They’re wired, they’re affluent and they are a largely untapped market. This prized group is teens. They are often referred to by a variety of different monikers including Echo Boomers, Millennials, Netizens, Generation Y, Trophy Children (because of the strong impact that parents have in their decision-making process) and Generation N (for Net).

When analyzing this group, market researchers often slice and dice things in slightly different ways, but one common thread among all the facts and figures is that the group’s size is on the rise and its spending power is awesome and undeniable.

Northbrook, IL,-based Teenage Research Unlimited (TRU) put the current U.S. population of teens (age 12 to 19) at 31.6 million. TRU says this population, which has increased steadily since 1992 as children of baby boomers entered their teen years, spent $155 billion in 2005.

Alloy Media says 10-to-24-year-olds are a demographic said to be 60 million strong with annual spending power of as much as $250 billion. Alloy expects the number of teens to reach 35 million by 2010, while Forrester Research says there are 73 million people under the age of 18 in the U.S.

JupiterResearch reports that teenagers spent over $158 billion in 2005 and are expected to spend $205 billion in 2008.

A recent Harris study reports that American kids, teenagers and young adults, aged 8 to 21 years old, have annual incomes totaling $211 billion and they are spending 81.5 percent of their earned income – a whopping $172 billion per year.

Younger kids, the so-called “tween” set between ages 8 and 12, spend $51 billion per year, according to Alloy (see sidebar, page 58).

Futurist Jim Taylor, vice chairman of the Harrison Group, says boys under 18 have an average of $525 to spend each month, while girls have $430.

U.S. teens controlled an estimated $169 billion in disposable income last year – or $91 per week per teen – according to a study by TRU.

So where do these kids get their money? The major sources of teens’ income are: parents on an as-needed basis (47 percent); odd jobs (41 percent); gifts (41 percent); parttime jobs (28 percent); regular allowance (25 percent); and full-time jobs (11 percent), according to TRU. The average young consumer spent $84 per week. Some $57 of that was their own money, while they received the remaining $27 from their parents.

And unlike kids of the past, they are free to spend; 22 percent of U.S. teens have credit cards while in high school.

Getting Hip to the Kids

But this group is hard to get a handle on. Maybe that’s why researchers have devoted a lot of effort to trying to understand this highly coveted group. Here are some basic things you need to know about teens.

  • They are very wired and likely to stay online for longer periods than adults.
  • They are more likely to access the Internet from different locations.
  • They participate in a wider range of online activities.
  • They are more likely to adapt quickly to new technology, and embrace its changes.
  • They multitask while online.
  • They are fickle and not necessarily brand loyal.
  • They are savvy and often distrustful of traditional advertising methods.

No other age group matches teens’ enthusiasm for the Web or their use of broadband connections. About 21 million or nearly 87 percent of the 12-17 age group is online, many at least twice a day, according to a recent Pew Internet & American Life study. That’s more than the activity of 25-to-29 year olds, which have an 85 percent penetration. And 49 percent of teens have high-speed connections at home. That’s more than any other age group.

A Burst Media survey from June of 2006 reports that 69 percent of Web users (13 to 17 years of age) said if they had no Internet access outside of school it would “ruin” or make their day “not as good.” Bummer, dude. Among teens who go online from home, friends’ homes, libraries and other locations outside of school, more than one-third (37.4 percent) say they spend three or more hours per day on the Internet.

Teen males are more likely than teen females to say they spend three or more hours per day on the Internet – 39.9 percent versus 34.7 percent. Additionally, nearly one in five (17.9 percent) say they spend between two and three hours online; one-quarter (25.1 percent) say they spend one to two hours online; and 19.6 percent say they spend less than one hour per day online outside of school.

What Teens Are Doing Online

And while spending all this time online kids are multitasking – Web surfing, watching TV, sending emails, listening to music, sending instant messages and doing homework (see sidebar, page 54).

“Corralling these distractions to minimize their disruption is a significant challenge for marketers,” Chuck Moran, Manager of Market Research for Burst Media, says. “Marketers should use the Internet to create a central content point for teens on a variety of subjects and interests. By doing so marketers can then develop integrated marketing campaigns with advertising creative and programs referencing a central platform and working in tandem to get teens’ attention.”

One way to do that might be look to the growing popularity of social networking sites. Three out of five (61.4 percent) respondents in the Burst Media study had visited a social networking website. Of those, 60.7 percent joined the site and created a profile. Teen females are significantly more likely than teen males to say they have visited and joined a social networking site (67.5 percent versus 53.7 percent).

And MySpace leads the pack when it comes to social networking. From April 2005 to April 2006, the overall number of teen visitors (between the ages of 12 and 17) to MySpace grew from roughly 3 million to 7.8 million. That was up 162 percent, according to comScore Media Metrix. MySpace currently has approximately 85 million members.

Like Google, MySpace has spawned a cottage industry of sites that provide support and services to teen subscribers. Sites like MyGen.com.uk, Coshed.com and Poqbum.com, help kids create profiles, layouts, graphics, games, icons and quizzes for MySpace blogs.

But once something gains popularity there is usually some backlash – MySpace has drawn fire from parents and teachers – and now many teens are looking to newer, edgier social networks, such as Bebo.com, Tagged.com and MyYearbook.com. Tagged.com grew to half a million teen visitors in April 2006, from a virtual unknown, according to Nielsen//NetRatings. Also a newcomer, MyYearbook.com blossomed to 1 million visitors over the last year.

Marketers value these virtual communities for a number of reasons: They attract a very specific target audience; visitors return again and again; they provide a place to promote and sell products; it’s fairly easy to collect demographic and product- use information; and they provide a place to interact one-on-one with teens.

However, it’s not going to be easy for affiliates to crack.

“It’s an interesting market opportunity that has everyone salivating,” Blagica Stefanovski, affiliate program director at PartnerCentric, says. “But it’s difficult for affiliates to make headway on those social networking sites like MySpace or FaceBook. I think an affiliate would need to have a niche site that caters to teens or be a MySpace superstar with a large network of friends. It’s going to be hard for affiliates to get credit for driving registration and sales in that environment.”

She adds that there is significant opportunity for merchants on social networking sites as long as the merchant can get all 0f its divisions on the same page to drive success.

Consultant Shawn Collins agrees that it’s difficult to acquire teen-centric affiliates. He found this out in his role as the affiliate manager for Payless Shoes, which has several lines of shoes geared toward young women and teens.

“I tried to reach out but there were not a lot of savvy affiliates for the market,” he says. “Most teens aren’t serious affiliates or aren’t taking it as seriously as people who do it for income. They are not as diligent and business like. Also it’s a hard market to crack according to Collins, because it’s so community oriented and many of the popular online communities don’t do performance ads just CPM ads.

Teens also use such social gathering spots like MySpace to talk music. That means the social network is ripe with independent bands promoting free MP3s. But other music sites are also feeling the beat. Apple.com, for example, increased its teen visitor base by 68 percent to 3 million from April 2005 to April 2006, according to ComScore. A study by the Pew Internet & American Life Project reports 47.1 percent of teens download music (see Music story, page 68).

That same study from Pew also reports nearly half (49.3 percent) of the respondents play online games, which provide marketers with a great vehicle for keeping kids in the marketing loop with integrated product promotions called “advergames” (See video gaming story, page 74).

Another thing that teens love to do is talk, and online communication reigns as the preferred method of chat. A recent Lycos survey showed that once the school day ends, 45 percent of the teens surveyed preferred to communicate via Instant Messenger (IM) outside of school. Although public teenage chat rooms have become stomping ground for spammers and other unscrupulous prowlers, legitimate marketers can still be heard above the din.

And when they are not chatting online, teens are talking on their cell phones. In fact, 70 percent of teens own a cell phone. Many claim that creating online branded content for teens or reaching young buyers through their cell phones is the way of the future.

“Seen as the next frontier, mobile marketing appears to infiltrate teens at a rate much higher than adults,” a Forrester report says. In addition to buying ringtones, Web-enabled phones will make it possible to watch video clips and shop via cell phone.

And while the average teen spends seven hours a week on the Net, they spend 10 hours a week watching TV, a difference more pronounced than for online adults, according to JupiterResearch. Many suggest that a multichannel mix of online and television would likely reach the teen population.

Blogging is also something that has captured the attention of teens. More than half of all teens and 57 percent of teens who use the Internet have created a blog or Web page, according to Pew Internet & American Life Project. The most active segment among teenage bloggers is girls aged 15 to 17. One-quarter of online girls in that age group blog, compared to 15 percent of online boys of the same age, the study says.

But blogs can be tricky territory for online marketers because many blog sites are owned or run by individual users. These sites are often highly personal journal- based pages that are updated with no regular schedule and subject to the whims and opinions of the users. Many don’t even accept advertising. All this combines to make them a less attractive opportunity for marketers.

Hook, Line and Sinker

Many industry watchers characterized teens as fickle, cynical and not particularly brand loyal.

That’s a claim Forrester Research analysts dispute. “Although they admit to shopping around before making a purchase, more than half of both younger and older teens agree that when they find a brand they like, they stick with it,” the Forrester report says.

However, when it comes to trends and what’s new – the brand is not the issue – it’s all about what’s hot at the moment.

Still, for the most part, teens are incredibly marketing savvy and by the age of 19 the average teen has seen roughly 300,000 advertising messages, according to Peter Zollo, author of Getting Wiser to Teens: More Insights into Marketing to Teenagers. Zollo is also co-founder and president of market researcher TRU.

To cut through the clutter-marketers need to develop marketing that doesn’t seem like marketing, according to Boston College sociology professor Juliet Schor, author of Born to Buy: The Commercialized Child and the New Consumer Culture.

And while there are some common traits among teens, observers note that teens are profoundly accustomed to marketing and they can easily detect messages that are less credible. Most say resorting to stereotypical images will backfire. There needs to be a keen understanding of teen culture to develop messages that resonate with them. Marketing to teens is all about inspiring positive involvement. That takes clever creative and a commitment to delivering value.

“It’s important to speak the right language and use the right people,” Ron Vos, founder and CEO of Hi-Frequency Marketing, a street marketing company, says. “If you stay true to their culture, it can be very effective.”

Parry Aftab, executive director of WiredSafety.org says marketers tend to approach teens in one of two ways. “Either they treat teens as kids, in that they should do what they’re told, or they treat them like smaller versions of adults, in that they assume kids have the same values as adults,” Aftab says. “Neither approach works with teens.”

Because teens are especially adept at avoiding advertising through the use of pop-up blockers, marketers have gotten more creative in their delivery of their messages to this younger audience, according to a report by Forrester Research that highlights advergames, instant-win games, online coupons, streaming video ads and cell phone promotions as things that work with teens.

Under the Influence

 Teens have already been identified as music influencers and often the primary decision makers for consumer electronics purchases within their family’s household, according to Jupiter Research. But the real key to connecting with teens is to find the influencers within their peer community. The Jupiter report revealed that 17 percent of the online teens would qualify as highly active online “influencers” who spend roughly eight hours per week on the Internet, engaging in the broadest range of activities. More than half (53 percent) of the influencers are girls who actively shop and spread the word to friends about trends and products.

That’s why viral marketing and word of mouth seem to be working. A recent study from eMarketer says, “For the most part, it works. Teens are active users of viral marketing tools like forwarding video clips to friends, using ‘e-mail a friend’ links, and sending e-greetings. They use tools like ‘e-mail a friend’ links on retail sites, wish lists, and IM when shopping to get purchasing help from friends.”

Often marketing companies, such as Hi Frequency Marketing, will use an extensive network of teen influencers who are rewarded for promoting brands to their friends and acquaintances. But that can backfire if the promotion is uncovered or deemed fake.

Still some claim too many teens exhibited concerns that companies would steal their friend’s emails if they used a “forward to a friend” feature common in many viral marketing campaigns. Teens have also expressed concern about cluttering up friend’s inboxes as well as a reluctance to waste their friends’ time by forwarding jokes and other things found on the Net.

Instead, Vikram Sehgal, research director for JupiterResearch, recommends search engine marketing as an effective tool in reaching this age group.

Google is already part of teens’ online routine. According to comScore, Google got a rise from teens in the last year as the number of teen visitors to Google jumped 24 percent to 10.7 million from April 2005 to April 2006 (see sidebar, page 54).

The comScore report states “it’s clear that there are benefits to providing realtime inventory information to sites like Google when it comes to capturing young consumers. They’re three times more likely to use Google to find local businesses than online yellow pages from a phone company.”

According to a study by A Couple of Chicks Marketing firm, the younger generation is very patient when searching. Fifty-three percent of those surveyed by A Couple of Chicks say they go to as many pages as they need until they find the answer, with only 18 percent sticking to the first page. With 79 percent of the teens stating they have never clicked on a sponsored ad, most said they believe most of what they see on the first page is some sort of advertising – whether it is not.

Other findings from that report showed Expedia has clearly done the best job of building their brand with Gen Y. Over 56 percent of the respondents said their families had booked a vacation on Expedia. Hotels.com came in second at 28 percent. Identical statistics were cited when asked if they had ever visited any travel sites. From a marketing perspective, teens were not at all familiar with Travelocity, Priceline, Hotwire or even the ability to book travel on Brand sites. The survey concluded these habits will have an influence on future purchases as this group ages and begins to book their own travel.

Getting to customers early is what many are shooting for. In April, Toyota started a campaign to promote its Scion car in an unusual place – Whyville.net an online community that caters to 8-to-15 year olds. These kids can’t reach the pedals, let alone buy the car. The hope is that they will influence their parents’ purchase or grow up and have some brand loyalty to Toyota.

Toyota claims that just 10 days into the campaign, the word “Scion” was used in Whyville.com’s online chats more than 78,000 times; hundreds of virtual Scions were purchased, using “clams,” the currency of Whyville; and the community meeting place “Club Scion” was visited 33,741 times. These online Scion owners customized their cars, drove around the virtual Whyville and picked up their Scion-less friends for a ride. Cadillac has used similar tactics and incorporated its cars in a game for Microsoft’s Xbox.

What some say works is to reverse the marketing process from aiming for awareness to achieving shared network respect. Let teens have an influence in shaping your brand’s identity. Build trust with teens by using words and images that make your website feel like a place (a destination or world); create friendly characters that encourage kids to identify with products and companies; develop Interactive games and activities that get kids to return; develop clubs that teens can join; offer contests, quizzes and brand-related games; and use bold graphics.

Just remember there are a host of issues to consider when dealing with highly impressionable teens. Parents are clearly worried about internet access exposing their children to sexual predators, to values they do not agree with or to ideas that their children are not ready to see or understand.

A nationwide poll conducted by Common Sense Media in 2006 found the No. 1 media concern for parents has shifted from television to the Internet. Currently, 85 percent of parents say the Internet poses the greatest risk to their children among all forms of media, compared to 13 percent who consider television the biggest risk.

So, if you don’t want parents to use parental controls to block your site, be sensitive to what might be considered parental concerns and that way you’ll keep the parents happy and the kids coming back.