Did young people just kill television?

Kennedy watching television 2018

Watching flight of Astronaut Shepard on television. Left to right: Vice President Lyndon Johnson, Arthur M. Schlesinger, Jr., Admiral Arleigh Burke, President Kennedy, Mrs. Kennedy. White House, Office of the President’s Secretary. Cecil W. Stoughton (1920–2008)

This article is brought to you thanks to the strategic cooperation of The European Sting with the World Economic Forum.

Author: Adam Jezard, Formative Content.

While previous reports of the death of traditional TV viewing have been greatly exaggerated, 2017 marked a major tipping point. Spending on online and digital advertising in the United States overtook broadcast and cable revenues for the first time ever.

The money seems to be following younger viewers, who are increasingly turning to social media, apps, gaming and on-demand TV. Marketers have even coined a term for the Millennial and Gen Y viewers who spurn traditional TV: “the Unreachables”.

GroupM, part of advertising giant WPP, predicts that, globally, time spent with online media will overtake linear TV viewing in 2018. Online will have a 38% share, TV 37%, and the balance will be spread primarily across print and radio.

Global Online Media Usage will surpass TV in 2018 Online advertising beats traditional TV for first time last year with $88B
Image: Interactive Advertising Bureau (IAB) 2017 annual report

A trend for youth

Internet advertising revenues in the US totalled $88 billion in 2017, an increase of 21.4% from a year earlier, according to the Interactive Advertising Bureau (IAB) 2017 annual report. Advertising on TV, meanwhile, fell to $70.1 billion, a 2.6% drop, for the same period.

Meanwhile, Nielsen, which reports on US TV viewing habits, said that 18-24-year-olds were watching under one hour and 49 minutes of traditional TV a day in the second quarter of 2017, a fall from two hours and 10 minutes a day the year before. This is part of a broader slide of 44% since 2012.

Older audiences are underpinning traditional TV. People aged 50-64 watched 39 hours 35 minutes a week, which is relatively flat over five years.

But those who were 65 and over viewed 48 hours and four minutes of traditional TV a week. While this is down by 1.2% from the year before, it marks an overall rise of 6% since 2012.

Reaching out to the ‘Unreachables’

Turning off the TV is gaining traction among younger folk, an Omnicom Media Group study agreed. This found 47% in the 22-45 age bracket were no longer hooked by the unblinking eye in the corner of the room.

Omnicom found that a third of households aged under-35 did not have a cable or satellite subscription, while in 2016 the smartphone replaced the TV as the device most watched by Millennials.

While younger audiences are “blending” – using apps, social media platforms, playing games – they are still watching TV, just in a different way: Omnicom says that 73% of US Millennials use online streaming services, with Netflix and Amazon the market leaders.

Distributors are already responding to this fast-changing environment by seeking to combine and own more content, as recent mergers and acquisitions activity in the media sector shows. AT&T’s bid for Time Warner, Comcast and Disney’s vying for Fox, and T-Mobile’s planned merger with Sprint are some of the more headline-grabbing attempts.

Ad-free zones?

But how much studios will charge and whether new streaming services will carry advertising – and how much and for whom – are questions open to debate. Netflix and Amazon have taught a generation that ad-free television for a low-price subscription is the norm.

Farid Ben Amor, who is part of the World Economic Forum’s Future of Information and Entertainment Initiative, said: “Between streaming services and traditional TV, video remains the predominant way millennials spend leisure time, but conventional commercials are far less tolerated among this group. Brands and programmers need to collaboratively create new ways for digital advertising to reach this audience if they are to sustain the financing necessary for content at today’s production quality. “

There are also questions over whether regulators in the US and beyond will stand for what some have called a “Balkanization” of content. The Department of Justice at the end of April stepped in to block the AT&T-Time Warner deal, a move now the subject of a legal challenge.

The DoJ has argued the merger would mean substantially less competition and higher prices for consumers unless some of the subsidiary content companies or linear networks were spun-out. In response, the companies said the government must prove the merger “will likely (not potentially or possibly) lessen competition substantially, in a video marketplace that is experiencing revolutionary, unstoppable transformation and growth in competition at all levels”.

Who has the money?

One further point about the separation of ad spend on media consumed by younger and older viewers is worth considering: according to Omnicom, the US Millennial market is worth $1.3 trillion, which the marketing company calls “staggering”.

However, this is dwarfed by the spending power of older generations. Marketing Charts points out: “Baby Boomers have the highest average monthly spend per [US] household, of $765. That figure is about 50% higher than Millennials’ average of $508.”

It adds: “These figures bring to mind a seminal statistic released by Nielsen in 2012: that [by 2017], Boomers would control 70% of disposable income in the US.”

So, while marketers are keen to win over younger generations of consumers, do they risk ignoring the grey dollar at their peril?

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