Gen Z are extremely different from Millennials and are more inspired by Malala Yousafzai, the Pakistani activist who stood up to the Taliban and defended her right to an education rather than pop singer Beyonce, according to the report by J. Walter Thompson Intelligence's innovation and futurism division.
It revealed Gen Z held progressive views, are ethically-minded and digitally savvy.
The report surveyed 1,000 12- to 19-year-olds in the US and the UK in February 2015, to explore ways brands can better engage with Generation Z.
With Gen Z’s passion for provenance and sustainability, brands should be honest and transparent.
The report suggests brands should not just look to sponsor events but should also host. It gave the example of Coke Zero and Twitch hosting the "Game-a-Thon 1.0" live gaming session at the brand's Atlanta headquarters last year, in which four professional gamers competed for charity.
Matt Wolf, Coca-Cola's head of global gaming, was quoted in the report as saying, "Viewers can see we’re not just a mythical big brand. We’re real people here and we care."
The report found 86% of Gen Z use their smartphones multiple times a day, while 70% watch more than two hours of YouTube content each day.
Showing the growing importance of ecommerce, 67% said they would rather shop in stores than online. In the UK and US, Gen Z comprises a quarter of the population, and in the US alone the group represents more than $44bn in annual purchasing power.
Lucie Greene, worldwide director of the Innovation Group, said: "Gen Z-ers are a complex mixture of sophistication and wide-eyed optimism.
"They are intelligent, confident and, importantly for brands, they question the prescribed norms of everything from formal education to gender politics.
"For brands to reach this group, they will need to understand what makes them tick and come to grips with these nuances."