It’s Time To Take The Digital Media Plunge

The topic of digital media seems to generate a number of comments from TVNewsCheck readers. Some question the amount of attention paid to a category that contributes so little to the bottom line. Others are convinced that digital is not of interest to their clients now.

Meanwhile, industry trades and consumer publications are full of stories focused on how digital ad revenues are outpacing those of traditional TV. The question becomes, “What’s the risk of a wait-and-see approach”?

Have you ever hard-boiled eggs? The trick, according to TV chef Julia Child, is bringing the water and the eggs up to boiling together. Adding cold eggs to hot water practically guarantees the shells will crack and some of the contents will escape.

If you think about the eggs as holding your clients’ advertising budget, you will understand what I mean. In fact, look no farther than local newspapers to see how, once budgets have shifted, it’s nearly impossible to get them back.

Consumers are increasingly accessing content digitally. Savvy advertisers continue to follow them.

Deloitte’s 10^th Annual Digital Democracy Survey

Earlier this year Deloitte released its 10^th annual Digital Democracy Survey that compares and contrasts consumer attitudes and behaviors across generations as they relate to entertainment devices, advertising, media consumption, social media and the internet. The session outlining key findings was so popular during our annual conference in May that we asked Scott Lippstreu, a principal with Deloitte Consulting, to reprise it for our December Distance Learning webinar.

Lippstreu, a strategic adviser in the firm’s pricing and profitability management practice, focused his presentation on the potential impact these digital media trends may have on media provider revenues in the coming year. From my perspective, combining his insights with other market data validates the belief that now is time for venturing into the digital media waters, while they’re still tepid. Following are a few of the data points that I found most compelling:

Online Video Viewing Continues To Rise

When it comes to TV ownership, Deloitte’s 2016 report found four-fifths (84%) of all respondents said they owned a flat panel TV, up from 76% in 2014. Ownership was even higher for Gen Xers (aged 33-49) and younger boomers (ages 50-68) while lower (72%) for millennials 19-25 years of age. But that doesn’t mean younger TV viewers don’t value a video screen. Laptop ownership is highest among millennials, standing at 90% for 14-18 year-olds and 88% for those aged 19-25.

As we have learned from other reports, the greatest distinctions come with how the various groups access and consume video. Boomers are the most likely to own a digital rooftop antenna (19% of those over age 69 and 15% of those ages 50-68) compared to an average of 14% for all age groups, while millennials are two-to-three times more likely to use streaming media devices or platforms. TV continues to be the way the vast majority of Gen Xers and Baby boomers get their news while millennials rely more on social media for that information.

And while nearly half of U.S. consumers subscribe to a streaming video service, millennials are the most likely to stream TV shows and movies, with 80% saying they do so regularly and watch live programming only about 30% of the time. Online viewing of TV and movies is also continuing to climb among Gen Xers (63%) and younger baby boomers (41%).

The rise in streaming from over-the-top (OTT) video services has been accompanied by a decline in cable and DBS subscriptions, which can have a direct affect on a station’s viewership and retransmission consent revenues. The study also found we have become “a binge-watching nation,” with 70% of consumers — and more than 80% of millennials — reporting they binge watch TV content.

A Big Role For The Little Screen

The findings of Deloitte’s 10^th annual Digital Democracy Report also track with the latest data concerning the growing importance of the mobile content delivery platform. Consistent with the report’s finding in 2015, consumers in most age groups ranked smartphones as their most important device, with the highest rankings coming from baby boomers as well as millennials.

The notion that consumers aren’t likely to view long form video content on their phones no longer holds true. The Deloitte study observes: “The TV and movie percentages are so close that we no longer see a device distinction for how consumers prefer to watch long-form and short-form content, as both are increasingly watched on mobile devices.”

Smartphones also figure heavily in the multitasking that takes place when consumers are watching television programming on a larger screen. Browsing and surfing the web (33%), using a social network (29%), email (29%) and text messaging (26%) numbered among their top multitasking activities.

Video platform provider Ooyala confirms these trends. Its latest data shows 52% of all video views in 3Q of 2016 came from mobile devices, a 233% increase over the past three years. Ooyala’s most recent Global Video Index also echoes Deloitte’s findings with respect to watching longer form content on smartphones and other connected devices.

Smartphone users are spending 48% of their time on mid-to-long-form content, a 23% increase over last year. Video watching is also up on computers (57%), a 23% increase, and connected TV usage has increased the most, with consumers watching mid-to-long-form content 97% of the time, up by 73%.

Insights For Advertisers 

The Deloitte survey also tracks consumer behaviors of interest to advertisers. For example, it found millennials aged 19-32 consider recommendations from their social media circle and online reviews more important than the influence of TV advertising. That said, nearly two-thirds of every age groups reported that TV ads had a high or medium influence on their purchasing decisions.

Additionally, Deloitte’s Digital Democracy Survey reported more than one-quarter of U.S. consumers currently use ad-blocking software. Not surprisingly, millennials use these tools more than other age groups, with 40% of 19-25 year olds and 37% of 26-32 year-olds reporting they use the software to view content without advertisements.

Conclusions For Media Providers

As Deloitte’s Lippstreu noted during the MFM webinar, the 2016 report confirms the growing use of digital media devices for watching TV. And with connected TVs becoming more commonplace, TV viewers are also taking advantage of the ability to use internet connections to time-shift and binge-watch television content.

While TV ad revenues have remained relatively strong, the report’s findings would support the wisdom behind a TV station’s decision to explore its digital media options, especially in tandem with the industry’s upcoming adoption of the ATSC 3.0 standard.

I expect this point of view to be reinforced in our upcoming educational programs. A CPE (continuing professional education) webinar scheduled for Thursday, Jan. 19, will feature a presentation on “Digital Auditing” by David Murray, finance business partner for digital at the E.W. Scripps Co. And on Feb. 14, Gordon Borrell, CEO of Borrell Associates, will discuss “Macro Trends for Local Advertising in 2017,” sharing his five predictions for the new year.

With the Borrell webinar coming just weeks before the firm’s annual Local Online Advertising Conference in New York, participants will get a sneak peek at one of the industry’s best looks inside the minds of media buyers. If you are thinking about attending, there’s a discount code on the MFM website.

All of this data underscores the growing importance of digital to your station’s future ad revenues. Delaying execution of a digital strategy could be a lot like placing that cold egg into boiling water: you’re likely to develop a few cracks and risk losing some content. In this case, the cost of the loss will be significantly more than the price of a few eggs.

Mary M. Collins is president and CEO of the Media Financial Management Association and itsBCCA subsidiary, the media industry’s credit association. She can be reached at[email protected] and via the association’s LinkedIn, Twitter, or Facebook sites.