October 26, 2015 Reading Time: 2 minutes

Goldman Sachs, in a beautiful infographic titled “Millennials: Coming of Age,” tells us that 34 percent of millennials say advertising on social media has a positive impact their perception of a brand.  This is more than double the rate of the rest of the population (16 percent), and Goldman concludes that “millennials are turning to their online networks when making purchasing decisions.” 

But we also just learned that two-thirds of millennials perceive no benefit from social advertising.  A better conclusion might be “Social media advertising is a growing phenomenon, but has not yet become a dominant form of advertising among millennials.”

Goldman isn’t intentionally misleading us.  Human beings love seeing patterns and making generalizations. Pattern seeking is one of the primary miscues that behavioral economists identify as a hurdle when interpreting the complexity of the real world. It is in our nature to try to identify patterns and draw conclusions that are often incomplete or downright incorrect.  We know that social advertising reaches a lot more millennials than other generations, so we unconsciously assume it reaches most or all.

Labeling (or stereotyping) generations is an American national pastime.  Members of the Greatest Generation are war heroes; gen X-ers are slackers.  The only difference with millennials is that we have the (sometimes misinterpreted) data to back it up.

When you see this misinterpretation once, it’s hard not to see it almost everywhere:

  • Analysts frequently point out that millennials are America’s most educated generation.  True, but over 50 percent don’t have a bachelor’s degree and will likely never have one.
  • CNN plays up the optimism of millennials by noting that 34 percent believe “the American dream is alive and well” (up from 17 percent for ages 51-64). That still means that 66 percent of millennials feel otherwise.
  • Money magazine asserts that Sriracha has “evolved into the go-to condiment of the all-important millennial demographic.”  This is because it is stocked in 16 percent of Millennial households, compared to 9 percent of others.

The Sriracha one sounds like a joke, but I find no evidence of humorous intent.

If a brand or advertiser is targeting millennials only as college-educated social network users, they are missing more than half of that population.  Trends and differences between groups are useful tools in understanding our economy and society, but they can lead to automatic assumptions about who a person is.  It’s never a bad idea to step back and question your automatic assumptions.  And bring your own Sriracha.

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Max Gulker

Max Gulker

Max Gulker is a former Senior Research Fellow at the American Institute for Economic Research. He is currently a Senior Fellow with the Reason Foundation. At AIER his research focused on two main areas: policy and technology. On the policy side, Gulker looked at how issues like poverty and access to education can be addressed with voluntary, decentralized approaches that don’t interfere with free markets. On technology, Gulker was interested in emerging fields like blockchain and cryptocurrencies, competitive issues raised by tech giants such as Facebook and Google, and the sharing economy.

Gulker frequently appears at conferences, on podcasts, and on television. Gulker holds a PhD in economics from Stanford University and a BA in economics from the University of Michigan. Prior to AIER, Max spent time in the private sector, consulting with large technology and financial firms on antitrust and other litigation. Follow @maxg_econ.

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