Gen Z and the Future of Television Advertising

In an effort to understand the future of television advertising, Tremor Video and Hulu partnered on a study to research the viewing habits of Generation Z compared to Millennials and Gen X. Gen Z is not only watching less television than their forebears but how they choose to access shows and movies is unique.

Even the language differentiates generations. The vast majority of Gen X say “watching TV” means access through cable or satellite whereas the majority of Millennials and Gen Z consider watching by an online source to qualify.

The reliance on streaming videos allows Gen Z to watch more at one time than through traditional cable or satellite. As reported in “How Gen Z Connects to TV: Exploring the Generational Divide in the Future of TV”, 60% of Gen Z watch multiple episodes in one sitting compared to just 44% of Gen X.

In an interesting twist, Gen Z is actually more receptive to advertisements and are the most likely to share video ads through social media. However, advertisers should be aware that Gen Z expects ads to be relevant to what they are viewing.

With 48% of Gen Z saying they watch less television than their parents, it would be wise to target ads thoughtfully. By advertising across platforms (48% of Gen Z say they browse social media while watching TV) and reducing ad loads, advertisers can reach Gen Z when it most counts.

Unexpected DVR Trends

I remember when my family first got a DVR; I was a young teenager with two very frugal parents. However, when the cable company offered a free trial, my dad bit the lure and after a few months we were hooked.

Even as a kid, I remember hearing the buzz about how DVR would ruin the television industry and take away from the advertisers. Surprisingly enough, data from Nielsen and the Video Advertising Bureau report a different story.

During the first quarter of 2016, time-shifted programming (recording television and watching it at something other than the original air time) has dropped 12% among viewers 18 and older.

For years, estimates had been that viewership would be roughly 50/50 between time-shifted programming and live programming. However, data from first quarter 2016 shows that 77% of viewing is done live while only 23% comes from DVR viewing.

Other demographics have seen a decline in DVR viewing as well. Those aged 50-64 have dropped 6% while people 65+ have declined 7%.

So, why aren’t people watching as much prerecorded television shows as they used to? After all, it does give you the power to fast-forward through all those commercials. Perhaps the industry is simply shifting. One theory is that the rise of digital media is to blame.

In my mind, this is great for advertisers. Most digital streaming video has opportunity for advertisements without the ability to fast-forward.

Fear not! Viewers are still watching television and they’re still watching their DVRs. Advertisers can still reach their audience during shows; it just might be through their laptop or smartphone screen rather than on “the tube”. 

Where are women watching digital video content?

Watching videos online has become the new norm, more or less, for internet users in the United States. The question becomes is there a site where people view content more than others? While YouTube has the lion share of viewership, other vendors have made a dent in the landscape. A new poll conducted by SheSpeaks outlines how American women access digital video content online.

eMarketer reports on the poll results which shows that internet users who are female discover videos through these conduits:

·        YouTube with nearly 100% of poll responders

·        Facebook with 83%

·        Websites at 54%

·        Word-of-mouth at 49%

·        Blogs at 36%

·        Twitter at 27%

·        Instagram at 21%

Facebook is also one of the primary ways the women polled shared video content. Approximately 71% answered that they used Facebook to share.

Research shows that women have the slightly higher Facebook audience than men. In fact, eMarketer released estimates stating that females should hold the majority at 54.9% of the Facebook community from now through 2019.

Nielsen uses a new definition of TV homes to generate the Universe Estimate

Prior to the television industry’s 2013/14 season upfronts, the Nielsen Company typically releases its new TV home estimate. This allows advertisers to better estimate audiences.

According to MediaPost, the overall American TV household Universe Estimate grew from 2012. Last year, it was estimated that there were 114.2 million TV homes. This year, the estimate has grown by 1.2% to 115.6 million. In fact, there are about 1.6% more TV viewers from last year, which calculates into 294 million viewers who are 2 years old+. 

One reason given for this growth could be the new Nielsen definition of a TV home. Now, each home must have at least one working TV or monitor that can deliver content by means of antennae, cable set-top-box or a satellite receiver. The satellite receiver could include a broadband connection.

With the new TV home definition in use, it will be interesting to see how the TV home population develops over the next few television seasons.

Television dominates user viewership on subscription video-on-demand services

For those of you out there that subscribe to a video-on-demand (SVOD) service like Hulu Plus, Amazon Prime or Netflix, would you be surprised to find that television content dominated consumer viewing over movies? The company GfK recently did some research to see which consumers prefer.

According to MediaPost, the three services have the following viewership:

·        Amazon Prime: 79% view TV content vs. 21% view movie content

·        Hulu: 96% view TV content vs. 4% view movie content

·        Netflix: 77% view TV content vs. 23% view movie content

Research shows that on average of SVOD services, television had about 81% viewership vs. movies at 19%.

Interesting to note is that a large amount of viewing takes place on an Internet-connected TV device. A device could be a gaming console, Blu-ray player, etc.

The important take away from this for advertisers is the fact that consumers are seeking out TV content on a massive scale whether it’s on broadcast television or a subscription service. Advertisers may not be able to be on some of the SVOD’s yet; however, there are still ways to reach these people through digital initiatives and maintaining a strong broadcast schedule. 

More access to television shows leads to more binge-viewing

In order for advertisers to respond to consumer needs, it’s best to constantly be updated on consumer habits. According to MediaPost and eMarketer, Harris Interactive conducted a study this past February to record how US adults access time-shifted TV. Because of the numerous ways TV viewers are able to watch content, the phenomenon binge-viewing is continuing to grow.

Results showed that 80% of those surveyed watch TV through web-based subscription video on demand services (SVOD) like Netflix or Hulu, video-on-demand (VOD) cable or satellite, or through digital video recorders (DVRs).

In the findings, Harris reports that about 62% have watched multiple episodes of television shows in a row. This is called binge-viewing, which is most commonly watched through SVOD, VOD, DVRs, or DVDs. Interestingly enough, TV shows that tend to be the most binge-viewed are older shows or past seasons of current shows. Only about 12% of binge-viewing was done with current shows.

It is noteworthy that the younger demographics tend to have higher binge-viewership. According to the report, 18-29 year olds have a 78% likelihood to binge-view, 30-39 year olds are at 73%, and 40-54 year olds index at 58%. This behavior characteristic can be used to help advertisers craft a plan to reach the target audience. 

Should advertisers pull TV budget because of cord cutting?

A constant worry that advertisers deal with is how an audience utilizes media. Are some media dying? Are some growing ahead of others? What makes the most sense for the target audience? Part of our job is to constantly be immersed in the latest research.

One of the newer worries for advertisers is the new trend of “cord-cutting” TV, which is when people stop paying for television services like cable or dish and go online for content. According to a new report by PwC on cord cutting, this is not a phenomenon that should cause advertisers to pull out of TV entirely.

MediaPost reports that while people have been cutting the cord, downgrading subscriptions, or simply not subscribing, the impact of this to pay TV will be relatively small over the next five years.

Television industry leaders stand by the fact that TV advertising still has a measured 37% of influence over adults 18+. In comparison, newspapers have about 11%, Internet 6%, and mobile 4% influence for the same target audience.

It’s estimated that because of the increasing viewership of online TV content, traditional television viewership will see a .9% decline every year through 2017.

Overall, while this is a trend advertisers should keep track of, it is not a good enough reason to encourage pulling all TV ad dollars out of the market.