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THE $1.1 TRILLION IN STUDENT LOANS OWED BY MILLENNIALS A.K.A. 'GENERATON DEBT' IS A NATIONAL ECONOMIC CRISIS

The student debt fight is back -- with a vengeance.

Once again, current students are facing the possibility of interest rates on Stafford Federal student loans doubling.

Once again, we are asking what our leaders are doing about a crisis that gets worse every year.

Once again, the answer is: Not much.

That is a huge problem -- and not just for millennials, or young people born between 1980 and 2000. The approximately $1.1 trillion in student debt out there already constitutes a crisis for every one of us.

College student loans now total $1.1 trillion (Click Image To Enlarge)

The number of student loan borrowers increased from 23.3 millin in 2005 to 38.8 million in 2012 and the average student loan balance increased from $16,651 in 2005 to $24,803 in 2012 (Click Image To Enlarge)

Student loan debt now exceeds consumer auto and credit card debt as of 2012 (Click Image To Enlarge)

It is the only form of household debt that has continued to rise during the Great Recession. It is also the only form of debt that cannot be discharged under bankruptcy or even death, as parents who have lost children have discovered to their horror. It is preventing young people from buying homes and starting businesses.

The cost of a college eduation grew by nearly 600% between 1980 and 2010, while the U.S. Consumer Price Index  grew to 150% during the same period (Click Image To Enlarge)

In short, student debt is a $1.1 trillion anvil dragging down the entire U.S. economy.

Unfortunately, the conversation in Washington is not about big fixes, but simply how to avoid making matters worse by letting interest rates rise.

Last year, the interest rate on federal Stafford student loans was set to double from 3.4% to 6.8%. There was a massive outcry from students and organizations like my own, Rebuild the Dream. Perhaps fearing young people's electoral clout, Congress kicked the can down the road a year.

The average cost of a 4-year college education grew from $8,756 in 1980 to $21,657 in 2010 and the average cost of a 2-year college education grew from $5,580 in 1980 to $8,734 in 2010 (Click Image To Enlarge) 

So here we go again: Last week, President Obama waded back into fight, urging Congress to prevent the rate hike scheduled for July 1.

But this year, something is different: Sen. Elizabeth Warren. A few weeks ago, Warren, D-Massachusetts, proposed groundbreaking legislation that would give students the same deal that big Wall Street banks get. This bill is good policy, and even better politics.

The top 10% of households (net worth > $983K) had students owing the least student debt (3% of total student loans) than the bottom 25% of households (networth < $58.5K) owed the most in student loans (58% of total student loans).  (Click Image To Enlarge)

After all, why are we loaning money to mega-profitable international financial institutions at 0.75%, but demanding up to nine times more from our own young people?

By comparison, the otherwise ideal Harkin-Reid proposal for a two-year extension of the current 3.4% rate is simply not as ambitious.

Unfortunately, the proposals with the most energy behind them are worse than both these options. House Republicans, the Obama administration, and a number of senators are all pushing to permanently tie the rate for student loans to the government's borrowing costs.

Nearly 12% of all student loan borrowers are now 90 days past due on their loans.  Credit card, home equity and auto loan borrowers constitute 10%, 6% and 4.5% of total loans now 90 days past due. (Click Image To Enlarge) 

It may seem commonsense, but the devil is in the details.

For instance, the Republican plan passed recently is just plain bad for students. Interest rates on July 1 would actually be higher than 6.8% for some borrowers, and vary wildly and unpredictably over the lifetime of the loan. The government would mark up the costs 2.5% to 4.5%, based on the type of loan. The profit would pay down a deficit young people did not create, instead of funding education.

If Congress does nothing the annual interest on student loans could eventually skyrocket to $9,083 per year. Under President Barack Obama's alternate student loan plan, annual interest on student loans will increase gradually from $3,959 in 2013 to $8,133 in 2020. (Click Image To Enlarge)  

The Obama plan, by contrast, has better terms for borrowers and would offer fixed-rate loans that will not suddenly spike in cost. But it lacks any cap on how high interest rates can go, and continues the worrying practice of the government profiting off student loans.

As for borrowers who already have loans? Sen. Kirsten Gillibrand, D-New York, has proposed allowing students to simply refinance their old loans at today's historically low rates. It is almost shocking that you cannot do this already. California Democratic Rep. Karen Bass' Student Loan Fairness Act would make repayment fairer and easier.

The high rates of unemployment (12.5%) among new college graduates is alarming and forcing many to take part-time jobs and jobs paying minimum wages.  This means many college graduates will be forced to take on several low-paying jobs just to make ends meet and payoff their student loans (Click Image To Enlarge) 

Young people should be rallying behind the Warren, Bass, and Gillibrand bills. But they can and should demand a whole lot more.

The problem is not just that the cost of borrowing could go up. The real problem is the skyrocketing cost of tuition that is forcing students to take on unmanageable levels of debt in the first place. It is in our leaders' own best interests to do something about that.

After all, millennials will make up one-third of eligible voters in 2020. It is no accident that the two best Senate bills were introduced by senators -- Warren and Gillibrand -- who have been rumored as future presidential candidates.

But at the end of the day, this is not a student issue. It is not a youth issue. This is a corrosive crisis that touches your life whether you know it or not. If you live in the United States of America, this is your issue.

The student debt fight is back -- and it is not going away any time soon.

COMMENTARY:   The silver lining to this story is that more Americans are pursuing higher education, even if they are taking out loans to do so. Some economists are troubled by the fact that fewer people under 30 are buying homes and other goods as more are paying for college, but higher education is, on the whole, a solid place to put your money. In 2010, the median earnings for young adults with bachelors degrees were 50 percent higher than those of their counterparts with high school diplomas. But for many members of Generation Debt, the benefits of having a diploma may seem a long way off.

I am definitely concerned about the Millennial generation and the future of America.  There is no student loan relief in sight, and the rising costs of earning a college education, the shrinking middle class, the large number of households at the lower end of the economic scale with student borrowers, the high unemployment rate among college grads, and rising deliquency rate among college borrowers, presents long-term problems for the U.S. economy.  

• Credit ratings will be lowered. 
• Lenders will be less inclined to lend to Millennials with large student loan balances. 
• Overall consumer spending will be negatively impacted because Millennials wil buy less.
• The housing industry cannot rely on younger Americans to become homeowners and housing prices will become stagnant.

If Congress does not act to provide student loan relief, Generation Debt will become a fixture in our economic landscape.        

Courtesy of an article dated June 6, 2013 appearing in CNN Opinion, an article dated June 5, 2013 appearing in Mother Jones and an article dated May 1, 2013 appearing in Quartz

BURST MEDIA STUDY: GOOGLE+ TOPS TWITTER AMONG BOTH MALES AND FEMALES IN THE U.S.

New research from Burst Media shows that Google+ (not Twitter) is the second most popular social networking site in the US.  Google’s late-blooming social network leads Twitter by ten percentage points among both male and female account holders in the US.

The Burst Media study also examined the gender gap on social networks, noting that women continue to lead men on multiple social sites.  Women are six percentage points more likely than men to have an account on Facebook; on Pinterest, nearly 22% of women have an account vs. only 5% of men.  On Twitter, LinkedIn and Instagram the gap was much smaller, with women only slightly in the lead.

The Burst Media identified five key insights from their study:

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COMMENTARY:   As an early adopter of both Google+ and Twitter, I can attest to the increased diversity and popularity of the users on Google+.  Google+ has only been around for only about two years, I already see a lot more young female users.  Google+ used to be predominantly males with an interest in science, technology and blogging, but now major fashion, accessories, entertainment and cosmetics brands have created pages on Google+, and the results have been dramatic -- more female users are joining Google+.  Most of them tend to be 18-35 years of age.

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The Google+ interface is more user-friendly, elegant, less cluttered and intuitive than Facebook, and the latest upgrade with hidden menus and larger, brighter and more colorful videos and images.   Although Facebook added timeline and graph search, its user interface is just too boring and bloated. Google+ simply offers users much richer and minimalist online experience.  

Facebook is quickly becoming more MySpace-like over the years, and with the addition of video ads later this year, could be the driving force that will result in many younger users leaving the social giant. Teens, long regarded as the most active users on Facebook, are leaving Facebook for more niche-driven social sites and apps like Instagram, Tumblr, Vine, Twitter and Google+.  

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Google+ has placed greater emphasis on user-developed content, and this has resulted in increased engagement and stickiness.  I also think that Google+'s newness has attracted more females and younger users, looking for something that is different than both Facebook and Twitter.  

For those of you who had written-off Google+ as a dying social network, you could not be more wrong.  I now spend more time on Google+ than Twitter (where I used to hangout) and Facebook (where I rarely hangout).   Although you will find a lot of posts on my Facebook timeline, the majority of them are feed directly to my Facebook page via Twitter.   

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Courtesy of an article dated June 3, 2013 appearing in The Realtime Report

THERE ARE OVER 1 MILLION MILLIONAIRES, WHERE DO THE RICHEST ONES LIVE, AND HOW MANY OF THEM ARE BILLIONAIRES

The Facebook IPO billionaires club (Click Image To Enlarge)

Twenty cities have more than 100,000 millionaires – but which has most? And where do the world's billionaires live?

Where do the world's wealthiest individuals live? Well, it depends if you're talking millionaires, multi-millionaires or billionaires, according to a new list of the global rich.

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Tokyo may contain the most millionaires (US$), however London is the city with the highest number of multi-millionaires - defined as individuals with over $30m each. For the fattest of the fat cats, though, look to New York where 70 billionaires have made their home - or maybe one of their many global homes.

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The ranking of top global cities for millionaires, multi-millionaires and billionaires has been compiled by London based wealth consultancy WealthInsight using five years of data analysed by their team. So what insights can we glean from this latest rich list?

Great location-based data like this, however, often makes more sense displayed on a map. With Mapsdata, and thanks to the data being available alongside the article, it took us just a few minutes to create the interactive data visualizations below, and map the cities with the most millionaires and billionaires.

The world’s millionaires:

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The world's billionaires:

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COMMENTARY:  It does not surprise me that Tokyo, Japan has the most millionaires.  You have to be a millionaire just to live there.  And it does not surprise me that the New York City has the most billionaires.  After all, New York City is the financial capital of the world.  The place where millions are made and lost in one day.

Courtesy of an article dated May 8, 2013 appearing in The Guardian DataBlog and an article appearing in MapsData

THE DEVICE AND MEDIA VIEWING HABITS OF TEENS, THE ADOLESCENTS OF TODAY, AND ADULTS OF TOMORROW

According to the PEW Internet Survey, teens would rather giveup their TV's than their mobile devices (Click Image To Enlarge) 

Young adults are a crucial segment for businesses and advertisers. As the 18-24-year-old demographic expands faster than any other young age group, so does its viewing and purchasing power. Today’s 17-year-olds will play a significant role in the young adult segment of the future, which is why it’s crucial to get to know them now in order to better understand who they’ll be tomorrow.

WHO ARE TODAY’S TEENS?

Today’s teens and young adults are quite the multicultural bunch—with purchasing power to boot. In fact, the 12-17, 18-24 and 25-34 groups are almost identically multicultural, as 42 percent of each comprises Hispanics, African-Americans and Asian-Americans. This is only the tip of the iceberg—U.S. Census data shows that African-Americans, Asian-Americans and Hispanics will generate the vast majority of the U.S. population growth over the next few decades.

Teens have serious purchase potential. In 2012, 29 percent of U.S. teens lived in high-income homes ($100k+), while only 25 percent of young adults lived in households within this same income bracket. There were also more teen households with middle incomes ($30k-$100k) than those of young adults. Finally, fewer teens lived in lower-income homes ($30k) than their slightly older counterparts.

DEVICE OWNERSHIP DETERMINES VIEWING

Within teen households, smartphones and tablets are growing faster than any other device. From Q4 2011 to Q4 2012, smartphone penetration increased by 45 percent among teens, 32 percent among adults 18-24 and 22 percent among adults 25-34.

Laptop penetration increases as teens age into young adulthood, but begins to decline when young adults enter their late 20s. Laptop penetration is highest among young adults, but all three age groups (12-17, 18-24, 25-34) have increased their laptop ownership over the past year.

Consumer Electronic Device Penetration - Teens, Millennials and Gen-Y's - Q4 2012 - Nielsen (Click Image To Enlarge)

Though young adults view most content on television, they are increasing their video watching on other devices. According to Nielsen’s Fourth-Quarter 2012 Cross-Platform Report, all consumers under the age of 34 increased their video consumption via mobile and the Internet from Q4 2011 to Q4 2012.

How We Are Watching Video - Hours and Minutes Spent Per Month - TV, Internet and Mobile Devices - By Age Group - Teens, Millennials and Gen-Ys - Q4 2012 - Nielsen (Click Image To Enlarge)

While everyone under 34 is spending less time in front of the TV, viewing preferences aren’t consistent across the 12-17, 18-24 and 25-34 year old groups. For example, teens like to watch on mobile more than anyone else. In fact, they watched 18 percent more video on their mobile phones than persons 18-24 and 46 percent more than persons 25-34, in Q4 2012. While teens are watching more content on mobile devices, they watch less video online than young adults. In fact, persons 18-24 spent almost 3 times more time watching video on the Internet than teens 12-17 in Q4 2012.

So, do young consumers change their viewing habits as they age? While consumers may watch less mobile video after the age of 17, young adults 18-24 and 25-34 have increased their mobile video consumption over the course of the past year. The same can be said for internet video viewership among young adults past the age of 24.

Notably, adults 25-34 spent the most total combined time watching content on TV, online, and mobile in Q4 2012, viewing 19 hours and 30 minutes more content per month than ages 18-24 and 40 hours and 54 minutes more than ages 12-17 across all three devices. These combined trends suggest that teens will continue to view content on mobile and the internet as they age.

Peter Katsingris, Vice President Industry Insights says.

“Given their changing lifestyles, the resulting dynamic nature of teens affects their device ownership and usage.  As teens’ situations change and they leave the home or become more independent adults, they’ll likely go from using shared family devices to carrying personal devices with them, such as smartphones or laptops. As platforms become more pervasive, increased access and connectivity will surely affect the consumption behaviors of both teens and young adults in years to come.”

COMMENTARY:    The folks of the PEW Internet Survey prepared this very interesting infographic describing the online video consumption habits of teenagers.  I hope you find it interesting.

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Courtesy of an article dated April 16, 2013 appearing in Nielsen Blog

IT'S OFFICIAL: FACEBOOK IS NO LONGER HOME TO TEENS, OVER 2 MILLION TEENS LEFT FACEBOOK DURING A 3 MONTH PERIOD

 

While the market continues to debate the importance of Facebook's new features like Home and Graph Search, it continues to ignore the inescapable truth that teens are leaving the social network in the millions .

In a blog post dated April 7, 2013, Facebook Inc (NASDAQ:FB) announced the Home skin app for Android phones that loads and takes over the starting display when you turn on your smartphone.  Facebook again grabbed the media attention similar to Graph search back in January and several other initiatives recently.  The news that teens are exoding from Facebook is good news for Google and Yelp that could be impacted if Facebook was ever successful with these new Facebook features. 

The Facebook Home skin for your Android will be available for dwnloading on April 12, 2013 or you can buy the HTC First smartphone and get it now (Click Image To View The Facebook Home page)

The leading internet social media firm had surged to a market cap approaching $70 billion back in January based on the expectations that these big initiatives will lead to surging revenue growth. What investors generally missed is that these new initiatives came with additional costs that will limit earnings growth this year.

On April 22, 2013, Forbes reported that in the first week since its launch, users downloaded 500,000 copies of the Facebook Home skin app, but it remains to be seen whether this was out of pure curiosity or the downloads were hardcore Facebook users who just had to be logged into Facebook everytime they turn on their phone.   In my blog post dated April 7, 2013, I reported that there were some signs that some users are installing the app, but just as quickly uninstalling the app, because it gets in their way of doing other things with their phone.

While the market focuses on the monetization initiatives such as Home, the existing users on the platform don’t appear as eager to stick around for these new services. Facebook is not ensured to be the social media outlet of choice in the future.  Back in January, the evidence suggested that domestic users had peaked. Now, it appears that the younger crowd is leaving the service in droves.

Is Home even important?

As with the Graph search function in January, the Home function is an attempt to place the genie back in the bottle. Initiatives such as home are possibly leading to the user base fleeing as Facebook quickly goes from a free service absent ads to one where the company attempts to hock every move made by a user.

Facebook claims that the Home function turns an Android phone into a living, social phone. It turns the focus of the phone to people and away from apps. The question is whether users actually want this service. Most people constantly use business, games, sports, and weather apps outside of Facebook questioning any desire for this new service.

The service appears to be another attack on Google similar to that of Graph search. While the company claims that the service isn’t an operating system, it clearly takes several steps towards overwriting Android. It could just be the first step to creating a full-blown OS.

Teen users plunging

The bigger issue not generally addressed is that all the new revenue monetization issues won’t matter if Facebook follows the path of all other social networks. Eventually users tire of the service and move onto the next hot social network. The new set of teens aren’t as interested in following the footsteps of the teens from 5 years ago akin to a nightclub typically having a limited length of popularity.

As the previous article pointed out, SocialBakers was already showing that users in the U.S. were peaking. Part of the problem is a matter of size as nearly 69% of internet users were on the site. In reality, the data now confirms that not only did the user base peak back at around 170 million, but also it is now dropping with the younger crowd leading the downturn. See chart below:

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The chart shows that the 18-24 year old group lost the largest amount of users in the last 3 months at over 2 million. The second largest group was the 25-34 year olds at nearly 2 million users. Ironically the only group to gain was the 65+ year old group that likely diminishes the younger groups desire to stay on the site. Its one think to deal with a nosy parent, but showing your wild party pics to your grandparents is a whole different issue.

As with all of the monetization plans of Facebook, the investment community always overlooks the number one fact. All social networks eventually die whether a virtual network such as MySpace or a real world network of high school or college friends.

Reduced competitive impact

The long-term impact to Google and Yelp appears to decline on a daily basis. Clearly Facebook will make some inroads into search and grab a minimum user base for search functions. No signs exist that users want Facebook to provide any services such as search and user recommendations.

Analysts still expect Yelp to grow revenue by 54% this year and nearly 40% next year. Both indications that Facebook is having no impact on the services it hopes to replace.

Conclusion

Remarkably, the analyst community and media outlets continue to fight over whether Facebook deserves the vast $61 billion valuation while ignoring the potential for the social network to face the typical demise.

The SocialBakers data is worth following as it suggests the network peaked in October. The desire for the company to increasingly monetize the massive network of users is only likely to push the average user away from the service.

It doesn’t appear that Google or Yelp have anything to fear.  Google will remain the place to search for actual business-related functions. Likewise, Yelp collects data from users that voluntarily share in hopes of helping the community as a whole.

In the end, Facebook will never be able to monetize users that don’t exist in the future.  If teens are fleeing the social network, the future doesn’t appear bright enough to justify a valuation of over 9 times the current revenue base.

COMMENTARY:   In a blog post dated April 18, 2013,  I reported that teenagers were fleeing from Facebook for other online social destinations, games and mobile apps.  SocialBakers chart confirms this by clearly showing that just in the U.S. teens and Generation Y are leaving for the previous reasons, but also because they believe that the social giant has become bloated with too many features, concerns over privacy, and the belief that Facebook is targeting them with ads, and this will detract from the overall Facebook online experience.  Facebook fatigue has also set in, with teens spending less time on Facebook, but making their presence felt on sites like Tumblr and Twitter Vine.

Ever wonder how teenagers spend their media and social lives online?  This infographic by the folks at Common Sense Media will tell you.

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Courtesy of an article dated April 23, 2013 appearing in Insider Monkey

FACEBOOK LOOSING ITS EDGE, FACES STIFF COMPETITION ON ALL FRONTS, RAPIDLY LOSING TEENS AND THE AD DOLLARS THEY REPRESENT

 

Facebook is starting to get a taste of what it means to be the king of the social media hill as it is attacked by competitors on all fronts.

Small and more nimble competitors with novel ideas have sprung up and begun to entice young users away from the No. 1 social media platform – a bad omen for Facebook stock, which 11 months after its IPO still trades 29% below its offer price.

According to Piper Jaffray’s annual “Taking Stock of Teens” survey, teens are spending less time with Facebook and more with a vast array of alternatives.

The survey showed that just 33% of teens consider Facebook “the most important social network” compared with 42% last year.

Last month, the creator of social photo album app Albumatic, Adam Ludwin, conducted a focus group of users under 25.

Ludwin told Business Insider.

“They gave me the typical teenage response: ‘We’re bored with Facebook.’” 

Anyone who doubts how quickly a social media company can become yesterday’s news need only look at MySpace, a once-dominant social media site that lost a third of its users in 2010 mostly as a result of Facebook’s growing popularity.

Piper Jaffray analyst Gene Munster told MarketWatch.

“History is not on Facebook’s side when the trend starts to move in the wrong direction.” 

Facebook Stock Can’t Afford a Major Slip-Up

Facebook absolutely cannot afford to lose its grip on its youngest users, who often foreshadow which social media are on the way up – or down.

Although Facebook has 1 billion users worldwide, the company has struggled to monetize this vast audience; hence, lackluster performance of Facebook stock.

The company has experimented with various forms of advertising and more recently has taken steps to make its software more mobile-friendly, but with limited success.

The transition to mobile has worked to a degree – that’s certainly where users are headed – but ad revenue from mobile devices is less than that from PCs, and Facebook has just 13% of it.

That has left Facebook stock with a crazy high P/E ratio of about 1,800.

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And with 1 billion users, not only is growing the customer base very difficult, it’s going to be hard to hang onto all of them.

Especially the young ones.

Facebook even admitted as much in its annual 10-K report, in which it said

“Our younger users are aware of and actively engaging with other products and services similar to, or as a substitute for, Facebook.”

The company also acknowledged the threat to Facebook stock:

“In the event that our users increasingly engage with other products and services, we may experience a decline in user engagement and our business could be harmed.”

Facebook Faces Stiff Competition On All Fronts

Social media alternatives have shown up like flies at a picnic over the past couple of years, which tells us Facebook pretty much has no “moat” to deter rivals from entering the market.

And those rivals are rapidly gaining traction among teens.

• Kik - The messaging app Kik is extremely popular among teens and its founders claim it now has 50 million users since its launch in 2010.
• Whatsapp - Another mobile messaging startup, Whatsapp, claims to have more than 200 million users. At the AllThingsD conference today (Tuesday), Whatsapp CEO Jan Koum said he plans to keep his app ad-free, and instead is banking on a business model that charges users 99 cents a year.
• Vine - An iOS mobile app acquired by Twitter in January 2013 that allows users to produce 6-second video clips and share them with their followers on Twitter using their mobile devices.  Vine became the No 1 downloaded iOS mobile app in March 2013, only six months after its launch.  Since going live in January, Vine has grown its monthly active users by 50% in the last month, and it was used on 2.66% of all iOS devices in the U.S. by the end of February 2013.  When an Android app comes out, watch out. See my blog post dated March 28, 2013 for more information about Vine.  
• Reddit - a social news website where users can post links to content on the web. Other users may then vote the posted links up or down, causing them to appear more or less prominently on the reddit home page. Stats: 43 million registered users with 400 million unique visitors and 37 billion page views per month. 
• Tumblr - World's largest blogging site with 170 million users and 100 million blogs.  In January 2013, The Wall Street Journal recently reported that Tumblr's popularity among teenagers has skyrocketed, with about 61% saying they use Tumblr on a regular basis, compared with 55% for Facebook. The numbers are slightly lower for both for those aged 19 to 25.

Chinese teens have taken to Tencent’s WeChat app, which already has 400 million users. Two other China-based apps, LINE (120 million users) and KakaoTalk (80 million users) are planning to launch in the U.S. market.

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The top 5 social networking sites of China having the following shares of active users – Qzone – 44%, Sina Weibo – 19%, Renren -19%, Tencent weibo – 8%, kaixin -7%.

Tencent, one of the top most social website, accounts for 56% of the total social media users through its Qzone, Tencent Weibo and pengyou sites.

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The Chinese social media scene – with over 600.000.000 users – of course has shown tremendous growth alongside the growing internet penetration. China welcomed 50.9 millionnew netizens in 2012.

There are now 597.6 million people – out of 1.34 billion in population – active on the nation’s top social network, QZone, which is made by local web giant Tencent.

Guide to Social, Digital and Mobile in China (2nd Edition, Jan 2013) from We Are Social Singapore

Facebook, Twitter and Google+ are all banned from China, and that's not going to change in the foreseeable future.   Facebook had 1 billion users worldwide at the end of 2012, but being locked out of China places a limit on the number of users Facebook can win over from Asia.

And let's not forget Facebook major social network competitors like Twitter and Google+.  Twitter now has 500 million registered users and 200 million active monthly users.  Google+ has impressed everyone since its launch in June 2011.  Google's social network now has an estimated 525 million registered users and 105 million active monthly user.   

In spite of the huge gains in the number of users by it two major competitors, Facebook still leads the pack in minutes spent on social networks by users in 2012 with 405 minutes per month (January 2012).  With the launch of Facebook's Home skin app in April 2013, Facebook hopes to dramatically increase those minutes.  See my blog post dated 

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One key factor most of these new social media upstarts have in common is that they encourage real-time interaction between users, a degree of intimacy younger users prefer to Facebook’s time-shifted interactions.

Rich Miner, a partner at Google Ventures who invested in messaging app MessageMe, told Reuters. 

“True interactions are conversational in nature.  More people text and make phone calls than get on to social networks. If one company dominates the replacement of that traffic, then by definition that’s very big.”

Worse still for Facebook stock, many of these rivals are turning their apps into platforms, just as Facebook did with games like FarmVille.

Charles Hudson, a partner at early-stage venture capital firm SoftTech VC, told Reuters.

“The tried-and-true approach for a social network is first you build a network, then you build apps on your own, then you open it up to third-party developers.” 

Facebook’s response has been to cut off integration with some apps, like Snapchat, MessageMe and Voxer, while buying up others.

Facebook’s most notable acquisition, Instagram, cost it $1 billion last year – an indication that such tactics could get prohibitively expensive, particularly if such acquisitions contribute little to the bottom line.

The growing threat from other social media apps is just one more reason to stay clear of Facebook stock.

Piper Jaffray’s Munster told MarketWatch.

“Long term, it’s a problem if they don’t do something about it.  It’s hard to keep things fresh with teens.”

COMMENTARY:   From the look of things, the stock market also believes that Facebook's days may be numbered.  As of 11:30 a.m. PST, its share price had dropped to $25.33, down 1.29 or 4.85%.   (UPDATE:  Facebook shares ended trading at $25.67 -- down $0.95 or 3.59%).  

My gripe with Facebook has always been that it doesn't make or sell anything physical like an Apple, Amazon.com, HP or Sony.  It's a user-free site, that makes its money from advertising.   So in effect, you are the product.  Anything that changes the Facebook dynamics and reduces the number of users or time they are spend on the site, will negatively impact advertising revenues. This is all reflected in the volatility of Facebook's stock price, and the ongong belief by many that when it had its IPO, it was over-priced, and truth be told, it was!! 

It's just not the competition that is causing havoc with Facebook, but anything mobile.  Mobile is becoming the channel of choice for accessing the internet and social networks in general.  For the quarter ending December 31, 2012, Facebook reported it it now has 700 million users accessing its site using mobile devices.  It has to find a way to optimize monetization of its mobile users.  

Facebook had a late start when it comes to monetizing mobile.  It's taken Facebook about 9 months to catchup with other sites when it came to "mobilizing" its site and squeezing revenues out of all those mobile users.  In 2012, Facebook did about $500 million in mobile ads, and eMarketer forecasts that it will do about $1 billion in 2013, but Google is forecasted to remain the leader in mobile ad revenues through 2017, with Facebook lagging far behind.   

Facebook's two biggest moves to increase site stickiness and user engagement for 2013 were as follows:  

• Facebook Timeline - Officially launched for all users on December 15, 2012, after it announced Timeline at the F8 Conference in September 2012.  Timeline was a new way to display a users updates in a timeline chronology.  
• Facebook Home - A mobile skin app announced on April 7, 2012, that allows Facebook to occupy the home screen of Android mobile phones.  HTC, the high-end smartphone maker, will be the first device maker to include Home.   Users began downloading Home effective April 12, 2013, but marketers and users have given it a lukewarm reception. 

Facebook fatigue among teens has been reported since 2011, but it now appears to be really cascading into a torrent of exits from Facebook by teenagers.  The main reasons:  Facebook has become boring, it's no longer their social networks, but the social network of their parents and elders, and there are a lot more interesting options like Twitter's Vine, Instagram, Whatsapp, Kik, Tumblr, Reddit, and foursquare.

In March 25, 2013, Zynga announced that it had launched its own social games site, and had unhinged itself completely from Facebook.  Zynga still maintains a Facebook page, but its social game apps do not run within Facebook, but its own Zynga social game site.   Many of Zynga's game players are teenagers, and they will no longer be spending as much time on Facebook, as they switched over to the Zynga social games site.  Facebook will also miss its 30% cut of Zynga's social game revenues, which in 2012, were about $500 million, and mobile ad revenues from users playing games on mobile devices.

Courtesy of an article dated April 17, 2013 appearing in ETF Daily News and an article dated January 13, 2013 appearing in ViralBlog

TEENS SAY SOCIAL MEDIA IS LESS IMPORTANT, PREFER TO SHOP IN STORES INSTEAD OF ONLINE, FACEBOOK FATIGUE SETTING IN

 

Today's teens, though digital natives, by a wide margin prefer to shop in stores than online, and even their use of what they consider their favorite social networks is decreasing in importance for them, according to the 23rd semi-annual Taking Stock With Teens survey from Piper Jaffray.

The study also indicates improving discretionary spending across various categories: "Our Spring 2012 survey results provide confirmation that we are in the early stages of a clearly defined discretionary spending cycle," said Jeff Klinefelter, director of research and senior research analyst at Piper Jaffray.

"Double-digit increases in spending on a sequential and year-over-year basis for both upper- and average-income teens, and similar strength in spending intentions, signal improved confidence in the overall environment and a willingness to spend more broadly on key categories of interest."

Below, selected findings from the most recent Taking Stock With Teens survey from Piper Jaffray.

Social Networks and Websites

Facebook is still cited by a plurality (33%) of teens as the most important social network, but that's down 9 percentage points from the fall 2012 level of 42%.

Instead, teens give more importance to Twitter and Instagram now than they did six months ago:

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When considering social media websites (as opposed to networks), teens ascribe equal importance to YouTube (not cited as a network) and Facebook, followed by Twitter and Instagram.

Still, relative to six months and 12 months earlier, the importance to teens of both Facebook and YouTube has declined, whereas that of Twitter and Instagram seems to be improving.

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Asked whether social media has an impact on their purchasing behavior, more than have said it does: 53% of female teens and 52% of male teens.

Shopping

By a large majority, teens prefer to shop in stores rather than online: 78% vs. 17% in the case of female teens, and 75% vs. 19% in the case of males.

Nevertheless, teens do shop online—in similarly large proportions:

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Teens' top 4 favorite shopping websites, led by a wide margin by Amazon, remained unchanged from six months earlier:

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The following are additional study findings from the portable devices, fashion, beauty and personal care, restaurant, and videogame categories.

Mobile Devices

Teen spending on portable devices continues to accelerate: 86% of teens report that they are likely to purchase a smartphone for their next device, up from 83% last fall and 81% one year ago.

• Apple's iOS gained market share as the most desired operating system, with 51% of teens reporting they are likely to buy an iOS device (compared with  22% for Android).
• Approximately 34% of teen respondents owned an iPhone, up from 17% last spring, driven by the availability of a $49 iPhone 3GS at the launch of the iPhone 4S.
• Also, 40% of teens expect to purchase an iPhone in the next six months, up from 37% last year.

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In tablet market, 34% of teens owned a tablet computer, up from 22% last spring. Of those teen tablet owners, 70% owned an iPad, 19% owned an Android-based tablet, and 11% owned a Kindle Fire.

Furthermore, 19% of teens expected to purchase a tablet in the next six months, with 80% of those teens intending to purchase an iPad.

Fashion

Teens cited improvements in both current fashion spending and intention to spend, across income levels and genders:

• The fashion category accounted for 39% of teen budgets, up from 38% in the fall of 2011 and 37% a year ago.
• Upper-income teens indicated that spending on fashion increased 17% on a sequential basis and 21% year-over-year.
• Average-income teens indicated their spending on fashion increased 18% on a sequential basis, and 15% year-over-year.

Those double-digit increases in fashion spending are the first recorded since the 2003/2004 surveys, when teens across income levels indicated a similar meaningful propensity to spend on the fashion category, Piper Jaffray said.

Strength in spending was broad-based across categories, but spending by male teens in fashion was the highest—historically indicative of a multi-year, dual-gender fashion spending recovery, according to the firm

Food and Restaurants

Teen spending on food and restaurants is at or near the highest level since early 2000:

• Upper-income and average-income survey respondents increased their weekly restaurant spending approximately 10% and 3%, respectively, compared with the fall of last year.
• Taste remained the strongest influence on food and restaurant dining decisions.
• Value also continued to be an important influence on dining decisions and has gained in importance over time, ranking number two in the current survey compared with number five in the spring of 2007.

Videogames

• Teens constitute 33% of videogame players, with videogames accounting for 7% of teen spending.
• Teens are increasingly receptive to downloading games, accessing social networks, and playing games on smartphones and tablets.
• Social networks, tablets, and smartphones are taking increasing eyeball share away from console-based video games.

Beauty and Personal Care

• Beauty spending by upper-income teens increased 8% sequentially and 6% year-over-year. For average-income teens, beauty spending increased 21% sequentially and 18% year-over-year.
• Skin care and cosmetics accounted for a larger share of overall beauty spending, and the beauty spending gap between upper- and average-income teens continues to narrow.
• MAC remained the No. 1 cosmetics brand for upper-income teens, while Cover Girl was once again the No. 1 brand for average-income teens.
• Victoria's Secret remains the preferred fragrance for teens across both income segments, consistent with the past eight surveys.

About the data: The Taking Stock With Teens survey from Piper Jaffray gathered input from approximately 5,600 teens, whose average age was 16.3 years during the latest survey. Teen spending patterns, fashion trends, and brand and media preferences were assessed via visits to geographically diverse high schools in 11 states, and via an online survey of a wider group of teens from 34 states. The survey is conducted in partnership with DECA (an international association of high school students).

COMMENTARY:   Teens are growing tired of Facebook andYouTube, says the Piper Jaffrey study, and the reports shows a falling-out that has the potential to trigger a wide-ranging effect on retail, fashion, gaming, and other youth-oriented industries.

According to Piper Jaffray, while Facebook and YouTube are still considered the most important social media destination for teens, their popularity among this fickle demographic has fallen precipitously since this time last year, as the chart above indicates. 

Why is this a big deal? Teens make up an $819 billion consumer segment, and the social media chatter about brands—positive or negative—is an increasingly large influence on their purchasing decisions. Just over half of all teens polled for the research (53 percent for female teens and 52 percent for teenage males) said social media affects their overall purchasing decisions, a trend that has gained strength in recent quarters.

For teen-targeting marketers, then, keeping pace with taste-shifting teens and their social networking preferences could make or break a sales quarter. Just askAbercrombie & Fitch and Best Buy, two retailers that, according to the Piper Jaffray polling data, made teens’ top 10 roundup of favorite e-commerce sites a year ago but this year vanished from the list. They are on the outs in the offline world, too.

For the so-called youth brands, increasing their presence on the cool and relevant social channels of tomorrow—not so cool that they wouldn’t allow advertisers, mind you—is becoming an increasingly vital part of a digital marketing strategy.

And what are the new hot teen channels in social? According to Piper Jaffray, they are Reddit and Twitter, plus Snapchat, Vine, and 4chan. That ranking is sure to change again soon. Stay tuned.

Courtesy of an article dated April 15, 2013 appearing in  MarketingProfs and an article dated April 11, 2013 appearing in Bloomberg

7 THINGS MARKETERS NEED TO KNOW IN ORDER TO EFFECTIVELY MARKET TO THE MILLENNIAL GENERATION

The world's 1.8 billion millennials are expected to comprise 75% of the workforce by 2025 and outpace boomer earnings by 2018. So whatever you may think about millennials, one thing is for sure: Marketers can't ignore them. Here are seven things you need to know about these consumers, as gleaned a study of 4,000 millennials from 11 countries by EdelmanBerland and online community 8095 Live. The study updates one from 2010.

Millennials want brands to entertain them. Some 80% said so and when asked how they want to be entertained, 40% said they want brands to let them influence products via co-creation. But only 31% said they want brands to create online content such as videos, photos, games and blogs. Even fewer (19%) want brands to entertain them through celebrity partnerships. The good news: only 3% cited advertising is boring.

Millennials want brands to help them. When asked how they want brands to help them, 77% said they want brands to provide provide assistance through grants and scholarships; 75% cited the opportunity for brands to enable more life experiences. And 65% want brands to behave as a mentor that can help guide them. Some 55% to 60% want brands to help them connect and share using brand audiences such as Facebook and ads.

Millennials' most important life goal is having a job with a purpose that matches their personal passion. That was cited by 80% of respondents, followed by 11 other goals, including owning a home, getting married, having a family and obtaining a high-paying career.

Millennials see themselves as leaders. In the study, 74% of respondents said they think they influence the purchase decisions of peers and those in other generations.

They seek out help in deciding what to buy. According to the study, 94% use at least one outside source for guidance to make a brand-purchase decision.

Millennials will tell marketers what they think. In the survey, 70% of millennials said it is their responsibility to share feedback with companies after a good or bad brand experience. The highest percentages of these customers – above 80% per country sample - were from Brazil, China, the UAE and India. By contrast, 67% shared this opinion in the U.S.

They are concerned about the future, but the economy wasn't their main worry.Only one quarter of respondents, 25%, said the economy is the top issue in their lives and facing their community and country.

COMMENTARY:   We’ve all read the headlines, that Millennials are the hardest generation to reach due to their  multi-tasking, multi-screen, “always on” mentalities. With this group’s tendency to overload their senses and ability to edit their lives in real time, Millennials are savvy to the ways of traditional advertising. This makes it hard to figure out how to engage them and even more difficult to begin the conversation. When it comes to the Millennial attitude towards marketing, they don’t want to be told what to do, what to like, or what to buy and will quickly tune out any message that is clearly meant to sell. With all the information available to them today, they want to believe that they have organically discovered the things that they buy or associate with.

We pay close attention to this audience’s desire to discover. For this group, being the first to discover a product or brand means garnering greater social currency with their peers. They become the savvy trendsetter in their social circles. Every brand they associate themselves with and every post they share further builds out their self-identity. And because of their highly connected social and digital lives, their ability to discover and share with peers strengthens their connection to like-minded individuals. 

So how do you get Millennials to discover your product or brand and make it their own? Based on our research into this audience and work with brands in the alcoholic beverage, travel, and CPG spaces, here are some things to consider when you develop your next marketing initiative geared toward this generation. 

Give Them a History Lesson

Millennials grew up with continued support from their parents; they have watched their grandparents move back home (most likely next door), and take pride in their family backgrounds. This respect for tradition and increased curiosity concerning their own personal heritage plays a role in their connection with brands. From “locavore” movements in food to revivals of nostalgic brands such as Converse, Millennials want to feel a personal connection with the brands that take part in their lives. This is not to say that a brand needs to be “vintage” or have a “cause” specifically, but that a brand’s story should be well thought out and interesting or Millennials won’t give it more than a passing glance.  When VeeV, a new player in the premium spirits market, decided to go after Millennials, they ensured that everything about the brand connected to a larger story. Their product gives money back to support rain forests (where some ingredients originate), they take steps to reduce their company’s footprint -- but even more, they provide their consumers with details about the ingredients in their product, how it benefits them, and even provide them with bracelets that are made from the açía berry’s seeds, a nice added reminder of the brand for Millennials. 

Deliver an Experience

Millennials value authenticity from brands, but being authentic goes well beyond what you say. Millennials pay attention to and care about what brands actually do. They are more likely to invest in experiences than material things and use the stories from all of their unique experiences to gain lead to move up within their peer groups. Whether it is a cause such as “I’m With Coco” which resurrected Conan O’Brien after being sacked by NBC or Red Bull’s variety of brand experiences like the Cliff Diving World Series Event, Felix’s Jump from Space and Flutag, brands that make Millennials part of the experience by surrounding them in emotional, educational or entertaining ways provide the most fodder for conversation.

Think Beyond Facebook/Be Relevant Across Platforms

We know that Millennials are well connected throughout social media and that friends’ recommendations are very influential to them. Yet, the ability to drive mass pass-along has become harder because Millennials have become savvy with the way they choose to connect and what they choose to post, or re-post, and where. To them, different types of content should live on Facebook, Pinterest, LinkedIn, Flipboard, or Instagram.  One creative use of a niche social site was Philadelphia Tourism, which utilized Foodspotting to create guides to local restaurants and award followers who visited particular locations. To really connect with this group, the key is to focus on having the right forms of compelling content across a variety of channels.

Engage Them in the Moment

Millennials move from one medium to another at rapid speeds and often simultaneously. Consider a call-to-action that goes beyond the traditional click or you may lose them completely. Think of ways to engage them in the moment by providing results in banner, gathering their information in mobile, or placing your video in traditional banner placements. In a recent campaign for a restaurant client, we utilized interactive pre-roll units that allowed consumers to see menu offerings, watch video and enter their zip to find the closest locations all within the unit. These ads saw a high engagement rate of 9%, and 69% of those that engaged took an action. Millennials are looking for brands to engage them by providing relevant content now; they don’t want to work hard for it. Find opportunities to lead them through your KPI funnel - discover attributes, locations, variations of your brand - but without always making them visit your brand website.

Enabling a Millennial to discover your brand is much more effective than shouting the loudest. Millennials want to take the journey with the brands and products they like, ask questions, have an experience, and find information no matter where they are. This adventure-prone group has very different behaviors than previous generations, but the need for connectivity and social exchange is still very relevant even with an overwhelmingly large network of peers. Their social status is measured on the information that they share, the photos they post, the places that they’ve checked into – the stories that surround their lives are more important than the things that fill it. But, if you are a brand they discover that fits with their story and identity, they may just decide to bring you along for the ride.

Ever wonder what Millennials eat?  Check this out:

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I also highly recommend that you checkout my blog post dated December 16. 2011.

Courtesy of an article dated December 4, 2012 appearing in AdAge and an article dated October 26, 2012 appearing in MediaPost Publications Engage:GenY

THE MOBILE, SOCIAL AND WEB CONNECTION PREFERENCES OF GEN Zers (18-23 YRS) AND HOW THIS AFFECTS BRAND MARKETING STRATEGIES

 

Members of Generation Z, those now age 18-23, tend to be indiscriminate with their media choices and are more likely than other generations to embrace and trust online communications such as social and mobile media and email, according to a report by Forrester Research.

Raised in the age of technology, Gen-Z audiences know the world only as a digital one—where they can connect anytime, anywhere, and to anyone. They will likely be the first generation to consume more media online than offline, according to Forrester's report.

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Moreover, Gen-Z audiences are often distracted with multiple forms of media: 84% multitask with an Internet-connected device while watching TV—using on average 1.5 other Internet-connected devices (e.g., laptops and cell phones).

Below, additional findings from the report titled "How To Build Your Brand With Generation Z," by Forrester Research.

Gen-Z audiences appear to trust online content (e.g., ads and promos) more than other generations. 

Some 22% of surveyed Gen-Z consumers say they trust somewhat or trust completely posts by companies or brands on social networking sites. That level is roughly 49% higher than other generations.

Similarly, Gen-Z consumers are 48% more likely than other generations to trust somewhat or completely the content on mobile applications from brands, as well as text messages from brands.

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Because Gen-Z audiences are exposed to so many brand choices, they tend to be demanding consumers, Forrester found.

Tracy Stokes, the report's author, wrote in a recent blog post. 

"Gen-Zers are open to a relationship with brands, as long as those brands are authentic and live up to their high expectations and consistently deliver what they need." 

Stokes offers key insights on how marketers can build their brands with Gen-Z audiences:

• Practice participation, not persuasion. Gen Z grew up with two-way brand conversations, so a traditional one-way sell won’t work. Invite them to participate in your brand via new and fresh experiences that earn their trust.
• Deliver a consistent brand experience online and offline. Gen Z see no distinction between the real and virtual worlds. So the experiences that brands offer must provide the same seamless experience.

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COMMENTARY:  On January 15, 2013, Forrester Research published its annual “State of Consumers and Technology” report about how U.S. consumers use the Internet, but the most interesting statistic is probably that the overall online penetration rate in the U.S. has stabilized at 79 percent (the same number Forrester found in 2011). That’s the percentage of U.S. adults that go online at least monthly. What has changed, however, is how many adults go online at least daily: In 2011, that was 78 percent of U.S. adults, and in 2012, Forrester reports that 84 percent now go online at least once per day.

One of the reasons for this is, of course, the growing smartphone and tablet penetration. Forrester found that about half of U.S. online adults now own a smartphone and two-thirds even own multiple connected devices. Tablet adoption doubled since 2011 and is now at 19 percent.

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One trend that the Forrester report, which includes survey data from nearly 60,000 consumers in the U.S. and Canada, also notes is that 43 percent of consumers now connect to the web with their TVs. Forrester, just like similar surveys, found that most of these users rely on their game consoles to do so (42 percent), while connected TVs (19 percent) and Internet-connected set-top boxes like the Roku or Apple TV are only being used by 14 percent.

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It doesn’t come as a surprise that Forrester’s research also found that there are still distinct usage patterns among different generations.

• Generation Z:  The 18-to-23-year-old crowd, for example, is far more active on social networks than anybody else. About 70 percent of these Gen Zers, Forrester says, “visit social networking sites daily” and 85 percent visit Facebook at least once a month. 
• Generation Y:   The 24-to-32 year olds are more likely to own a tablet (about 25 percent) and smartphone (72 percent). 
• Generation X:   The 33-to-46 year olds are most likely to spend their money by shopping online (an average of $561 in the past three months compared to an average of $449 for all U.S. shoppers).
• Boomers and Golden Generation:  For Boomers (47-to-67 years of age) and the so-called “Golden Generation” (68+), technology adoption obviously lags quite a bit. Older online adults, for example, are more likely to use desktop computers at home and are less likely to own tablets and smartphones. Still, even among this group, tablet adoption has doubled to 14 percent since 2011.

Courtesty of an article dated April 4, 2013 appearing in MarketingProfs and an article dated December 19, 2012 appearing in TechCrunch

STUDY: ACCORDING TO EXPERIAN, EARLY ADOPTER MILLENNIALS ARE LEADING IN MOBILE DEVICE ADOPTION

 

Roughly one-half (52%) of surveyed Millennials—those now age 18 to 34—are surpassing their generational peers in adopting new technologies, according to the forthcoming 2013 Digital Marketer Report from Experian Marketing Services.

Such Early Adopter Millennials strive to be the first to have the latest electronic equipment, are willing to pay almost anything for an electronic product, and want to be a source of information on electronics for others, according to Experian's report.

Moreover, Early Adopter Millennials spend far more time than their peers using mobile devices.

Below, additional findings from Experian Marketing Services.

Overall, Millennials are an important consumer segment:

• 60% of Millennials own a home.
• 34% are married.
• 24% of have a college degree.
• On average, Millennials have $11,317 of discretionary spend annually.

Meanwhile, Millennials are more likely than the US online population to visit search and social websites before visiting a retail website, but less likely to engage with email or visit rewards and directory sites before visiting a retail website.

Early Adopter Media Use

More than one-quarter (27%) Early Adopter Millennials say they have used a tablet in the previous seven days. That’s about 20% higher penetration than other Millennials:

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Early Adopter Millennials are 32% more likely than other Millennials to IM (instant message) or chat online, 26% more likely to read media, 20% more likely to use email, 17% more likely to visit websites, and 16% more likely to visit social media sites or blogs:

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Early Adopter Millennials spend more time than their generational peers using various technologies, such mobile tablets (17%) and mobile phones (14%):

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 Bill Tancer, general manager of global research for Experian Marketing Services, said.

"Brands and marketers are taking notice of Millennials and the fact that they communicate and behave differently than other generations.  Marketers increasingly understand that they need innovative marketing programs in order to engage this important segment of the population."

COMMENTARY:   If you are interested in knowing more about the Millennials or Generation Y's, then you came to the right place, because I have profiled and researched this generation more than any other.  Check out my numerous blog posts about the Millenneials by clicking HERE.  

Courtesy of an article dated March 25, 2013 appearing in MarketingProfs