Marketing to Millennials

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Meanwhile, Colt Hothorn, one of McDonald's competitors, found similar success at his two Which 'Wich? sandwich shop franchises in Nashville. Of the 300 seniors he prewarded, more than 40 redeemed their $3 credits—an impressive 15% return rate. And since the average customer spends at least $7 per visit, Hothorn sees plenty of profit potential. "From my perspective," he says, "the strategy is seamless."

The Facebook Factor

Of course, Edo's concept is not entirely original. Last November, Facebook—home to 21.4 million U.S. millennials—began courting small businesses with Social Ads, a target-marketing tool that gleans information from user profiles. Several years ago, this "deep pull" marketing would have been impossible, says Skey. But the rise of social-networking sites like Facebook and MySpace (NWS) and blog hubs like LiveJournal and Blogger (GOOG) has normalized the publication of personal facts.

Tim Kendall, Facebook's director of monetization, calls the ad service "highly efficient." Once small businesses pay a premium, which usually ranges from 48¢ to 62¢ per click (or 22¢ to 29¢ per thousand impressions), they can advertise to ideal demographics. If you own a toy store, for example, you can market Star Wars gear to sci-fi junkies. If you're a jeweler in Atlanta, you can target local women, ages 18 and over, who list "diamonds" as an interest.

Does it work? According to Andy Dunn, CEO and co-founder of Bonobos.com, an online trouser store, "there's no better marketing tool." In March, Dunn spent $64 peddling royal blue pants to Facebook's 50,000 Chicago Cubs fans. (Official Cubs colors are royal blue and red.) Within days, Bonobos had sold 12 pairs and netted $1,300. The company's follow-up campaigns—red pants to Boston Red Sox fans, orange pants to Syracuse University alumni—brought even bigger success.

Crafty Consumers

For better and for worse, Skey says, millennials are willing to "share themselves" with the world—and, more important, advertisers. That said, they're not easily exploited. The second Edo's preward notifications start to resemble spam or Facebook's über-ads become too intrusive (BusinessWeek.com, 11/30/07), young adults will readily shut them out. As Skey explains, "This isn't a very forgiving demographic."

Kendall isn't too worried, though. As millennials gain spending power, he says, these "granular" marketing tactics offer a viable alternative to TV spots and neighborhood flyers, especially for small businesses. Sutter, the 16-year-old Facecard user from Nashville, couldn't agree more. "I don't mind coupons," he says, "but I'd rather use a preward."

Business Exchange related topics:
Youth Marketing
Social Marketing
Niche Marketing
College Marketing
Millennials at Work

Macsai is a writer for BusinessWeek.