The advertising world will never be the same again. History is being made, and records are being broken. Consumers have made their preferences known, and advertisers need to adjust if they want to retain the competitive edge.
A New Era of Advertising
According to a recent eMarketer study, 2017 is the year that digital ad spend will finally turn the tables on its cord-connected counterpart.
The data suggests that by next year, digital formats will account for an anticipated 38.4 percent of advertising budgets, as opposed to TV’s 35.8 percent. This is a monumental shift, as TV has dominated the advertising world for decades.
Experts anticipate this is a long-term change. Digital advertising is draining market share from every other format; TV will account for just a third of ad budgets by 2020.
Mobile Driving the Change
Much of the boost to digital advertising is in mobile, which is not surprising given the near-ubiquity of mobile devices, especially in the past three years. Forecasted mobile ad spending more than doubled between 2014 and 2016, and that share of the ad spending pie is expected to continue growing at least 2-3 percent per year through the end of the decade.
While the same report predicts that spending on TV advertising in terms of actual dollars will continue to grow at a rate of about 2 percent per year, TV’s share of the market is being quickly eclipsed by mobile.
Perhaps the main reason for the near-stagnation of TV ads in comparison to dramatic mobile ad growth is that TV has simply reached its high-water mark. As it was suggested in The New York Times last year, TV’s share of ad expenditure will shrink in the future because TV viewership has plateaued, while mobile is still a young technology.
The Generation Gap
To understand the shift in ad spending patterns, it’s necessary to look at viewership across different age groups.
As the last of the Millennials prepare to leave for college and Generation Z starts to make a presence in the market, advertising must change to adapt to the “digital natives.” Of course, no one is making the claim that young people don’t watch TV anymore; however, they are much more likely to turn to alternate sources of entertainment than their parents.
While older generations tend to regard television as an indispensable source of entertainment and information, younger people see it has more of an expendable luxury.
Defy Media’s 2016 Acumen Report took a look at the viewership patterns of people ages 13-24, offering some pretty clear insight into young people’s preferences for consuming media.
Among survey respondents, 38 percent report that they do not have a cable/satellite box. At the same time, a large portion of the remaining respondents are still not financially independent; for these individuals, cable is a perk of living at home with the parents. However, barely half of responders who are still financially dependent on their mom and dad plan to pay for their own subscription after moving out.
This is a notable drop from the 86 percent who intend to sign up for Netflix after achieving independence, which can be viewed either in front of the TV, on a laptop, or from a mobile device.
Young Media Consumers Affecting Ad Delivery
The same study suggests that the preferences of digital-savvy young viewers is the catalyst for the change in ad spending.
Young viewers demonstrate a greater interest in online celebrities than in traditional influencers like movie stars or athletes. Their increased devotion makes viewers willing to consume ads differently than older generations.
- 58 percent of responders say that they are willing to watch ads in order to support their favorite personalities.
- 80 percent of viewers are okay with watching a 15-second commercial before a video.
- That figure drops to 53 percent when the ad length jumps up to 60 seconds.
- The most highly preferred (89 percent) method of ad delivery is a 5-second intro announcing the video’s sponsor.
- The second favorite ad format (87 percent preference) is in-video product placement.
Obviously, it’s important for advertisers to understand young viewers’ preferences. Those same young people are tomorrow’s primary consumer base, so getting a brand message in front of their eyes is a matter of understanding not just where they’re looking, but also what they want to see.
Relying on ad delivery methods to which members of Generation Z are hostile could be counterproductive, and might even mean potentially alienating the viewer.
Ad Delivery Going Forward
Digital might be the new prom queen of advertising, but television is not disappearing any time soon.
Older viewers tend to remain loyal to TV as a medium, and, of course, a certain portion of Millennials and Gen Z will still sign up for cable/satellite service as they move into greater financial independence. However, the trend toward digital as the preferred content delivery platform for Gen Z looks to be a long-term generational shift.
While it might have once been perceived as a supplement to an ad campaign, digital delivery is likely to take center stage as Gen Z comes of age, meaning that we can expect to see ad budgets continue to skew more and more in that direction.
Photo by Stuart Miles/FreeDigitalPhotos.net
Monica Eaton-Cardone is Co-founder and COO of Chargebacks911.com.