Understanding Gen Z and Advertising in the Subscription Economy

Generation Z, those born after 1996 according to Pew Research, is the first truly digital native generation. They’ve never known life without the internet – the magnitude of how this frames their reality cannot be understated. From birth, they’ve been shaped by their online experiences. Further, in most cases this cohort was raised by Generation X, whose key traits are said to include a level of innate skepticism. This recipe creates an emotional connection to technology, alongside a desire to have everything the way they want it.

With its 65 or so million members, Generation Z plays a significant role in the cultural, social and economic makeup of the United States. As they age, their purchasing power grows with them. One thing is clear – they are incredibly thoughtful with their purchases compared to their predecessors. Particularly in the way they consume online, digital and video content. Combining the fact that Generation Z are more conscientious spenders, and that a large percentage have shunned traditional television viewing, this group is more averse to advertising than most. In the subscription economy, however, these generally conservative consumers have shown that they are willing pay for the ability to skip advertisements. Their aversion to ads can take several forms. It can mean using services that have no ads altogether or jumping to a different device while an ad runs. This poses a major problem for advertisers in general but also for the businesses who have traditionally been supported by advertisements.

So how can businesses and advertisers capture this generation of consumers?

  • Rethink duration. Traditional television ad spots are 30 seconds, with a few 15-second and 1-minute commercials peppered in as well. In today’s microwave attention span society, even that 15 seconds is too long.
  • Change the personalities. Advertisements, whether television or digital, have long relied on character actors or celebrities. Today, however, they lack the impact they once had. Gen Z is more interested in digital personalities and influencers they follow. If businesses want to move the meter, YouTube stars are preferential to TV or film actors.
  • Authenticity is key. Gen Z is leading the charge in social consciousness, and they have a keen eye for marketing messages. They’re quick to spot when a brand is capitalizing on a trend, as opposed to championing a cause they truly believe in. That distinction is critical, as it may cause them to flee from any future interaction.

The final, and potentially most innovative way that brands can capture Generation Z with their advertising, is to not make it feel like advertising at all. Consider Zillow, who worked with the creators of Fuller House to weave the use of the app into the story of finding a new place to live during an episode. This isn’t intrusive, and it’s easily relatable.

In the world of Augmented Reality and Virtual Reality, ad overlays can easily blend into the virtual experience. For example, as an Olympic skier glides past a billboard, it can display products or services based on the viewer’s preferences, literally bringing that VR viewer along for the ride. To be effective in the Generation Z world, advertisers need to focus on opportunities for natural, authentic content integration.

At CSG, we’re helping partners and clients navigate the content landscape in order to reach this audience.  Through CSG’s Ascendon platform and its ability to target offers for specific consumers based on their preferences, we can create micro-subscriptions and/or offerings, that appeal to audiences both from a content and cost perspective.

As the digital landscape evolves, the way consumers engage with video content changes as well. New devices, consumers and preferences combine to create a fast-paced environment in which advertisers and business often struggle to keep up. By understanding the core of what makes Generation Z tick, content providers can adjust their strategy in real-time, resulting in meaningful, engaging content which resonates with this increasingly important demographic.

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