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ARMONK, NY - 17 Nov 2008: IBM's (NYSE: IBM) second global online survey of consumer digital media and entertainment habits revealed that consumers are adopting digital content services -- such as social networking and videos -- on mobile phones and personal computers at an accelerated pace, and it is impacting traditional consumption habits.
The survey, which was conducted with 2,800 people in six countries -- Australia, Germany, India, Japan, the U.K. and the U.S. -- also shows that people are willing to get personal with advertisers by sharing information about themselves if it results in targeted incentives that match their lifestyle. This presents companies with significant advertising revenue opportunities among today's informed and empowered consumers.
What makes you stop to view an advertisement? IBM stopped people on the streets of Frankfurt, London, Mumbai, New York, Los Angeles, Sydney and Tokyo to ask about their media device and advertising preferences. See what they had to say.
"I Want My Ad-Supported Digital Content and Interactive Tools"
Last year's study showed the decline of TV as the primary media device. This year's study found large scale adoption and usage of digital content services accessed via the PC and mobile phone, with ad-supported models (versus consumer-paid) preferred almost three to one by respondents globally. Adoption for most categories of digital content services doubled from last year, with services such as social networking now at 60 percent penetration and Internet data plans for mobile devices at over 40 percent for respondents globally. While digital content services adoption is widespread, interactivity through features such as user ratings tools and video uploads is primarily concentrated among the more digital savvy consumers.
"With the rise of Web 2.0, millions of people can instantly create, publish and consume content. In order to survive, advertisers must understand how to reach their target audiences across multiple devices," said Dick Anderson, General Manager, IBM Media & Entertainment. "Knowing distinct consumer segment preferences and delivering consistent content and messaging are essential for long-term success."
Consumers desire, and are comfortable with, wired and wireless access to content. 76 percent of consumers surveyed have already watched video on their PC, up 27 percent from last year. 32 percent indicated they have viewed video on a portable device or mobile phone, up 45 percent from last year. Interest in mobile video content has more than doubled since last year to 55 percent.
For both PC and mobile video, over 70 percent of respondents prefer advertising-supported models as opposed to consumer-paid models, representing a huge growth opportunity for the industry. Preference for ad-supported models ranged from 62 percent to over 80 percent by country, with Japan having the highest preference for ad-supported on both devices.
"I Watch Less TV Because of Online Video Alternatives"
Consumers are moving beyond the trial stage of watching online video. Of those who have watched videos on their PC, 45 percent are doing so regularly -- at least a few times per month.
As adoption of online video continues, cannibalization of overall television consumption is becoming more apparent. Over 50 percent of respondents who have watched online video claim they watch slightly less -- 15 percent -- to significantly less -- 36 percent -- television as a result, implying place-shifting alternatives may be changing consumer "couch potato" behavior.
"Hey Corporate America, Get out of my Online Video!"
When asked how they prefer to view advertising associated with online videos, the majority of respondents said they prefer to see it before or after a video. Respondents from all six countries polled protested traditional television models such as interruption advertisements during the video or the use of product placements within programs.
"Consumers have grown accustomed to accessing new forms of content through alternative sources, such as online video and video-on-demand, at no cost to them -- no fee, with very limited advertising shown," said Saul Berman, Global Lead Partner, Strategy & Change Consulting, IBM Global Business Services and the author of many recent IBM studies. "The industry must find appealing ways to monetize new content sources or risk a similar fate as that of the music industry where value shifted away from core players."
"I'll Trade Information in Exchange for Incentives"
Close to 60 percent of total respondents were willing to provide information about themselves -- such as age, gender, lifestyle or communications preferences -- in exchange for something of value. Younger respondents had fewer concerns about revealing personal preferences, and a sizeable portion of participants over the age of 45 were also willing to share information about themselves. However, all respondents indicated the need for perceived value and incentives as a trade-off to provide personal information.
Consumers listed free high-quality music/videos, discounts to favorite stores and air travel/hotel points as the most desired and attractive incentives. These findings were consistent across all countries polled, with Japan and India having the least reservations about providing personal preferences, with over 62 and 72 percent of respondents respectively willing to share information, versus 45 percent of respondents in the US.
"I Want my Content and Messaging Integrated -- Here, There and Everywhere"
The digital savvy consumers are embracing new multimedia devices. The 13-24 year old segment owns an average of between four to five multimedia devices, with the most popular being portable music players, such as iPods, game consoles such as Sony PlayStation, Microsoft Xbox or Nintendo Wii, high definition television sets (HDTV) and portable game players. The "Gadgetiers" -- early adopters, estimated at 15 percent of the market -- have on average between seven and eight multimedia devices, with the most popular being portable music players, HDTVs, DVRs, and Internet-enabled phones such as the iPhone or BlackBerry.
As devices become more embedded in a person's lifestyle, consumers desire more integration between them. Over 40 percent of respondents are interested in content portability -- the ability to view and transport the same piece of content across multiple devices. Nearly one in five respondents was interested in consistent, tailored messaging across devices. Advertisers must focus on consumer-choice and centricity in order to effectively capture and retain consumers who are relying less on a sole device for digital content.
"As consumers continue to rely on more devices to view and access content on their terms, interest in convergence over multiple media devices grows," said Bill Battino, Managing Partner, Global Communications Sector, IBM Global Business Services. "Operators must carefully think through their opt-in strategies to take advantage of advertising and commerce opportunities across TV, mobile devices and PCs."
Within the six countries polled, Australia and the U.K. had the highest adoption of social networking sites, with over 65 percent and 70 percent respectively, compared to an average of 60 percent for all countries. The U.S. had the highest adoption of premium video services for the traditional TV at over 45 percent, versus Australia which had the lowest penetration at less than 25 percent. The U.S. also had high adoption of online TV/video sites such as HULU or YouTube, at close to 40 percent, versus the U.K. which had the lowest at 28 percent. Japan, Germany and India had the highest adoption of mobile services, including Internet data plans and mobile content plans for video and music.
While there were differences between countries, the majority of all respondents stated that recommendations from friends had the most impact on the type of content they viewed over celebrity, amateur and professional endorsements.
IBM Survey Methodology
The online survey was conducted during the third quarter of 2008 by the IBM Institute for Business Value. The questionnaire generated 2,800 responses in six countries: Australia, Germany, India, Japan, the U.K., and the U.S. The survey was split 50/50 male/female. It proportionately reached demographic groups 13 years and over. Respondents reported a range of household salary levels, though the vast was under U.S. $100,000. The results can be considered statistically significant at the 95 percent confidence level and have a margin of error of +/- 0.0138 points.
This consumer study is a component of the upcoming report "Beyond Advertising: Fact or Fiction" jointly authored by Saul Berman, Bill Battino and Karen Feldman, planned for release in late 2008. It is the latest in a series of thought leadership papers including: "The end of advertising as we know it," "The end of television as we know it," "Navigating the media divide: Innovating and enabling new business models" and "Beyond access: Raising the value of information in a cluttered market," providing recommendations for broadcasters, advertising agencies and media distributors including telecommunication and cable companies.
The IBM Institute for Business Value provides strategic insights and recommendations that address critical business challenges to help clients capitalize on new opportunities. The Institute is comprised of consultants around the world who conduct research and analysis in 17 industries and across five functional disciplines, including human capital management, financial management, corporate strategy, supply chain management and customer relationship management. IBM has a strong global focus on the media and entertainment industry across all of its services and products, serving all the major industry segments -- entertainment, publishing, information providers, media networks and advertising. For more information on IBM and the survey, please visit: http://www.ibm.com/media.
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