A generation of tech natives, Gen Z grew up in a digital world, so they have grown to understand the value of data and the importance of protecting it.  But there’s a paradox that brands will have to understand to succeed when they are targeting Gen Z – the payoff between data exchange and customized experiences. Here’s what brands need to understand when it comes to Gen Z consumption.

Who is the Gen Z privacy seeker?

From the rise of social media to a volatile economic climate, technology has reshaped Gen Z consumption and communication. They make up 32% of the global population and command a spending power of $143bn. So it is vital for brands that create products or communicate with this demographic to understand what drives and motivates them. As a cohort, they balance their pragmatic nature with a need for instant gratification. And their desire to change the world is already shaping the present and future. This comes down to the brands they buy and follow and means those brands need to embrace social responsibility to effectively target Gen Z. In fact, 82% of Gen Zers said social responsibility was very important to them, and they are more likely to trust large companies that operate in society’s best interests and show it by their actions.

Across Europe, LATAM and USA, the attitudes towards data privacy and tech are very similar and it provides an opportunity for brands to innovate on a mass scale in a thoughtful manner. But while they are open to sharing their data and lives, Gen Z across the APAC region are the most likely to feel uncertain or concerned about the future of technology according to GfK.

In addition, nearly half of global consumers expect companies to not sell their data to third parties, and in North America, this expectation is even higher among Gen X, Baby Boomers and women across all generations. According to a report by KPMG, these shifting attitudes have enabled regulators in Europe, parts of North America and China to tighten the roles on how organizations can handle users’ data.

As a generation, they are the most aware of the implications of protecting their privacy. “If you roll back to the Facebook generation, people were posting everything and they didn’t realize at first that it wasn’t the right thing to do or that their employers were looking at their social media profiles,” Eric Wagatha, Head of Consumer Life at GfK says. When comparing concerns about data privacy across different generations, 78% of baby boomers exhibited the most concern compared to 72% of Gen Xers and 66% of millennials. “I would expect Gen Z to be a little more cautious, and probably a little more scripted in what they will allow being shared across different channels,” Wagatha adds.

This can be seen in the carefully curated social profiles of Gen Z, who are guarded about what they post and share because they know it is being seen right now, and into their future. “Gen Z’s concerns about privacy and data protection on social media tend to relate to their personal appearance and the maintenance of public identity, rather than concern about the longer-term impact of companies amassing banks of data about their tastes and preferences,” says Olivia Yallop, digital youth strategist.

The Gen Z consumption value

Gen Zers are demanding truth, security, and accountability, and this is being reflected in their use and consumption of technology and consumer goods. But they do see the value in personalization and customization. GfK’s China Market Brief 2021 reveals 52% of Gen Z like the idea of technology that can make personalized recommendations to them. Even still transparency is key and offering these consumers visibility over the data held about them is just one solution. “If they’re given the option to review, export, edit and delete their information by choice, it will ultimately create trust between a brand and a Gen Z consumer,” Yallop adds.

Globally, 58% of Gen Zers believe it’s important to put the truth before other factors. This enlightened attitude means this generation wants companies to be accountable for data or privacy breaches that may take place. This is impacting the adoption of certain technologies with 52% of Americans saying they have decided not to use a product or service because of privacy worries. And in India, 81% of internet users are reluctant to use certain apps due to privacy concerns.

In targeting Gen Z it’s vital for businesses to understand how important privacy and data security is for customers as they develop product innovations and marketing communications about their products and services. These need to reflect the balance between personalization and convenience that Gen Z expects. They are well aware there is a cost to personalization, and they are happy to pay with their data, but they expect the exchange to be fair, secure and transparent. “What we are finding specifically in our data is that if there is some type of service, product, or financial benefit to them (Gen Z), it’s pretty straightforward,” Wagatha says.

They’ve grown up being able to customize their preferences in the digital world, from advertisements to social platforms. In fact, 44% will provide their personal data to enable a more personalized experience over a random one. Gen Z wants personalized experiences, and they are willing to pay for it with their data.
As digital natives, they navigate social media and brands in ways other cohorts cannot, which is where the value for their data can be differentiated. “Something like behavioral tracking across a site is harmless, but when it gets to tracking my shopping behaviors and social media behavior, where I may reveal a little more about myself, that can become a bit more contentious,” Eric Wagatha explains.

Finding the balance between personalization and protection

Gen Z is incredibly data-savvy, but they are concerned about how their data is being monitored, so there’s a desire to clamp down about how much is being used. Amidst high-profile data violations from search engines like Google, there are new cases that have come to light that are driving support for online privacy. It clearly provides an opportunity because younger generations are concerned about how they are being tracked. Whereas Brave Search, an innovative new search engine, doesn’t track users, searches or clicks. It’s built on top of a crypto-enabled web browser enabling privacy by default, auto-blocking advertising and tracking cookies. In the future, it plans to offer the choice of either ad-free paid search or ad-supported search.

Internet giants are aware of the growing concerns about surveillance capitalism and are acting on the fact that consumers are feeling tracked by brands, so they’re looking to change their advertising models. “Gen Z users rely on ad-blockers and VPNs to improve their online experience. These ad blockers limit paid ads from interrupting their browsing experience and truly offer them a degree of privacy,” says Jennifer Quigley-Jones, CEO, Digital Voice.

There are further efforts to support the use of cookies to benefit the user experience. The Federated Learning of Cohorts (FLoC), launching in the second quarter of 2021, enables Google to replace individual user tracking cookies by clustering large groups of people with similar interests. This will still allow some level of customization which is vital for brand success among Gen Z, since 75% of this cohort are more likely to buy a product if they can customize it. 34% of consumers across all age groups believe future websites will “talk” to each other and bring up more tailored results, so personalization will become even more expected. In terms of content, Gen Z is looking for services that use insights and interests to create an online experience that they would like to see.

Despite yearning for personalized experiences, Gen Z is still incredibly knowledgeable about how much they want to share about themselves on social media. The widespread rise of ‘finsta’ accounts (private Instagram accounts where young people post content that they don’t want to be seen on their carefully-curated public-facing profiles) is just one way they keep some level of their personal lives to themselves. “There is a trend of blurring with emojis, or scribbles used to conceal Gen Z’s identities on social media, whether it’s over one eye or a chin. They’re not spending less time on social platforms, they are simply moderating how they show up on them to the broader public,” Yallop says. It is critical to understand this, as 74% of respondents are somewhat or very concerned with facial recognition software automatically identifying, archiving or tagging their face on social media.

This concern for concealing their biometrics extends to TCG devices in their homes and surveillance in public spaces. Anti-face is a trend where individuals use make-up, hair bangs, and creative face coverings to defeat facial recognition technology. In the digital realm, Everest Pipkin’s web app strips metadata from images and lets users blur their faces or mask them completely. It has an open-sourced code to allow anyone to download and run the app on their own device. Anonymous Camera also offers real-time anonymization for videos and pictures, helping to protect people’s privacy on the go. The app uses machine learning to identify people within images and offers a range of options to obscure their distinctive features, such as blurring, pixelating or blocking. 

“It seems that Gen Z are embracing this mix-and-match approach to online identity as a tool for creativity and self-expression,” says Yallop. Technology brands should take the lead from these brands and explore ways to help consumers boost their digital privacy by avoiding facial recognition and tapping into their creative needs while allowing them to share aspects of their lives online.

But social media is also a tool of activism for Gen Z and following the pandemic digital activism is on the rise. “The popularity of link-in-bio petitions in response to racial, gender and social injustices proves that youth audiences consider ‘donating’ personal data part of supporting a cause,” Yallop says. And this is where brands can truly capitalize on the opportunity to gather data and insights from Gen Z, as 90% believe companies should help with environmental and social issues. Specifically, concerns about information security, education and the environment have risen according to GfK.

Global consumers have been kitting out their homes with smart technology and devices during Covid-19 lockdowns. But 84% of them are worried the devices are vulnerable to hackers. Privacy concerns around smart home technology remain acute: it’s the #1 barrier globally for penetration by voice assistant speakers, according to GfK insights. In fact, 37% of global consumers have changed their security settings on a device because of a privacy concern, as stated in GfK’s Consumer Life Global report.

To ease consumer anxiety, brands are developing privacy-preserving smart home tech. New smart security cameras feature physical privacy shields so people can clearly see if a video is being captured. On US brand Cync’s Indoor Camera, a shutter slides across when disarmed, while New York-based Kangaroo’s slick new solution is to use polymer liquid crystals to blur the lens. It’s these kinds of approaches to product innovation, that focus on the privacy of the consumer, that will win the hearts and minds of security-aware Gen Zers.

Looking to the future of protected and customized brand experiences

This generation is expecting a multi-faceted approach to their privacy, whether it is in the home or on social media. According to GfK insights, companies need to address these security concerns head-on, and transparency is key to safeguarding cybersecurity.

This notion of safeguarding, whether it’s from digital advertising or home devices is something that causes a sense of unease among Gen Zers. “It is a current battleground between consumers and brands. Especially creepy ads that follow you around the internet or pick up on what you’re saying” says Yallop.

One way for brands to truly innovate in this space is to find ways to make the data that is being collected have some sort of value for Gen Z. New transactional business models that empower users to take control of their personal data is the next step in customization. For example, LunaDNA is a community-owned data platform, and it affords users complete control over their encrypted and anonymized data. It offers shares of ownership to data contributors, allowing them to profit from their health data.

Tech leaders that are paving the way to make privacy a core part of their value proposition, will have long-term appeal to Gen Z consumers as they rely on these technologies. “Gen Z live in a world in which the Internet provides vital infrastructure for education and socializing, they simply wouldn’t be able to function without accepting the terms and conditions, so to speak, and in many instances, consumer refusal isn’t viable,” Yallop says. This is where our current understanding of the internet and the role of platforms comes to a head – they are treated and regulated as private companies, but increasingly represent our public space.

Apple announced its new app privacy report, which allows users to track and manage how their data is accessed and disclosed. This level of transparency is something consumers are increasingly demanding, as it becomes vital for users to understand what information is being distributed. Brands can take a cue from Apple’s new privacy labels and provide clear, simple explanations about what data is being gathered – and how it’s being used – to reassure confused or apprehensive consumers. In a similar vein, Facebook was prompted to launch an ad campaign arguing that targeted, personalized ads help small businesses reach consumers.

There is a huge opportunity for brands to understand the paradox between Gen Z’s awareness about data security and how to continue living their lives online. “With the imminent arrival of the metaverse, nobody will have to be their “real selves” online, they will be able to become alternative characters and their identity will be ratified by blockchain technology. These consumer tech brands that explore this shift with blockchain early on will reap the benefits,” says Yallop. Whether this means they’re able to conceal their identities in a virtual setting or use their data for activist causes, it’s imperative to create a balance between personalization and convenience that Gen Z expects.

FAQs

What is Gen Z?

Gen Z is also known as iGeneration and post-millennials. They are the first digitally native generation and are hyper-connected to the world around them. Gen Z’s formative years have been shaped by economic turmoil and the rise of social media. Gen Z consumption behavior is different from the other generations.

How old is Gen Z?

Members of Gen Z were born between 1997 and 2012 and are currently between 6 and 24 years old. On one end of the spectrum, Gen Zers are at the early stages of their career, while others in this generation are approaching their teenage years

Gen Z consumption and targeting Gen Z?

Although they are digital natives, Gen Z’s consumption habits have led to a revival in brick-and-mortar stores. But they also shop at destinations with an ethical stance, such as second-hand furniture and fashion stores.