Generation Virtual

By Adam Sarner

With 1.2 billion people expected to be online by 2011, the Internet has already become the catalyst for immersing interaction and e-commerce and the conduit for vast amounts of information.

In 10 years, the largest influence on all purchases will be the virtual experiences associated with them, and, therefore, more money will be spent marketing and selling to multiple online personae than marketing and selling offline. This transition in customer interaction is being driven by Generation Virtual, also known as "Generation V."

Labeling generations is a way to understand new generations that appear not to have connections to the cultural icons of previous ones. And marketers use the categories of baby boomers, Generation X and Generation Y to segment the population for targeting products and services with a focus on age.

However, Generation V recognizes that general behavior, attitudes and interests start to blend in an online environment. As more baby boomers (who are living longer) and young people go online and participate in a flat virtual environment, the generational distinctions break down. Customers will hop across segments at various times for various reasons and are likely to act like several generations at any given time.

Unlike previous generations, Generation V is not defined by age, gender, social demographic or geography, but is based on demonstrated achievement, accomplishments (merit) and an increasing preference toward the use of digital media channels to discover information, build knowledge and share insights. Generation V members create multiple, often anonymous, personae to control relevant information flow into the community and businesses.

Web 2.0 signaled a "V-day" shift of control from company to customer, where increasingly powerful virtual environments and social networking communities proliferate. While traditional wisdom has focused on customer identification for one-to-one targeted marketing campaigns, cross-selling and so on, the reality of Generation V members using multiple personae (e.g., Amazon reviewer, eBay seller, Second Life avatar "World of Warcraft" blood elf, digger, blogger, YouTuber), and the sheer power of their growing influence, means that customers will have a host of online personae driving your business relationship.

Discovering customers' true identities becomes irrelevant. Multibillion-dollar third-party customer data providers, business intelligence and analytics markets will shift from collecting demographic information to psychographic information to better understand these various personae and their behaviors. Companies will create multiple interactive, virtual environments as a way to orchestrate customer exploration toward purchases. By doing so, they will benefit from a deeper understanding of how and what people are exploring or buying, who strays from the normal path and why.

Generation V's emergence is a direct consequence of the consumerization of information technology. Such consumerization extends far beyond the availability of affordable hardware and Internet-delivered, consumer-oriented services. It has become clear that it is the attitude of users toward the purchase and use of these capabilities--and their desire to involve themselves in a highly participative interaction--that is the fundamental and most influential aspect of this established trend.

Generation V is, therefore, defined around three key behavioral attributes.

First: to use technology as a day-to-day tool to facilitate communication that is not bounded by the previous limits of geography. Note that this characteristic is shared with the so-called "digital natives." Still, it is becoming common for digital natives to teach their grandparents (typically baby boomers), who find themselves--with the time in retirement and a better level of health than they expected--able to take advantage of the available technology.

Note as well that familiarity and willingness does not automatically equate to complete understanding or even the desire to understand the technology they use. To digital natives and Generation V, this is not technology--merely the stuff they use on a day-to-day basis.

Second, building on their communications capabilities, Generation V members demonstrate an overwhelming desire to participate through involvement in global communities. This participation is enabled through self-created online personae. Technology has delivered the means to produce content in a rich variety of media formats, and the Internet enables its global distribution at little cost, eliminating the stranglehold previously held on information dissemination by the broadcast media, the authorities and those with power or money.

This capability, at an ever-accelerating pace, undermines the power of the broadcast distribution channels, leading to declining readership and viewing figures and threatening to break the advertising model that has funded this sector for decades. Key in this desire to participate is the absolute belief in the necessity and value of a two-way participation--an active involvement in the community rather than a passive consumption. Generation V expects a conversation rather than a communication.

Finally, the value set of Generation V differs subtly from that of its predecessors. Its members have an overwhelming belief in a meritocratic environment: the value of collaboration, that "we" is more powerful and valuable than "me" and that sharing increases the value of something rather than diminishes or erodes it. This can be traced back to the growth of the open-source development model, which conventional enterprises have viewed suspiciously because it does not compute with their traditional "work–for-reward" model.

Further examples can be seen in pop music (the rise of remixes and sampling, as well as reusing existing and copyrighted materials to create new creative works) and in the software mash-ups of Web 2.0, where powerful and vibrant new "applications" are built through the collective, and iterative, activities of many disconnected individuals.

Although the inevitable rise of Generation V threatens established business models and power structures, it is not driven by a desire for destruction. Instead, it represents a desire for creativity, belonging, self-actualization and self-determination. It is entirely in keeping with existing economic theory, which maintains that in the latter stages of a technological revolution, it is not new technologies that drive growth, but new ways of deploying and combining established technologies to deliver new value.

The changes brought by Generation V will lead to huge opportunities for those who can accept the signs and react to the new forces shaping the technological landscape.

Adam Sarner is a principal analyst at Gartner, Inc.

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