Using AI to reach the elusive millennial market

Millennials represent arguably the most important consumer group for businesses to tap into. Here’s how artificial intelligence can help.

Illustration by Ana Duje.

As a target market, millennials have been a slightly tougher nut to crack than previous generations. Statistically, they’re less likely to be loyal to brands, more likely to expect a high level of social responsibility, and generally less patient with marketing messages that don’t resonate with them personally. However, businesses today also have access to more data than ever before. With strategic use of the right data mining technologies readily available to help marketers sort through those valuable insights, opportunities to connect with this demographic abound.

When brand loyalty doesn’t come easy

“The millennial is a discerning consumer,” says Charles R. Taylor, the John A. Murphy Professor of Marketing at the Villanova University of Business, senior research fellow at the Center for Marketing and Consumer Insights and current editor-in-chief of the International Journal of Advertising. “This emphasis on corporate social responsibility is just another thing that the marketer needs to do to get the business.”

A hallmark of millennial consumer behaviours is a smaller degree of brand loyalty.

Add to that the fact that millennials are outpacing baby boomers as the largest adult population group in the U.S., and it becomes even more crucial for business owners and marketers alike to focus energy on reaching this somewhat elusive market. “Relatively younger consumers now are the largest group and have a great deal of purchasing power,” says Taylor. “Most millennials were exposed to the Great Recession and many of them have student loan debt as well, so there’s definitely more price sensitivity.” According to a recent report by Deloitte, the Great Recession had a disproportionate impact on millennials, who experienced an unemployment rate of 19.5 percent (versus 10.6 percent for the general population), plus a slower bounce back and a more significant hit to incomes.

Corporate responsibility as a marketing strategy

A hallmark of millennial consumer behaviours is a smaller degree of brand loyalty. But, notes Taylor, exceptions to the rule do exist—especially when brands can exhibit a significant investment in social responsibility. “The research suggests that if millennials feel that a brand is linked to their personal identity, they can become very brand loyal.” In order for businesses to succeed with the millennial demographic, it’s crucial that they show a genuine interest in social causes. “Millennials on average value diversity, so they like to see that reflected in advertising,” says Taylor. “They value companies that are committed to environmental causes and charitable contributions.”

One thing that millennials are willing to spend on is experiences.

Taylor points to the stellar example set by State Farm, who unveiled their Neighborhood of Good program in May 2019 with the aim of helping underprivileged youth get access to music education. Not only did the company target a major area of interest for millennials—music festivals—but at the same time, it offered an opportunity for them to support a praiseworthy cause by interacting with the brand. Taylor also highlights the importance of the experiential marketing element in State Farm’s latest initiative—something that millennials have proven, time and time again, to be especially receptive to. “One thing that millennials are willing to spend on is experiences,” he says. “A millennial might think it’s less important to own a car when they’re young, but they like to travel and have experiences like music festivals.”

Personalization is paramount

Generally, millennials also have less patience for brands that don’t do their due diligence when it comes to proper ad targeting and personalization. Where businesses in past decades may have gotten away with “spray and pray” marketing tactics, casting a wide net and seeing what sticks, consumers in the millennial bracket come with a high level of digital sophistication. They have high standards for communications from companies they view positively—which is where automation and data, and lots of it, enter the equation. “The way artificial intelligence is mostly used in marketing right now is to program messages such that they’re much more targeted at the consumer than they used to be…using these much more sophisticated data analytics to classify consumers into much narrower buckets and see what they’re interested in,” explains Taylor.

The real magic is in transforming those mountains of data into actionable insights.

He uses the example of a craft chocolate producer to show how smaller, more niche businesses can benefit greatly from data-driven, highly targeted marketing efforts. “There are not that many people who are going to pay $12 for a chocolate bar. The craft chocolate people think it’s somewhere between a few hundred thousand and a million American consumers that are really craft chocolate buyers,” he says. “By using artificial intelligence to target ads to only those where there’s a lot of data-based belief that a person might be among that group, you can pinpoint them more through sophisticated algorithms that are predicting consumer behaviour.”

Delving into the data

Businesses today do have an upper hand when it comes to data, stemming from the fact that millennials are far more active and talkative online than their predecessors ever were. This gives marketers the ultimate gift—that of data, in the form of a digital paper trail of their customers’ truest preferences, thoughts, wants, needs and behaviours.

The real magic is in transforming those mountains of data into actionable insights—and text analytics software tools can be the ultimate magician’s assistant, turning undifferentiated masses of data into highly precise insights to guide the way towards good marketing decisions for businesses big and small. “Somehow, you’ve got to translate that into usable data, either to target an advertising message or to create the right product offering,” says Taylor. “I’ve been to conferences where you get somebody talking about some high-tech, flying saucer idea. But what we’re really seeing is not stuff that’s remarkable technologically but smart uses of data in a very programmatic way, such that it becomes artificial intelligence.”

Millennials may be harder to connect with than their consumer counterparts of previous generations, but with a little help from artificial intelligence, businesses have an opportunity to connect with an emerging customer base that’s taking up a larger share of the market every day.

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