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Ads and Content Experience Influence Audience Engagement with Dynamic Media Platforms

COVID-19 and Shifting Generational Preferences Reshape the Future of the US Media and Entertainment Landscape

Advertisers are constantly looking for ways to amp up ‘Audience Engagement’ to drive brand awareness. The pandemic has opened up new channels of engagement between audience and popular media platforms. We saw a meteoric rise of the online gaming, OTTs and on-demand audio streaming platforms during the pandemic months from which top players earned sizeable revenue, thanks largely to media partnerships and ad sales. However, things are changing for these players, especially when it comes to driving revenue with ad sales on popular media platforms like paid music and gaming.

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So, how do subscribers react to ads and what are their reactions to ads placed on a paid video, music, or gaming service?

According to Deloitte’s latest Digital Media Trends Survey, eighty-two percent of U.S. consumers subscribe to at least one paid streaming video service; the average subscriber has four paid video streaming services.

The report also found fifty-five percent of respondents now watch a free ad-supported video service.

So, how does content influence audience engagement?

According to Kevin Westcott, vice chairman, Deloitte LLP and U.S. technology, media and telecom leader, “Not only are American consumers more reliant than ever on digital media and entertainment, information gathering and social connection, there is also more competition for audiences among a crowded field of entertainment options. This requires consumers to ‘dance’ between services introducing frustrations as they try to manage multiple subscriptions and keep track of their favorite content. Media and entertainment companies with a deeper understanding of customer concerns about content, cost and ad-tolerance across all entertainment options and generations, can cultivate long-term relationships and reduce churn.”

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For Generation Z, playing video games is their No. 1 favorite entertainment activity

This is what Deloitte’s Digital Media Trends Survey, found out:

  • Streaming music subscribers pay for an average of two paid music services, and those who subscribe to gaming services pay for an average of three.
  • Subscribers cite an increase in price as the biggest reason they would cancel a paid video, music, or gaming service.
  • For Generation Z, playing video games is their No. 1 favorite entertainment activity (26%), followed by listening to music (14%), browsing the internet (12%), and engaging on social platforms (11%). Only 10% of Generation Z say that watching TV or movies at home is their favorite form of entertainment (which is No. 1 for all other generations).
  • While more people go to social media for news, 67% don’t trust the news they see on these services.

Consumers love video, but it’s not the only show in town

U.S. consumers have access to multiple free and paid entertainment options that are all competing for their attention and loyalty. However, all these different options are dividing and fragmenting the market and challenging providers to understand the nuances among segments, generations, and different kinds of media.

  • Eighty-two percent of U.S. consumers subscribe to at least one paid streaming video service; the average subscriber has four paid video streaming services.
  • Streaming music subscribers have an average of two paid music services; and gaming subscribers have an average of three paid gaming services.
  • Watching TV and movies at home continues to be the overall favorite entertainment option, with 57% ranking it in their top three (out of 16 entertainment activities). However, only 10% of Generation Z say that watching TV or movies at home is their No. 1 favorite form of entertainment.
  • Playing video games is Generation Z’s favorite entertainment choice (26%), followed by listening to music (14%). Watching TV and movies was their fifth choice for entertainment.
  • When asked what factors caused people to cancel a paid video, music or gaming service, an increase in price was the biggest reason.

Courting the consumer with cost and content

Consumers find it frustrating to manage and pay for a plethora of streaming video services that are now available. As they chase niche content and trending entertainment, consumers are also showing strong interest in ad-supported options that subsidize or remove subscription costs. However, from October 2020 to February 2021, Deloitte found that the churn rate for streaming video services is still hovering around 37%.

  • Content (35%) and cost (46%) are the most important factors in deciding to subscribe to a brand new paid streaming video service.
  • Fifty-two percent find it difficult to access content across so many services, and 49% are frustrated when a service doesn’t make good recommendations for them.
  • Fifty-three percent of those surveyed are frustrated by needing multiple service subscriptions to access the content they want.
  • Sixty-six percent get frustrated when content they want to watch is removed from a service.
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Generation Z prefers gaming and music

Generation Z has strikingly different entertainment preferences, often seeking video games and music over watching TV and movies — unlike older consumers who are “video first.” As early adopters, Generation Z may actually influence the behaviors of Millennials and Generation X — and possibly younger generations that follow them.

  • Eighty-seven percent of Generation Z are playing video games daily or weekly on devices such as smartphones, gaming consoles and computers.
  • A strong majority of Generation Z, Millennials and Generation X agree that during the pandemic video games have helped them stay connected to other people and get through difficult times.
  • Close to half (46%) say that video games have taken away from other entertainment time.
  • For all generations, listening to music is a top-three favorite entertainment activity. Around 60% of respondents have a paid streaming music service, and the same amount have used a free, ad-supported music service.
  • For those who pay, the library of music was the primary reason, followed by an ad-free and reasonably priced experience. For those using a free, ad-supported music service, zero cost was the primary reason, followed by ease of access and a broad range of content.

Social media is a gateway to entertainment and information, but trust is a concern

Instagram, TikTok, and Twitter are ranked among the top social media sharing channels that garnered a sizeable volume of audience engagement in the last 2 years. Bit, it doesn’t stop at just engagements! These are also very popular and attractive media to promote branded content in the form of videos, news feeds and influencer DIY blogs.

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Clearly, beyond connection and sharing, social media services have become a gateway for consuming music, video, games and news. However, there is tension between the value that consumers get from social media and the challenges of establishing trust, responsibility for content and the role of regulation. Consumers value social media, but they want more control over their data, and information that is more trustworthy.

  • Half of Generation Z rank social media as the No. 1 way they prefer to get news, whereas only 12% prefer to get news from network or cable TV. Conversely, 58% of Boomers say they prefer news on network or cable TV, and only 8% look to social media first for news stories.
  • While more people, across generations, go to social media for news, 67% don’t trust the news they see on these services.
  • For Generation Z, the top two activities on social media are listening to music, followed by playing video games.
  • Consumers are divided around the 2020 U.S. Presidential Election; 43% of respondents felt that social media companies did a good job managing misinformation, while conversely 44% of respondents felt that they could have done more.
  • Seventy-seven percent of respondents believe that the government must do more to regulate data collection and use.
  • Forty-five percent said they are willing to pay for social media if it didn’t collect their data.

Jana Arbanas, vice chairman, Deloitte LLP and U.S. telecom, media and entertainment sector leader said –

“It’s clear that consumers like the convenience of social media as a delivery platform for everything from entertainment to news, however, they also want to trust that social media companies are committed to distributing truthful, reliable information while protecting their own personal data. By building trusted and equitable relationships with consumers that address the need for more transparency, agency, privacy and security, social media services can continue to build on their success as dependence on their platforms continues to grow.”

Advertising: Building block for some, barrier for others

As more consumers use advertising-supported digital entertainment services, ad-related preferences and expectations around personalization and privacy vary across consumer segments and media. Some people welcome ads as a way to get more content while managing costs, building their own set of go-to services; others will do whatever they can to avoid advertising.

  • Forty percent of U.S. consumers note that they would prefer to pay $12 a month for a streaming video service with no ads, versus 60% of consumers who would accept some ads for a reduction in monthly subscription costs.
  • Forty-five percent of consumers agreed they would rather pay than have ads on their music streaming service. For Millennials, 67% say they would rather pay.
  • For those that subscribe to a gaming service, adding or increasing the amount of advertising are the top reasons they would most likely cancel or stop using a paid service.
  • Younger generations say that social media influencers and ads on social media are the two most persuasive channels influencing their buying decisions (55% of Generation Z and 66% of Millennials say that ads on social media are influential versus 49% of Generation X and 13% of Boomers).
  • Sixty-two percent of Generation Z and 72% of Millennials would rather see ads personalized to their likes and activity than generic ones. However, only 40% of consumers overall said they would be willing to provide more personal information to receive advertising targeted to their interests.
  • Forty-three percent of consumers (39% of Generation Z and 54% of Millennials) say they would associate content that included hate speech with ads that are displayed nearby.

Deloitte’s annual “Digital Media Trends” survey, 15th edition, found a world reshaped by pandemic-driven trends; and one where streaming video and subscription services have revolutionized the traditional U.S. media and entertainment industry.

The online survey of 2,009 U.S. consumers, conducted in February 2021, also revealed there is growing competition for audiences among a crowded field of streaming video providers, but also with other forms of entertainment, including music, video gaming and social media services. In this world of limitless choice, consumers can easily jump to competitors or other forms of entertainment as they weigh cost, content and ad-tolerance, making it challenging for media companies to earn consumer loyalty and cultivate enduring customer relationships.

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Digital content creators have to work with advertisers to ensure they produce and advertise content that is consumable for audiences from all sections of society, especially those who have lose their employment to COVID-19 cut-downs. It’s time to sought a fine balance between value and pricing in content advertising to extract mileage out of digital advertising efforts and boost audience engagement with paid media services.

[To share your insights, please write to us at sghosh@martechseries.com]

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