Deloitte Report: Traditional TV Ad Model Alive and Well

Digital media may have radically transformed how we access and interact with content on a daily basis. But a new report from Deloitte indicates that despite all the dramatic changes of the last few years, the traditional TV advertising model can still be relied on.

Surveying 2,000 U.S. consumers aged 14 to 75 at the end of last year, the State of the Media Democracy report reveals that 71 percent of Americans rate watching TV on any device among their favorite media activities, up from 66 percent in 2007. Using the Internet for social or personal interests is a distant second at 46 percent, followed by listening to music at 35 percent.

The fondness for television is particularly true for baby boomers—those aged 45 to 63—with 81 percent rating watching TV on any device as among their three favorite media. Adults aged 64 to 75 are not far behind at 76 percent, followed by the 28-to-44 demographic at 68 percent and the 14-to-27 set at 62 percent.

And while multiplatform is key, live TV in the home is still the most common method for accessing content. Deloitte notes that 74 percent of U.S. consumers use their home TV system to view their favorite shows. And increasingly, that device is a flat-panel TV; 59 percent of U.S. homes own a flat panel, a dramatic increase from 17 percent in 2007.

The study notes that 32 percent use a DVR on their home TV system, while 21 percent use free online services and 20 percent on-demand TV services. Other methods for watching favored TV shows include using a show’s website (20 percent), DVD box sets (19 percent), video-sharing sites (13 percent), gaming consoles (6 percent), smartphones (5 percent), portable video players (5 percent), peer-to-peer networks (4 percent), handheld video game players (2 percent) and tablets (2 percent).

DVR usage is greatest among those aged 28 to 44, while online video services are preferred by the millennials (the 14-to-27 set). Deloitte notes that 37 percent of this demo watch shows online five to seven days a week, as compared with 22 percent of the 28-to-44 group, 13 percent of the 45-to-63 set and 19 percent of the "matures"—adults aged 64 to 77.

Ultimately, Deloitte says, the data supports the notion that traditional television advertising continues to be a viable model. In fact, 86 percent of those surveyed reported that TV advertising still has the most impact on their buying decisions.

Another key finding is that the Internet, mobile and social media channels are enhancing the overall television viewer experience, driving people to watch first-run programs and live events during their initial broadcast. And people are certainly talking about their favorite shows with others. Multitasking while watching TV has also become the norm for almost 75 percent of those surveyed; 42 percent are online, 29 percent are talking on cellphones or mobile devices, and 26 percent are sending instant messages or text messages. In addition, 61 percent of U.S. consumers now maintain a social networking site—as a result, delaying awareness of live TV outcomes is almost impossible.

"Consumers are not only watching television, they are talking about it, and those conversations are frequently taking place in real-time online and via IM/texting," said Phil Asmundson, vice chairman and technology, media and telecommunications industry leader at Deloitte LLP. "By embracing the Internet as a platform that encourages audiences to participate in discussions about their favorite programs, television is maintaining its hold on the American public. People want to be part of the real-time conversation and they are embracing both platforms in a complementary fashion. And, because television has embraced the Internet and social media so effectively, the traditional television advertising model is alive and well."

Deloitte also notes that 33 percent of American households now own a smartphone, up from 11 percent three years ago. "The growth in the smartphone market over the past few years is having a bigger impact on our lives than anyone might have imagined," said Asmundson. "As the costs for these types of devices and the wireless services that come with them continue to fall, consumers are starting to shift their behavior, taking advantage of anywhere, anytime connectivity and handheld performance levels comparable to those found on their PCs. We expect smartphone adoption rates to continue to climb as new network technologies such as 4G begin to make the user-experience even faster and more seamless."