Linking up with wired youth: Generation Y, the millions of boomers' babies, are online. Are you ready to do business with them? (Trends).

Grace, a first-grader who just turned 7, plops down in front of the screen. Not the TV -- the monitor firewired to her mom's Dell computer. She deftly wields the mouse, double-clicks on the phone icon and patiently waits the several seconds it takes for the modem to whir and connect -- just long enough to reach up and turn on the speakers. Another click launches Explorer, followed by a few strokes on the keyboard. Moments later Grace is scrolling down nickelodeon.com's games area in search of a "Rugrats" title she likes.

"Imagine Grace in a few years, when she can hop online, and what she'll demand in a shopping Web site," says Michael Antecol, an analyst or Forrester Research and lead author of numerous reports by the Cambridge, Mass.-based firm delving into the online habits of what it terms "wired youth." "She won't settle for slow, yucky sites or bad products. Kids want different things from sites -- not only more process and customer service, but also games and chat rooms. Those are the kinds of things companies may want to consider."

There are literally tens of millions of considerations when it comes to reaching kids like Grace, the progeny of the baby-boom generation. Marketers and demographers refer to them as Generation Y or echo boomers. Ranging in age from 7 to 28, they represent the largest population group since their parents -- a fact that rings up Pavlovian responses across corporate America, which is salivating over the prospects of kids' disposable income, influence on family purchases and early formation of brand loyalty.

The most remarkable aspect of Generation Y, no doubt, is its direct link to the Internet and the potential for companies to capture them there as customers. Grace may not be shopping online yet, but she's certainly ripe for plenty of commercialism in anticipation of the day she starts.

"Not since the days of the Beatles has there been such a phenomenon," declares Matt Diamond, CEO of Alloy, Inc., a New York City-based media and marketing services company focused on the approximately 58 million boys and girls between the ages of 10 and 24. "This is the first demographic to grow up with the Internet." Alloy connects its own brand, plus those of advertisers and marketing partners, with kids through an integrated network of Web sites, catalogs, magazines and student publications.

The mutual core is a Gen Y database of nearly 8 million names. "It doesn't make a difference if you close a sale online or offline," Diamond says. The key is having that person in your circle of assets. "You can source the customer online, but close wherever you can.

Actually, Diamond, 33, was born in the midst of Beatlemania -- making him a member of Generation X -- yet he's old and wise enough to perceive the power of tapping into pop culture. A former executive with General Electric, he co-founded Alloy in 1996 to take advantage of the converging booms in youth-oriented entertainment and the Internet. "Our timing coincided with the release of Titanic and teenage girls' infatuation with the movie and its star, Leonardo DiCaprio," Diamond recalls. "We saw the Internet as a good, low-cost entry to the enormous youth market."

Beyond the Mall

Just how enormous, as well as Net-Savvy and e-commerce-minded, is the purview of Forrester's research surrounding online 13- to 22-year-olds. In an August 2001 report, "Wired Youth Data Overview," Forrester estimates that the American youth market will grow to 37 million by 2006, when 90 percent of this demographic will be online. Centered on an e-survey of 10,565 members of Wilton, Conn.-based Greenfield Online's panel of U.S. and Canadian consumers, the report finds that, despite common misconceptions, kids have their own money. Indeed, the average yearly disposable income per young Net buyer in the United States will grow to $2,602 by 2006, from $2,380 this year. The average amount spent online purchasing CDs, MP3 players, video games, clothing, jewelry, sports gear and other things kids crave will rise to $755 from $514 -- for a total of $21.2 billion, or 30 percent of wired youth's disposable income.

What's more, adds Antecol, "kids control a vast amount of indirect family expenditures, for everything from cereals to cars. There's a growing realization that if you can market to kids, they will buy products or influence their parents."

Among other enticing findings: more than 65 percent of wired youth have purchased a technology product with their own money; despite the Napster phenomenon of downloading songs for free, 40 percent are willing to pay to download movies, music and TV shows; 68 percent purchase gifts online; and 65 percent say they compare prices before they click the "buy" button.

"They are savvy but careful shoppers," contends Carol Kruse, co-founder and group director of marketing for RocketCash LLC, which operates a free Web-based service that allows registered members to set up and fund accounts from which they can purchase products online -- in essence, an e-debit card. Teenagers, most of whom don't have their own credit cards and typically use their parents', comprise the bulk of the Mountain View, Calif, company's 3 million members.

RocketCash also maintains relationships with about 100 merchant partners, many of them brand names whose Web sites are linked to rocketcash.com. There are the predictable teen e-tailers -- CDNow, Delia's, EBGames, The Gap, Pacific Sunwear and Sony Music -- as well as mainstream names such as JCPenney, Kmart, BestBuy, Office-Max and Wal-Mart. The lesson for marketers, Kruse suggests, is that getting Gen Y to shop online isn't necessarily about being cool: "Wal-Mart is not hip, but they're our No. 1 merchant."

RocketCash extends co-marketing opportunities, too. Last year, Coca-Cola's Sprite brand ran an under-the-cap promotion to earn RocketCash; in turn, RocketCash created content for sprite.com. So successful was the venture that Coke bought RocketCash in August.

Another recent Forrester report, "Comarketing to Snag Wired Youth," recommends that strategy as an effective means of building brand awareness among wired youth, 71 percent of whom consider themselves to be brand loyal. "Twice as many kids say they stick with brands they like than say they are won over by the latest trend," the report states. Somewhat predictably, they are hot for soda and sneakers, including Coke and Nike, though lukewarm about clothing and PDAs, such as J. Crew and Handspring.

Translating that into online sales, however, presents a challenge, one met with comarketing partnerships that can increase a brand's overall worth to wired youth. "Although brand-centric marketing is easier to pursue than marketing to cohorts," the Forrester report says, "it can capture only so much of wired youth's mindspace. By using comarketing partnerships -- the right ones -- a brand can pump up the volume of its messages without any message dilution. This will enhance overall brand equity and foster deeper relationships with specific wired youth cohorts -- an important point since wired youth become more brand loyal with age. The payoff can be huge."

While e-commerce itself continues to be a nebulous component for many companies, as the demise of so many e-tailing efforts in the past year or so certainly indicates, including the Internet and its Generation Y devotees in an online/offline, clicks-and-bricks marketing mix seems paramount. "I don't think any industry out there is going to be able to survive going forward without picking up these kids," Antecol says. "In a relatively few years, they're going to be their customers, and if they're not catering to them now, how are they going to know who they are then?"

Wired youth are comfortable using the Web as a two-way communications conduit, for e-mail, instant messaging and chat rooms. They also log on to obtain information about companies and products, including reviews and opinions. Then they go back and share their knowledge and beliefs within their online communities. This creates an opportunity for marketers to establish the types of relationships Antecol believes are critical.

"We talk a lot about the need for continuity with teens bombarded with messages," explains Lewis Scherr, senior vice president of marketing for YouthStream Media Networks, a Manhattan venture that helps companies reach Gen Y through tours, events and other offline promotions. "We love the Net as a mechanism for allowing continuing relationships. Once a kid has interacted with a client's brand in some way, the ability to capture information and send out updates is a fabulous way to build awareness."

Setting Limits

There's virtually no online marketing directed to very young kids, mostly because they can't buy anything without a parent anyway. But to thwart the unscrupulous or naive with a legal barrier, the federal government issued the Children's Online Privacy Protection Act in April 2000. COPPA limits the gathering and use of personal information via the Internet from kids under the age of 13 without permission. "In short, you can't," says Martin Cohen, a founding partner at promotional marketing law specialists Cohen & Silverman in New York. "You can make one contact to say hello and tell them about your program, and that's about it. You can advise them one more time to have a parent or guardian contact them."

The advice of the Internet Advertising Bureau is "to adopt a minimum standard requiring parental consent before a website or organization knowingly collects, uses or redistributes information gathered on or from ... an individual under the age of 13." Access to privacy policies and statements should be noted on the home pages. Acknowledging COPPA, policies at popular teen venues, such as Alloy and Delia's, simply state that their sites are intended for kids 13 and older.

The Net is proving to be an ideal way to keep tabs on wired youth and their constantly changing trends. "What they use the Internet for by far is communicating -- about products, technology, events and other information," says Donald Wisniewski, co-founder and president of Cybiko, the Bloomington, Ill.-based maker of eponymous, PDA-like devices for kids, primarily used for two-way instant messaging in schools, malls and other places, but also for e-mail, games and listening to music. "We boast the largest consumer-driven, peer-to-peer wireless network in the U.S.," he claims.

Cybiko can't interact directly with users via its devices, which use local area net-works, so it reaches out to them through its Web site, frequent focus groups and grass-roots marketing. "If marketers can tap a nerve with kids, they can use that opportunity to touch a lot of other kids," says Wisniewski, espousing the theory behind viral marketing.

Regardless of how marketers communicate with Generation Y, these kids should be treated openly and with respect. "Tell them the truth," Wisuiewski advises. "You can't lie to them or give them a marketing slogan. They can see an ad a mile away, and if it's not entertaining or funny, they'll blow it off."

Treat them as a distinguishable market segment, Forrester's Antecol submits. "You need to market to them, to actually talk to them," he says. "Bring them into focus groups before you launch products, not after the fact. Figure out a product that's going to work with them, and then the marketing will become self-evident. Listen, do surveys, involve them in the development stage. You will have created a product partly based on their desires."

Remember, there are millions of Graces out there, growing up online. They're just a click away from you.

Contact

Alloy, Inc. www.alloy.com

Cybiko www.cybiko.com

Forrester Research www.forrester.com

RocketCash, LLC www.rocketcash.com

Youthstream Media Networks www.youthstream.com

Bob Woods. ("Linking Up with Wired Youth")

Bob Woods is a freelance writer in Connecticut, specializing in business and sports. He knows darn well that the proceeds from this article will probably turn into his teenage kids' disposable income and likely be spent online.

RELATED ARTICLES: Frito-Lay Bowls Over Teens

Too often, watching the Super Bowl on TV is more memorable for the commercials than the football. This year, even as you were perhaps munching its snack foods, you may have noticed the absence of traditional Super Sunday advertiser Frito-Lay.

In a move to target 12-to 24-year-olds online, Frito-Lay announced before the Big Game that it would eschew its annual Super Bowl ad campaign and triple spending on its Doritos tortilla chips brand. The strategy is part of an online/offline marketing campaign to boost a line extension aimed at teens, Extreme Doritos -- billed with the tagline "For the bold and daring."

The Plano, Texas-based unit of PepsiCo told Advertising Age magazine, "We want to make sure teens are talking about and thinking about Doritos all the time, and it is impossible to do that without having a significant presence online."

The Doritos Web site was revamped to better promote offline efforts and quarterly partnerships with popular teen sites, initially with mtv.com A viral-marketing program adds an "underground" site, fortheboldand daring.com. And in January, the Doritos site featured a cross-promotion with Microsoft and its Xbox video game player.--B.W.

Contact

Doritos www.doritos.com