This past week’s report from Magna Global did not shock anyone who’s paying attention. TV ad sales are in a free-fall — down an estimated 4% globally and 3% in the US, the sharpest decline since the Great Recession.
The reason for the decline is simple: TV ad pricing is up despite viewership being down. Content competition has never been so intense.
For those advertisers hoping that this is a fad, know that younger generations will not suddenly change their behavior and start watching live TV (if anything, they’ll be watching less, not more, live TV). Gen Z would prefer to watch YouTube over traditional TV; and it’s not even close:
According to “Generation Nation,” an ambitious study about what’s real and what’s not when it comes to the US generational cohorts, nearly 80% of Gen Z report they prefer to watch streaming content instead of live TV compared to just 45% of Boomers. The preference isn’t just about YouTube; Gen Z is far more likely to be on their phones gaming, streaming, and connecting via social media than they are to be watching TV.
Genre doesn’t change the math either. Whether it is a TV drama, a movie, or even a live sporting event, 80% of Gen Z would rather stream.
So, what’s next with the power of TV ads declining? Well, for Gen Z and Millennials, Twitch and TikTok are on the rise, while advertisers and content creators are flocking to social influencers. But, as we’re about to learn in “Generation Nation 2020,” the power of micro-influencers, specifically podcast influencers, should not be underestimated.
Cross-generationally, podcasts represent a sustainable and emerging opportunity. U.S. advertisers spent an all-time high on podcast ads in 2018, up 53% from 2018. And, according to IAB and PwC, the US podcast revenue will hit $1 billion by 2021.
For brands that got in early like CashApp, StichFix, SimpliSafe and BetterHelp, exclusive partnerships and creative offers have bolstered their sales at a dramatically lower CAC than traditional TV ads. D2C brands are rapidly scaling by speaking directly in the ear of the consumer, while industry giants are sitting on the sidelines and losing market share.
Podcasts represent a throwback of sorts. Yet, it’s younger brands and startups that recognize the inherent strength of letting a podcaster use their authentic voice to sell products and services. Less scripted, less production, but a deeper connection.
Podcasts are becoming popular with both younger and older generations for a few key reasons: they’re built for mobile (meaning listeners can easily pick up on the go) and there’s seemingly unlimited content variety and perspectives available (with more 700,000 active podcasts and 2.9 million individual episodes, according to Apple).
For individual podcasters that are having massive success and are growing their audiences, they’ve had hours and hours to hone their craft and to develop their unique voice without the outside pressure of a network demanding immediate results. Similar to YouTube, there’s a natural rising tide for podcast personalities that don’t exist in TV — where audiences are built over time, through a seemingly personal connection with their listeners.
Erika Nardini, CEO of Barstool Sports, which is one of the largest and fastest-growing podcast publishers described it as such while on the DIGIDAY Podcast: “Personalities are the new publishers. Our fans look to our talents’ reaction around the things they jointly care about. They wait for it. Barstool [talents] never professes to be professional journalists or experts on anything. They professed to be fans of sports, comedy and entertainment.”
For Millennials, who have an infatuation in watching documentaries and non-fiction, podcasts represent a near-limitless pool of content. For Boomers, political talk radio is abundant. For Gen X, there’s the Joe Rogan Experience. There’s a podcast for everyone — including advertisers targeting a specific consumer segment.
It’s only a matter of time until the bluechip brands are “all in” for podcast advertising; the question is whether they can adapt to this medium and be as effective as their startup competitors. And, just how quickly will they recognize the opportunity.
Collaborata, in partnership with Quester and 747 Insights, is about one month out from launching our third iteration of “Generation Nation” (and I can barely contain my excitement given this year’s changes). This time, we’ll focus on what we’re calling “sources of influence,” in which we’ll dive deeply into how generations and lifestages perceive brand messaging across media channels. We’re looking forward to discovering what’s real and what’s not.