can sign up anonymously. "It's the fact that we're riding a few of the major trends happening with respect to teens on the Internet these days that has accelerated our growth," says Edelin. "It's been totally unintentional."
Offline, Bliss says, it's the brands that are giving teens a chance to participate in the creative process that are winning. Some do it by reblogging their customers' own Tumblr posts. Others use crowdsourcing. "Modcloth is brilliant," Bliss says of the online retailer, which lets customers choose which items should be sold on the site.
Of course, making the most of the teen demographic means a lot more than trapping them in for a few short months. Teens want their favorite businesses to grow with them. If you don't keep up, they'll have no problem leaving you behind.
Steve Goldberg, director of business development at Pheed, for one, is already planning the site's next big moves. Soon, in order to satisfy this generation's desire for on-demand entertainment, Pheed will begin streaming live broadcasts of concerts. And, in a direct challenge to Snapchat, WhatsApp, and the like, it will also begin adding direct messaging to its platform. Adds Goldberg, "Self destruct optional."