How Advertisers Can Adapt to Video’s Gen Z Shift: The Effect of CTV Ads on Younger Generations 

As the media landscape evolves, streaming services that previously offered ad-free subscriptions are now providing ad-supported alternatives. With the average household having at least four streaming subscriptions, switching to a discounted, ad-supported tier offers an easy way to cut down on costs. This introduces a new world of ad-supported video to many, particularly younger generations who grew up watching ad-free TV. As this shift progresses, it raises the question – what impact do Connected TV (CTV) ads have on younger generations and how can marketers effectively engage with Gen Z? 

Background 

What Americans consider “TV” has changed dramatically in recent years. Just a few decades ago, we would turn a knob or press a few buttons on our remotes to tune into cartoons, soap operas, sitcoms, and dramas. Throughout these moments, we were exposed to a range of different commercials, whether we wanted to see them or not. TV ads were an integral part of the viewing experience, not the exception.  

Fast forward to today and this version of TV likely elicits a sense of nostalgia. The rise of streaming has changed the video landscape as we once knew it. When major streaming services like Netflix were introduced in the 2000s, consumer popularity was not immediate. The spark caught fire when Hollywood saw the potential to make a profit. The release of exclusive shows like “House of Cards” and “Orange is the New Black” fueled American interest and subscriptions in the space. Once hooked, subscribers were given access to robust content libraries, leading to the now-common practice of binge-watching. By the time the pandemic hit, the demand for new content accelerated subscriber growth, ushering in the Golden Age of Streaming. 

Zeroing in on Gen Z Video Consumption 

Today streaming is bigger than ever, especially when it comes to Gen Z. Born from 1997 to 2012, Gen Z is coming of age in a time where linear TV is not the norm. Over 50% of TV audiences have either cut the cord or abandoned linear TV altogether, leading Gen Z to primarily view “TV” as the content watched on connected devices. In fact, 94% of Gen Z streamed video content last year, making them 8% more likely to watch video content daily compared to the general adult population. The video content they’re watching is evenly divided between TV and non-TV video, with the latter primarily consisting of user-generated content (UGC) on YouTube and TikTok.  

When it comes to video-on-demand services, Gen Z’s streaming preferences mirror general trends. Netflix leads as their preferred streaming service, followed by Hulu, Max, and Prime Video. However, there are some differences across age brackets. Teen Gen Zers watch more UGC video, prefer short-form videos on TikTok over YouTube, and – unsurprisingly – are more likely to watch streaming services paid for by their parents. In contrast, young adult Gen Zers watch more TV-style content and use their own money to access it, indicating consumption habits and attention spans may evolve with age and life stage.  

Regardless of platform Gen Z opts for, their affinity towards video is undeniable. Research shows Gen Z considers TV ads as influential as what they see on social media platforms. This presents a promising opportunity for advertisers looking to expand their marketing approach beyond display on search and social. The catch? Gen Z tends to skip ads. When given the option, 99% of Gen Z will bypass ads to resume their video content.  

“Some ads catch my eye if they are funny or relating to something trending right now.  Then there are ones that are boring and unneeded overall. I don’t mind them if they aren’t too long, but if they are it gets annoying.” – Veronica N., age 15 

This aversion to video commercials may stem from the amount of time they spend online. On average, the majority of Gen Z spends over four hours per day scrolling social media. Prolonged exposure to ad-supported apps and websites can lead to an ad-overload, causing Gen Z to feel “overwhelmed”. So, what’s a video advertiser to do?  

The good news is Gen Z is more receptive to video advertising on CTV than what they see on Linear. 60% of Gen Z feels CTV features higher quality ads than cable and 62% believes CTV ads are more relevant. This is especially valuable for marketers looking to leverage non-skippable video to attract Gen Z as they enter the workforce. Accounting for 20% of the US population and wielding an estimated $360 billion in purchasing power, Gen Z consumers want video ads to align with their values.  

“I like companies that stand for something. I recently [purchased] a shirt from a brand that supports mental health. If an ad has a good message, odds are I’m going to research it.” – Jackson D., age 18 

In the context of pharmaceutical companies, Gen Z prioritizes their well-being and seeks to actively engage in their healthcare and treatment journeys. This heightened focus on health and wellness makes Gen Z a pivotal demographic to include in DTC marketing, and brands can capture this growing audience in a few different ways. 

Advertising Implications 

To start, brands should focus on creative relevancy. 54% of Gen Z prefers ads that are targeted to their interests. They are also more willing to exchange their personal information for customized ad experiences in comparison to older audiences. This receptiveness might mean advertisers can leverage 3^rd party cookies to target Gen Z more precisely than other generations.  

Gen Z also loves a good laugh. When it comes to commercials, over half of Gen Z viewers prefer funny and entertaining ads, surpassing 42% of Boomers, 40% of Gen Xers, and 44% of Millennials. If humor doesn’t align with a brand’s messaging, there are alternative approaches to take. More than other generations, Gen Z is likely to engage with informative ads that have emotional, visually compelling content, often choosing to use products they feel a personal attachment to. Bonus points if the ad features their favorite music. While there’s no one-size-fits-all approach to crafting the perfect video ad, marketers should incorporate some of these elements to boost their chances of resonating with Gen Z.  

“CTV advertisers should heed the lessons learned from social platforms like YouTube and TikTok. Brands can forge meaningful interactions with Gen Z by adopting a small-screen mindset, tapping into their preference for authenticity and innovation. This shift towards immersive video tailored to Gen Z’s interests promises impactful results and can revolutionize CTV advertising.” – Toby Katcher, SVP, Video Investment, CMI Media Group 

Equally as important as customized, captivating ads, advertisers should be mindful of how their message is being delivered. 15-second ads are the most cost-efficient, drawing the highest levels of Gen Z attention in proportion to ad length. Pharmaceutical brands with longer creative due to FDA guidelines should introduce key messaging in the beginning of the video as Gen Z attention falls off around the 10-second mark. 

“It would be great to be able to use short-form creative all the time, however Pharma advertising doesn’t always allow for this. By using overlays that use QR Codes, brand canvases, or ad carousels, we’re able to captivate audience attention, leading to higher engagement rates compared to traditional ads. Overlays also allow for personalized storytelling with the combination of video, images, and interactive elements to foster a stronger connection.” – Debbie Kenney, Director, Video Investment, CMI Media Group 

Gen Z is also picky about commercial frequency. Running the same ad in a short amount of time can strain their visual attention rate. Research shows 43% of Gen Z is most attentive when the same ad airs three or more hours apart. They also prefer consistent messaging over multiple creative variations. By spacing out similar ads, marketers can improve the chances of capturing Gen Z’s attention in a positive way. 

“The main thing that bothers me is when I’m not watching [TV] for very long and – bam! – there’s another ad I just saw. I think I’m OK with commercials as long as they are infrequent.” – Alexa F, age 20 

On a final note, beyond ad frequency and creative wear out, research shows brands should also consider the time of day. When observed throughout the week, Gen Z audiences were the most engaged with ads shown between midnight and 6 am. While commercials still resonated during regular streaming hours, these findings suggest brands should explore dayparting campaigns to effectively reach Gen Z. By utilizing advanced targeting on CTV, pharmaceutical marketers can ultimately feel confident they are reaching Gen Z at the optimal place and time. 

Conclusion 

In conclusion, the video landscape has undergone a significant transformation over the past few decades, with Gen Z leading the charge towards a new era of streaming. This shift presents both challenges and opportunities for advertisers aiming to engage with this influential demographic. As Gen Z continues to shape the future of media consumption, marketers must adapt their strategies to align with their preferences and behaviors. This includes creating relevant, engaging, and personalized content that resonates with Gen Z’s values and interests. While humor and creative relevancy can capture their attention, advertisers must also be mindful of ad frequency and timing to optimize engagement and avoid oversaturating this audience. 

As Gen Z’s purchasing power grows and their influence on brand loyalty and social issues becomes more pronounced, pharmaceutical marketers cannot afford to overlook their preferences and values. By understanding and adapting to the unique characteristics of Gen Z, advertisers can effectively navigate the evolving media landscape and build meaningful connections with this important generation. As the saying goes, “change is the only constant,” and as the media landscape continues to evolve, so too must our strategies for engaging with the audiences of tomorrow.