Speaker 1: Digital Consumption Changes and Geolocation Coffee Orders? Where are we headed?

Speaker 2: People like to watch ads that are targeted at them. They're also interested in geolocation driving apps. I like having a cup of coffee in the afternoon. I could be walking down the street and they give me a discount to a cup of coffee. Or they may direct me at lunchtime to a specific restaurant. So based on where I'm located, can I deliver something that's both relevant to my interests and also relevant to where I am?

Speaker 1: Now if they can just have the pour-over ready when I walk in the door. I'm Heidi Rutage and this is User-Friendly, where we talk about emerging tech, media, and telecom trends. I'm here with Scott Lipstrue and Kevin Westcott, both principals with Deloitte Consulting.

Speaker 2: Great to be here. Thank you.

Speaker 1: Kevin, you and Scott have been reporting on digital consumption in the Digital Democracy Survey for the past 11 years. Let's start by understanding the shift in consumer consumption.

Speaker 2: The consumers actually stream more from free services than from paid services. We actually see an increase these days of a variety of streaming services being used.

Speaker 3: One of the things that we're seeing in the data when we ask about the value of streaming services, in particular we ask about what services that households value the most. And without question, home internet has been the top across all age groups. Pay TV is second, but coming quickly on the heels of pay TV is streaming video services. And for certain age groups, interestingly enough, streaming video services are actually considered more valuable than pay TV. One of the things we've learned from doing this survey for 11 straight years is the trends that start at younger ages work their way up.

Speaker 1: Scott, how are consumers accessing content differently? I mean, where are they placing value?

Speaker 3: The number one reason people subscribe to streaming services across all age groups is the ability to watch content when they want, time shifting. They want to be able to watch their programs when they want to watch it. Number two is the ability to watch without commercials. Is it more important to be able to time shift? Is it more important to actually be able to watch commercial free? And what you might see is the markets bifurcate or separate.

Speaker 2: Consumers are increasingly wanting to tailor their pay TV bundles. Well, a few years ago, they were quite satisfied with paying for the package and getting all the channels. Now they're more interested in tailoring this, specifically around their interests.

Speaker 1: Yeah, Kevin, I want to choose the channels I'm interested in, but it's not easy finding or paying for all of the channels.

Speaker 3: When we do these readouts with a lot of our media clients throughout the years, one of the things we hear consistently is our clients are telling us their consumers are getting a little bit confused. They're looking for content, and where do they find it? So one of the value of the traditional bundles is it makes it easier to know where to go look for content. It makes it easier to figure out how to pay for it, order it, et cetera. So I think what you might see is this role for both going forward. There will be some people who value the noncommercial component, some people who value the simplicity of being able to pay one bill and be able to subscribe to one service to get lots of content across multiple platforms.

Speaker 1: Okay, who does not love binge-watching? I have so many shows, I just can't help it. I've got to binge-watch all the time. So what's different about binge-watching today?

Speaker 2: As we've talked to our younger generation, the millennials and the Gen Zs, almost 40% of them binge every week. That generation reports that they watch an average of six episodes in a sitting and spend five hours in that sitting.

Speaker 3: I think the impact of multitasking, it plays nicely into binging and creates both opportunities and challenges for a number of our clients. So as you said, I think it's roughly 99% or within our margin of error that 100% of the younger generations are multitasking while they're watching what we consider traditional television. And what's most amazing is they're on average doing five things. They've reported doing four other things in addition to watching the program. The other point about binge-watching is it is a multi-generational component and people are doing it across platforms. And it's all ages, by the way. I like to tell the story of my 84-year-old stepfather discovered that he could get his favorite 1970s serialized detective show on one of the streaming services and he binge-watches that. He both streams and binge-watches because it's the only place he can get access to that show. The younger generations are consuming a little bit more than half of their content on non-television devices. And so what that means is that they are interested in consuming content whenever and wherever. So there's a lot of opportunity to continue to drive locational advertising into that binging as well.

Speaker 1: What can we glean from the survey?

Speaker 2: Amongst the millennials and Gen Z population, 90% of them are on a social network. It is part of their day every day. And they're actually using it for tasks that probably weren't initially envisioned. Right now, the majority of news for the younger generation is actually being gathered and read on social media sites. The other thing that's quite fascinating is over 70% of the millennials have used social media to interact with corporate customer service. They're publishing comments on social media, either on their own sites or on the sites of the companies. And that's a very radical change of how people think. Instead of doing things on a phone in a private session, they're doing it publicly on the Internet.

Speaker 1: Okay, so there's a lot more being done publicly, including a majority of people gathering in their news. Interesting. Scott, how does that affect purchase behavior?

Speaker 3: Social has become much more than a way of engaging with one's friends and is the basis for doing a number of things. Getting your news, doing customer experience, doing research for potential purchases, getting input on trips that you want to make. So it's a lifestyle or commercial platform. And I think there's many more opportunities, and it's going to be evolved to the uses that I haven't thought of yet today. It's also disrupting things in an interesting way. It may disrupt the way we consume things because it enables you to snack on items. You can snack on input or feedback on a particular product you want to buy. You can snack on news articles. You can sort of click on this and come back. And so it may change. So if I even think about whether it's digital or traditional, whether you consume something in a linear or sort of in a snack-type format, I think it will continue to have implications and impacts there.

Speaker 1: We have been talking to Scott Lipstrue and Kevin Westcott about digital consumption and their findings from a recent Deloitte survey on digital democracy. Now let's shift from the consumer to the advertiser. Kevin, how is advertising shifting?

Speaker 2: Well, advertising is definitely in a transitional stage. And what we're starting to see is what actually has a strong effect on the buyers of products and services. Social media recommendations, either from people within your social circle, so either a friend or someone who follows you on Twitter, recommendations on shopping sites or travel sites, are actually more influential than television ads for the Gen Zs and millennials. Companies really need to think about how do they reach those buyers. I might be running a television ad on broadcast, but I need to think about how do I also reach them in the digital channels.

Speaker 1: Scott, how do you see advertising's role changing in this new digital environment?

Speaker 3: On the advertising side, the messaging is actually getting much more constrained in terms of the amount of time you have to get your message across and to deliver engagement because people do have that ability to skip an ad after 5 to 10 seconds. One of the things that we're starting to see is a small reduction in the impact of an endorsement from a celebrity or an online personality because now you don't differentiate between a celebrity and an online personality. They're in the 0 to 1 in 2% category, in the baby boomer and matures category, and then even in the Gen Z and millennial category, it's well below 20% engagement.

Speaker 1: Advertisers don't have much time to get their message across. What about geolocation ads?

Speaker 2: People like to watch ads that are targeted at them. They're also interested in geolocation driving that. I like having a cup of coffee in the afternoon. I could be walking down the street, they may give me a discount to a cup of coffee, or they may direct me at lunchtime to a specific restaurant. So based on where I'm located, can I deliver something that's both relevant to my interests and also relevant to where I am? There is interest in receiving those kinds of ads.

Speaker 1: Scott, how can mobile ads be more relevant and successful?

Speaker 3: I think there is definitely an opportunity for advertisers to do a more effective job of targeting mobile ads to people. Consumers aren't necessarily opposed to an advertisement, particularly if it's on message, on target. If the mobile ad that appears is actually useful to you at the time, you'll be more likely to participate in it or be receptive to it. There are still a number of events that are going to happen, whether they be breaking news, they be major sporting events, they even be sort of the major award shows, that people still, by and large, want to consume in a linear fashion. And those are opportunities for advertising. What they're doing is making those limited properties sort of the equivalent of beachfront property. They're rarer and more valuable.

Speaker 1: So I understand that consumers are more receptive to targeted ads. Totally get that. But how can advertisers serve up these personalized ads without being intrusive?

Speaker 2: Most consumers are willing to give up some amount of personal information to make the content more targeted. And there's multiple layers of customer information. Some of it may be just your email address or a couple questions about you. As you get more and more around your interests and the sites you visit, if I'm advertising and it's targeted to me, that's great. But don't target me with ads that happen to be related to something I did just once. And I think that's where consumers get turned off.

Speaker 1: So as advertising adapts to these challenges, how will the user experience change?

Speaker 2: I think the user experience that a consumer has, whether it be on a mobile device, whether it be on their big screen TV or their desktop computer, needs to look and feel the same. The consumer now wants to be able to pause the video on their phone, restart on their big screen, and have a very similar experience. And the ads shouldn't change dramatically.

Speaker 3: The device on which they're consuming may actually drive engagement. So there's a school of thought as if they're consuming the content on a phone or on a tablet device. They may actually be more engaged to whatever's happening in the programming because those are the devices that they typically use to do other things at the same time. So it's interesting to see if there's an opportunity to get some rate arbitrage around advertising. I think the user experience, from an advertising standpoint, will continue to get better. The ability to have that content, that experience, follow you over platform is there. That will absolutely happen. The key is, and I'm one who enjoys advertising, by the way, and consumers know that's a place where advertisers are putting their best foot forward in terms of making the advertisement a part of the experience.

Speaker 1: Consumers continue to express their digital democracy by snacking on content, bundling their entertainment, and engaging with corporate brands in social media. Advertisers face new challenges and new opportunities. I want to thank Scott Lipstrue and Kevin Westcott for joining me today.

Speaker 4: Yeah, it was fun. Thanks.

Speaker 1: Next time on User-Friendly.

Speaker 4: It's more than just accounting, white paper policy process. If you have changes, it's a big deal to do anything in the end-to-end revenue process. You touch one little area, but you pretty much touch the entire organization.

Speaker 1: We'll cover the implications of the new Revenue Recognition Standard. Is your business ready? Ultimately, it's up to you. But move forward and stay present and don't get caught in the rear view.