• by Maxwell Knight , Columnist, January 27, 2016

Tailoring your messaging to serve a specific audience is crucial for a successful marketing campaign. In 2016, marketers remain as focused as ever on millennials, spending four times more to reach them compared to any other demographic. But how to maximize engagement and ensure ad spending is effective? Research shows marketers should consider targeting individual specific groups of millennials to better reach their audience – groups that may be underserved by broad strategies that don’t make the best use of available data.

We have identified four unique subgroups of millennials that marketers need to know about: Comfortable TV Watchers, Successful Home Owners, Active Affluents, and Struggling Aspirationals (the largest group by more than half) through a cluster analysis methodology.

Doing a cluster analysis like this is analogous to going from a 2-D to a 3-D picture. Once you fully understand the characteristics of your audience, you can leverage that information into a better ad spend and a more effective overall marketing strategy.To illustrate this, we’ve come up with some specific opportunities for the automotive, travel, consumer packaged goods, and financial sectors. 

Automotive

The worry that millennials are eschewing car ownership in favor of bicycles and public transportation should not be a true concern as recent data shows millennials account for 27% of all new car sales. The industry concentrates its spending on Comfortable TV Watchers, but our research shows Successful Homeowners and Active Affluents also share consumption characteristics that should make them attractive for ad spend. Video ad formats are particularly underutilized with Successful Homeowners, which means a high-impact campaign could help get them behind the wheel.

Travel

Millennials love to travel – and the travel industry has a clear opportunity to better engage them. This vertical spends a lot on Comfortable TV Watchers but not on those with a similar income and profile, the Active Affluents. Often new parents or couples looking for new travel or outdoor adventures, the Active Affluents can be targeted with ads for everything from family-friendly destinations, affordable vacation rentals, package tours, wilderness excursions, and luxury getaways to new culinary experiences. This group is especially under-targeted by mobile advertising, so a focused campaign to reach this on-the-go group could translate into more travel dollars spent.

CPG

The consumer packaged goods industry is aggressively targeting millennials compared with other verticals. It’s a strategy that makes sense as this group enters their prime spending years – but which group is the best investment? Struggling Aspirationals may be watching their wallets when it comes to household goods. However, an advertiser investment in Active Affluent families could pay off here as this subgroup moves through new life stages, forming brand loyalties that will last a lifetime. Whether it’s buying cleaning supplies for a new apartment or kibble for a newly adopted pet, these consumers with money to burn could mean big returns for the CPG industry.

Financial Services

This vertical focuses spend on Successful Homeowners, which makes sense: these are millennials with high-income profiles and likely with mortgages, who need services to manage their money. The industry also spends on both Active Affluents and Struggling Aspirationals – clusters with different financial needs. Struggling Aspirationals are more likely to have student loan debt rather than a mortgage but long-term investment and brand loyalty could pay off as they move from Struggling to Affluent. Comfortable TV Watchers have a similar financial profile to homeowners yet remain underserved. The takeaway is not to ignore the segment that falls between two extremes; an overlooked millennials group is a lost opportunity.

As these examples demonstrate, understanding your audience is key. No matter what the industry, using data to identify and engage with subsets of your main audience means a smarter and more effective campaign overall – which means more opportunity to reach the millennials as a whole.