There’s a lot of talk in the media about how Baby Boomers have a fair amount of money. The generation born between 1946 and 1964 “make up a quarter of Australia’s population, but hold more than half of the nation’s wealth” according to an article published by Starts at 60 this year.
But there’s one part of the consumer industry millennials are dominating in – social media influence.
A recent study by UBank found that 47% of millennials are using social media platforms to share their spending and financial habits. The research also found that 68% of millennials look to their friends, family, brands and influencers when looking for future purchase ideas. On top of this, 66% of millennials admitted that what they see when scrolling their newsfeeds drives impulse spending. This shows “a new ‘economy’ emerging within social media – driving spending, but also sparking financial conversations across networks”.
The statistics gathered from the UBank research are echoed by Performics and Northwestern University’s Intent Lab, whose research found that 81% of 18 to 25-year-olds stated they “rely on online customer ratings when making purchasing decisions”.
Similar information was also gathered by a YouGov US survey conducted in May 2017, that found that 40% of people 18 to 24 responded saying they always check reviews before purchasing a product, while 43% said they sometimes do. (Source: Awlogy).
A 2017 survey by Dana Rebecca Designs titled ‘The Fashion Impact of Instagram’ found that 72% of respondents made a fashion, style or beauty related purchase after seeing the item on Instagram. Of this percentage, 74% were millennials.
According to data collated by Hubspot, people are 71% more likely to make a purchase when referred by social media, and only 7% likely if not referred. Andrew Molz says businesses need to realise how strongly millennials are swayed by their peers and influencers. Molz is an entrepreneur who created a Shopify-based site that generated $2.2 million in sales using social media alone to generate traffic.
“Companies must recognise who has the ear of the millennials in their target audience. This includes bloggers and vloggers, publishers, YouTubers, etc. Getting their seal of approval could be key in pushing millennials further into the sales funnel,” Molz says.
The downside to this power and influence millennials hold when it comes to product endorsement and a display is a pressure felt by many to spend beyond their means.
UBank found that 25% of millennials admitted to feeling envious when they see posts of what others have purchased. The research also found that 23% have purchased items over their budget, purely to get a reaction on social media. More worryingly, 26% of millennials surveyed said they were “compromising their financial future by what they share on social media”.
The US seems to fair worse. A study by Allianz Life Insurance Company of North America found 61% of millennials surveyed “feel inadequate about their own life and what they have because of social media”. The study further observes that 50% experienced a Fear of Missing Out (FOMO), and 57% “spent money they hadn’t planned to because of what they saw on their social media feeds”.
Vice President of Consumer Insights for Allianz Life, Paul Kelash says millennials have to be careful with how they respond to what they see online. “More than any other generation, social media and the allure to spend beyond their means could have long-term negative effects on their finances if they’re not careful,” he says.
Millennials are powerful consumers due to the sheer reach they have when posting about items they have purchased. With their peers looking online for recommendations for what they themselves should buy, millennials wield a large amount of power when it comes to a genuine advertisement of brands, and influencing others’ spending decisions.