Guest Author Blog by Kit Yarrow, co-author of Gen BuY: How Tweens, Teens and Twenty-Somethings are Revolutionizing Retail.

By now you’re aware of the great marketing potential of online and social media. You’ve probably heard about how it’s “transforming the marketplace.” And certainly you’re aware of its mind-boggling growth.

Time spent on social networking and blogging sites is triple what it was last year, accounting for 17% of all time spent on the Internet. The average number of minutes an individual spends on Facebook has increased 83% this year. Teens send and receive an average of over 2,000 texts a month and 89% of adult Gen Yers watch online videos, 36% of them every day.

When it comes to brands on social media, the numbers are equally staggering:

Starbucks has over 4.5 million Facebook fans, and other brands like Nutella and Coca-Cola have over 3 million. Zappos’ CEO has over 1.4 million Twitter followers. Over half of the Gen Yers in my Gen BuY survey want to get promotional texts from their favorite brands. Samsung’s Extreme Sheep YouTube video has had nearly 10 million views in the past six months.

The numbers are impressive, but even more impressive is that those fans, followers and viewers are actively seeking out information and connection with brands. They’re not passive recipients (or active avoiders) of advertisements - they want to engage.

And no generation wants to engage more than Gen Y. For starters, they write over half of all online reviews.

The online world is so entwined with the lives of Gen Yers I call it their second brain and third hand. And as Mimi, a 26 year-old I interviewed for Gen BuY explained, “I found my job, apartment and boyfriend online.” She, and many of the other Gen Yers I interviewed also want to know about sales, what’s new, and to be able to share her tastes and get inspiration from real and virtual friends. That’s why Mimi gets Nordstom tweets, is one of H&M’s nearly 1.3 million Facebook fans, has rated over 25 products on Sephora and why she loves Topshop’s website.

Online and social media are nuanced and intimate. The key to leveraging these vehicles effectively is to understand how and why Gen Y uses them to interact with brands and what consumers like Mimi are emotionally craving from their online relationships. Here are four themes that surfaced repeatedly in the hundreds of interviews conducted for Gen BuY.

Status: Shoppers feel like smart “insiders” when they learn about special deals, new product arrivals and promotions through tweets, emails, Facebook fan pages, and by visiting shopping sites like Retailmenot. The medium has the potential to create intimacy at scale. Says, Ricardo, 23, “If I have a problem I use Twitter to complain to the company. I get much better service than I’d get if I called or sent an email, which is very impersonal and they don’t really care.”

When marketers reward fans and followers with exclusive freebies, promotions and information they create loyalty by elevating the status of their followers. As an added benefit, Gen Yers will communicate information to their friends for you. Levi’s sold out of an exclusive offering within minutes by providing a widget loaded with unreleased hip-hop tracks from big-name performers that was passed along virally.

Connection: In our increasingly fragmented and visually oriented world, people often connect with others using brands as the vehicle. It’s like wearing the school colors – a way to bond and identify like-minded others. Sites that facilitate connection between consumers are beloved for more than the merchandise – it’s because of their ability to create a community. Kaboodle’s popular shopping site does just that, as do Facebook fan pages like Converse’s where members can share photos and ideas with other fans – united by their common interest in the brand.

Play and Role Play: All generations have played with roles and yearned for feedback in their teens and early twenties as a way to figure out who they are. Today’s young generation has an arsenal of tools unimaginable to their parents.

Many of the Gen Yers we interviewed showcase their personality by showing off their interests – which are often the products they like - on their Facebook pages. Stacy, a freshman at UCLA, says that she loads photos of herself sporting new outfits “within days” of purchase. She loves the “thumbs up” feedback and the comments she gets from friends. Other Gen Yers adore customizing products on retail websites such as Zazzle, putting styles together on Polyvore, and playing with their own look on Taaz, where you can download a headshot and “try-on” new hair styles, makeup and sunglasses. Teen Gen Yers try, and often buy, outfits and equipment for their avatars in virtual worlds. Today they can even purchase the same real outfits for themselves. Particularly for the guys, nothing tops gaming when it comes to exploring roles and identities. Exploring brands can be a game too.

Marketers that use technology to facilitate the natural urge of young people to explore their identities get a double boost: besides the opportunity to gain a following, creative use of technology translates to a relevant, innovative and cool brand image.

Influence: As a generation that’s accustomed to having others value their opinions, and one that prizes creativity and teamwork, Gen Y wants to be involved. This is not a generation that waits passively to be told what they should buy. Instead they’d rather tell marketers what to make and how to sell it. Gen Y rates, makes and breaks services on Yelp, designs and sells products on Etsy, creates ads on YouTube and customizes everything from cars to energy bars.

Brands that create an open exchange of ideas are more credible to Gen Yers. While websites increasingly offer product reviews, most don’t act on them. Gen Y not only writes reviews, they read them – and they want a response. Modifying offerings or products because of poor reviews demonstrates humanness, caring and collaboration.

A generation that wants to be involved is a boon to marketers – the creativity, ideas and engagement of Gen Y is akin to a perpetual advisory board and review team. Plus, company that involves consumers is more trustworthy and transparent.

Consider traditional marketing engagement such as print and broadcast advertising as two-dimensional. Online and social media is three-dimensional, the third dimension being the active involvement, immediacy and dialog facilitated by the Internet.

Marketers developing online and social media strategies have a better chance of capturing consumer interest and building relationships by understanding the emotional and psychological needs of consumers. Connecting consumers to each other connects them to you.

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Kit Yarrow

Consumer Psychologist Kit Yarrow is co-author of Gen BuY: How Tweens, Teens and Twenty-Somethings are Revolutionizing Retail. She is a Professor of Psychology and Marketing at Golden Gate University in San Francisco and their 2009 Outstanding Scholar.

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