Media Buying Briefing: Here’s why agencies say it’s not too early to understand Gen Alpha
This Media Buying Briefing covers the latest in agency news and media buying for Digiday+ members and is distributed over email every Monday at 10 a.m. ET. More from the series →
For close to a decade now, the media industry — media agencies included — have focused a tremendous amount of attention and money on Gen Z. Is it too early to now focus on Gen Alpha?
Some agencies and marketers think not. The generation succeeding Gen Z will be the first entirely digital-only generation — more plugged in and surrounded by newer digital innovations like artificial intelligence, virtual and augmented reality content, and social media influencers from day one. This group is also growing up in a global pandemic, making Gen Alpha more comfortable with remote workplaces, social distancing and hybrid or virtual events and activities.
Now agencies are beginning to research and learn about this cohort born after 2010, as experts say the work will be crucial in connecting with future generations. While it is important to study Gen Alpha, this should be a “forward-looking approach,” rather than marketing to this group right now, said Josh Campo, CEO of Razorfish, an interactive agency within Publicis Groupe.
“In the not-so-distant future, this generation will be entering adulthood and it’s crucial for brands to be ready,” Campo said. “I know it’s cliché to say, but Generation Alpha truly is unlike any before it, and if companies aren’t learning and understanding Gen Alpha now, they could be blindsided by their behaviors when they gain purchasing power as consumers.”
For Sparks & Honey, Omnicom’s cultural intelligence consultancy, Gen Alpha interest started as far back as five years ago. Hannah Hickman, svp of client strategy and head of the agency’s youth culture practice, said starting to understand Gen Alpha now will help prevent the catching-up that marketers and brands had to do with Gen Z culture.
“The key to avoiding that experience for the next generation is to start developing insights, data systems that you need to track to understand both what they are doing today as they are children and how that might influence their behaviors, their beliefs, their attitudes in the future,” Hickman told Digiday. “So a lot of it is sort of stage-setting for what’s to come in order to avoid the scramble that we’ve seen a lot of marketers have around Gen Z.”
Impact of Gen Alpha in the market
Gen Alpha includes children born between 2010 and 2024, with about 2.7 million Gen Alpha members currently born each week, according to McCrindle Research. They are expected to be the largest generation to date, and the majority of children ages 8 to 11 have access to a smartphone. By 2030, McCrindle expects this generation to make up 11% of the workforce, which will likely consist of jobs like drone pilots, user experience managers and blockchain developers.
While it may be too early to characterize much of Gen Alpha’s habits, behaviors and beliefs — they are still children, after all — Hickman said one area we can begin to measure is their purchasing power and influence on the family. That’s because Gen Alpha is growing up with millennial parents who have a different set of values and greater access to and comfort with technology than previous generations. For example, Gen Alpha children are more likely than their older counterparts to be conscious about brand responsibility and sustainability from a young age.
“We’ve seen studies demonstrating that Gen Alpha have a greater influence on family purchasing decisions than previous generations at the same life stage,” Hickman said. “That’s indicative of the different kinds of family structure that millennials are trying to create, one in which Gen Alpha will have more of a say in decision making. … We also see Gen Alpha growing up in this cultural context where their parents are having a lot of discussions about the moral obligation of brands to protect the environment or to provide financial equity.”
Hickman said she believes this dynamic will result in a consumer that is more “attuned to the impact of their purchasing decisions” from an earlier age, whereas millennials or Gen Z might have adopted that in their twenties or teenage years. Gen Alpha will naturally engage in conversations on how brands impact the world as they buy.
WPP’s Wunderman Thompson also researched Gen Alpha the past three years through a digital shopping and retail study. The study found that 59% of this cohort would like to save lives when thinking about future work, and 66% said they want to buy from brands that have a positive impact. They also expect to receive their products quicker — with an average expected delivery time of 2.23 days. One in five Gen Alpha members under the age of 16 surveyed said they will never buy something online that cannot be delivered the next day, according to the survey.
“They have completely different purchasing behavior, and the strength of brands from now forward will depend on how deeply they’re able to understand and connect with a digital and technology first generation,” said Amanda Hudson, marketing expert and CEO of Hudson Davis Communications.
The role of metaverse, social media and gaming
Gen Alpha has immense access and exposure to devices and online platforms. That means their online habits and social connections are heavily influencing the media they consume. According to market research firm GWI, there has been a surge in ownership of devices in recent years. In 2022, there was a 27% increase in the number of Gen Alpha consumers who own smartwatches, a 19% increase in smart televisions and 6% increase in mobile phones.
In terms of the media mix, Hickman said that in the media agency world of their parent company, many client conversations are focused on the breadth of channels to reach Gen Alpha — rather than which specific channels are the best.
“[Gen Alpha] is growing up in a world where they’re engaging with social media or with gaming or content creation platforms at a much earlier age,” Hickman said. “For us, all that means is that we can expect that we’ll be drawn to a diversity of digital spaces or digital communities that are fitting really niche interests or needs, because it’s a little bit more natural for them to have 12, 15 different platforms that they’re using [Discord, Roblox and Google suite for classes].”
In this diverse ecosystem, agencies expect immersive content and social media to continue being a primary space for them to connect. And the pandemic has in part accelerated some of these trends, as we have seen with video games. Razorfish research showed that Gen Z gamers spend more than 12 hours weekly gaming, compared to six to seven hours hanging out with friends in person.
“That trend can only be expected to grow for Gen Alpha, who is having these immersive experiences at such a young age,” Campo said. “Gen Alpha’s expectations for experiences are groundbreaking, and that’s largely in part to its substantial exposure to channels like the metaverse and social media, and the degree to which members of Gen Alpha engage with gaming and game-based immersive experiences.”
Additionally, TikTok and Roblox will continue as dominant forces for Gen Alpha. TikTok was the favorite platform in 2022 for children age 13 to 15, followed by Instagram and WhatsApp, according to GWI. And for gaming, playing online games was the most popular activity — with more than half of those ages 8 to 11 and one-third of those ages 12 to 15 now playing Roblox. That is an increase of 27% and 30% for each group respectively from 2021 to 2022.
“They ask for their allowance in Robux instead of dollars and are even more well-versed in contactless digital payment technology, accelerated by the pandemic,” Campo said.
With Gen Alpha, it’s clear we’ve come a long way from piggy banks and recycling cans for deposit money.
Color by numbers
Mobile insights company data.ai, formerly App Annie, just released its 2023 State of Mobile Report. Results showed that consumer spending definitely cooled in 2022, but mobile still remained strong, with short-form video apps controlling consumer attention. People are now spending some 3 billion hours per day watching user-generated content and short-form videos (hello, TikTok). More stats from the report:
- Mobile ad spending is expected to reach $362 billion in 2023 as people spend more time on their apps.
- In Q4 2022, TikTok was the second non-game app to surpass $6 billion in all-time consumer spending. The Bytedance-owned app did not previously rank in the top 100 apps list by consumer spending until 2020.
- YouTube was the second-most downloaded, with consumers increasing time spent and spending over the last 10 years. In Q4 2022, the global consumer spend was more than $5 billion on the Google-owned video platform.
- Spending on other non-gaming apps last year increased by 6% year over year to $58 billion, largely driven by subscriptions and purchases in OTT, dating and short videos. Streaming apps, such as Netflix and Disney+, grew 12% year-over-year to $7.2 billion.
- The global time spent in social media apps surpassed 2 trillion hours in 2022 on Android phones. That is a 17% increase year over year.
Takeoff & landing
- Dentsu had a busy week last week. For starters, Dentsu X consolidated all media work for spice and flavoring company McCormick (which also includes the French’s and Frank’s Red Hot brands), adding business in Europe, Latin America and Asia to its existing remit. Work includes full-funnel media strategy, planning and buying globally. Separately, Dentsu named Paolo Stucchi its new head of media for the EMEA region, replacing Thomas Le Thierry, who becomes client advisor for the region.
- Independent media agency Empower‘s ownership changed hands when creative and media shop NitroC purchased a controlling interest and made its CEO Ashlee Clarke the CEO of the merged company, replacing Empower CEO Jim Price, who remains as non-executive chairman for a year. The move comes a week after Empower laid off a reported 15% of its staff.
- It didn’t take long for Paramount’s vacated spot during Upfront Week this year to get filled. And how telling is it about the power of streaming in the video marketplace that Netflix is the new occupant of the Wednesday May 17 time slot.
“While there are things that have a burst of interest, they might tend to die off quite quickly. I think [generative AI] is different in that regard. Even though there’s a surge of initial interest in this, there are a lot of people who realize that this in some variation or another is around to stay.”Oliver Dore, partner at digital product agency Work & Co., on the sudden interest in ChatGPT (see Marty Swant’s story below).
- Digiday’s senior reporter of marketing and technology Marty Swant dug into the opportunities and challenges of text-driven artificial intelligence’s use in marketing, in light of rumors Microsoft may invest billions in ChatGPT.
- Digiday’s senior reporter of ad tech Ronan Shields rounded up the questions marketers and agencies should ask in the process of figuring out which post-cookie identity solutions to use.
- Digiday marketing reporter Julian Cannon looks at how the increasing number of bans by governments and organizations on TikTok could have a potentially devastating impact on creators.
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