One of the biggest challenges for marketers and advertisers is effectively engaging with new demographic groups as they enter the consumer economy. While many brands say they want to capture emerging consumer cohorts, they often stay focused on earning today’s dollars.  

Downstream investment remains crucial to building customer loyalty and capturing future revenue. To succeed, however, that investment needs to be informed by objective, data-based demographic research. NIQ leverages its consumer survey and behavioral data with its expertise in neuroscience to understand the behavior of demographic groups—including how generations differ.  

Today, the biggest generational shift underway is the growth of Generation Z. For CPG and T&D brands, the stakes are high.

“Gen Z is already making a significant impact in the marketplace—and its influence is about to rapidly grow,” said Marta Cyhan-Bowles, NIQ’s Chief Communications Officer & Global Head of Marketing COE. “With two billion people, Gen Z is projected to be the largest—and the first truly digitally native—generation ever. In just five years, they will overtake Boomers in global annual spending, projected to total $12 trillion.”

Understanding Gen Z

Cyhan-Bowles recently joined other marketing leaders in a panel discussion at CES 2025 on the challenges generational shifts pose to advertisers. The discussion gave NIQ an opportunity to shed light on its recent findings about Gen Z.  

As our Spend Z report revealed, the stereotypical view of Gen Z as an unmotivated and phone-obsessed generation masks a complex reality. Gen Z’s attitudes and values are unique. Gen Z is motivated by authenticity, belonging, and self-esteem. It’s also the “least Western” generation, with emerging markets playing a disproportionate role. (Only 44% of this cohort’s spending will come from Western countries in North America and the EU.)  

Of these values, authentic relationships are a priority. “The importance of authenticity explains why Gen Z prefers advice from social influencers and customer reviews over traditional Hollywood celebrities,” Cyhan-Bowles explained. 

Gen Z consumers also connect their sense of identity with social causes (such as fair trade, climate change, corporate responsibility, and sustainability). To attract their interest, marketers and advertisers may try messaging on social issues, but this can be difficult if the tone isn’t just right.  

Getting social messaging right

NIQ neuroscientists studying the effectiveness of “pro-social” (altruistic) messaging developed key principles to help guide marketers and advertisers. To get this kind of messaging right, brands should be aware of how psychologically sensitive people are to negativity—and their natural inclination to avoid it. This makes positive imagery and solutions more desirable than negative ones. Any negative messaging or imagery, if needed, should be used sparingly. 

Marketers also need to embrace empathy, which is best triggered through powerful and personal stories. Demonstrating solutions in a clear, accessible way is mentally rewarding for the consumer too. Remember as well that people of all ages are drawn to simplicity and easy-to-process experiences.  

Another defining characteristic of Gen Z is their omnichannel behavior. They’re in-store, but they also regularly turn to social commerce (like TikTok Shop), direct-to-consumer apps, and loyalty apps—and are more likely to prefer pickup over delivery. 

“This is the most omnichannel generation, and you really have to be everywhere Gen Z is to connect with them,” Cyhan-Bowles added.

AI-generated ads: Off the mark, for now

As the most digitally native generation, Gen Z is more familiar with Artificial Intelligence (AI) tools and output than others. For brands, this raises several questions:  

• Is AI-generated advertising an effective way to reach Gen Z? 

• How do these ads perform across other demographics? 

• What are the implications of AI-generated advertising for brands?  

To answer these and other questions, NIQ neuroscientists measured consumer responses to AI-generated ads using a variety of methodologies, including electro-encephalograms to measure brain activity, eye-tracking, implicit response times, and traditional surveys. 

In the study, consumers could easily identify AI-generated ads. They were also more likely to describe them as “annoying,” “boring,” and “confusing” (compared with how they view traditional ads). The AI-generated ads also elicited weak memory responses, and consumers found low-quality ads confusing. While the ads did succeed from a brand association perspective, it’s not really a win for advertisers if consumers associate “annoying” and “confusing” ads with their brand.  

Even though younger generations (such as Gen Z and Millennials) are more open to AI and new technology, these responses to AI-generated ads were consistent across all ages and demographics. Advertisers shouldn’t assume that AI-generated ads targeted to younger generations will be well- received just because these consumers are perceived as more tech-friendly. 

At least for now, the quality of AI-generated ads can’t quite bridge the “uncanny valley effect,” in which viewers easily identify flaws in close-to-reality imagery, generating a sense of unease. This may get in the way of ad effectiveness until AI ads are perfected.  

“This technology may not yet be ready for prime time, but it can still help brand managers at the early phase of generating ideas and storyboarding,” Cyhan-Bowles said. “AI models will continue to become more sophisticated, so there’s still an incentive for marketers and advertisers to work with them.”

The path forward

Creating brand loyalty and building future revenue with Gen Z requires data-based insights. However, it’s not just any demographic data that matters. It should be rigorously based on proven scientific methods, like the kind our neuroscientists employ at NIQ to dig deeper into consumer reactions. Armed with this kind of knowledge, marketers and advertisers can more effectively reach this fast-growing consumer segment and identify future shifts or changes in customer demographics.