Late night is having a comeback, but it's not leading to increased TV numbers. Instead, it's being led by young adults who are devouring clips of the shows online.
What it is telling networks is that the young adult audience that advertisers crave is there — but they're not interested in the traditional show format. Instead, late night is going through an evolution to appeal to today's digitally native consumer, which means less face-to-face interviews and more memeable moments.
"A lot of these changes is to get that younger audience because we are seeing TV consumption start to slow as digital consumption starts to rise," said John Holdridge, Fullscreen's vice president of Channel+, which helps advise the digital strategy for ABC's "Jimmy Kimmel Live" and NBC's "Late Night with Seth Meyers." The firm has also previously worked with NBC's "The Tonight Show with Jimmy Fallon" and "The Tonight Show with Jay Leno."
"(Late night) is changing to become a bit more relatable to a younger audience. They are realizing that the younger audiences are more powerful, and if they like content — they will share the content, they will talk about this content, and they will interact with it more intimately," he added.
While there's a lot of buzz about this current crop of late-night hosts, the TV audience size hasn't grown that much since the last hosts were swapped out. "The Tonight Show with Jimmy Fallon" is the most watched telecast in the group, but most of his viewers are just migrating from the other late shows.
The bigger problem is the TV audience isn't the young adults whom advertisers covet.
The 18- to 34-year-old demographic is the largest workforce in the U.S., accounting for more than one-third of employees, according to Pew Research Center. The shifting of the guard away from Gen X and baby boomers gives brands a chance to expand their consumer base, both in terms of reaching a new group with growing disposable income and the potential to build brand loyalty with this demographic.
According to Magna Global, the average Jimmy Kimmel Live TV viewer is 57 years old, while Fallon's viewership is around 54. Variety pegged CBS' Stephen Colbert's audience at about 57.
During the week of Nov. 30 through Dec. 4, "The Tonight Show with Jimmy Fallon" averaged just a 1.06 rating in adults 18-49. "Jimmy Kimmel Live" and "The Late Show with Stephen Colbert" 18-49 audience share was about half that size. (It's also important to note that Colbert was in repeats that entire week, and Kimmel's Dec. 4 show was a repeat.)
The thing is that millennials are interested in late-night shows, just not on TV. Market analytics platform Jumpshot discovered that 51 percent of people who view Fallon clips on YouTube are between ages 18 to 34. Colbert's YouTube audience is 46 percent millennial. For Kimmel, the number jumps to 61 percent, with about 2 in 5 of his YouTube viewers between ages 18 to 24. They don't head to network websites to watch full shows. They prefer shorter segments that they can watch at their leisure.
Advertisers are noting the potential. Sources with knowledge of the situation say that the CPM (cost per thousands) for ads on digital late-night clips has gone up 5 to 8 percent over the last five years, slightly pacing ahead of the rest of the industry. Costs for TV and digital ads are measured differently, but several media buyers said the price to buy a commercial to reach an audience of the same size on each respective platform is practically identical.
The interest of the younger, digital audience is so strong that it's partially helping TV ad prices go up. One source said that rates have been about 3 to 5 points higher than prime time due to the current advertiser demand. Current late-night shows average about $40,000 for a 30-second commercial, or $30,000 for Colbert, $45,000 for Fallon and $20,000 for Kimmel.
The problem with digital is that it can take a while to amass a large audience, while one airing of a TV episode can reach millions at once. If a clip goes viral, it can far exceed the television broadcast viewership. But for the majority of clips, it still takes a while before that one segment is seen by millions of people despite getting millions of views, and then all those segments have to be compounded together to match the length of a show.
To get the digital audience to migrate to TV, more shows are embracing the structures of online content. Digital advertising agency Firstborn senior strategist Scott Fogel explained that before, most people relied on late-night shows to tell them the day's news, tell them about the new movies coming out that weekend and hear music from the latest album releases.
"When you're in this 24/7 media environment, there's no need to recap today's news and culture," Fogel said. "We aren't waiting until the end of the day to recap things we've read all day. We want the next thing. What we haven't seen is the people behind these things presented in a new and interesting way."
As a result, he's noticed that the new late-night hosts are shifting their content from being timely to be more evergreen. Not only does it fit what today's consumer wants, it also is better adapted for digital platforms that allow people to watch when they are free to watch.
So it means is that skits and segments are more important than sit-down interviews.
"There is a formula and an art and science taking shape to make it easier for people to consume content," Fullscreen's Holdridge said. "We're learning to know what to expect and how to appeal to the masses. A lot of these late-night shows are falling in-suit with those formats and formulas, which is based from what the popular vloggers and YouTubers are doing."
Holdridge pointed out that Kimmel's "I Told My Kids I Ate All Their Halloween Candy" or "Celebs Read Mean Tweets" is similar in structure to YouTube "react" videos where people try to capture another's emotions on camera. Fallon's lip sync battles come at a time when apps like Dubsmash, which allow millennials to mouth along with the words of their favorite songs, are extremely popular. Vloggers were lip syncing to millions of views way before Fallon's battles started.
Channel+ also advises more social media hashtags to get the conversation going online even ahead of the episode. Holdridge said shows like @Midnight have been successful in getting its #Hashtagwars to trend on Twitter, a crowdsourced call-out for clever tweets around a hashtag topic like #MakeTVShowsPunk or #ExplainAFilmPlotBadly. Fallon employs the same technique and features tweets around a predetermined hashtag on his shows.
And, late shows are embracing more digital media influencers. Colbert has interviewed YouTube celebrities like PewDiePie and is bringing tech influencers like Uber CEO Travis Kalanick on set. Holdridge said part of the strategy includes non-TV segments like green room digital interviews conducted by Vine or Instagram celebrities.
There's a risk that changes will turn off the baby boomers, still the largest TV audience, advertising agency said Naseem Sayani, digital ad agency Huge's vice president of strategy. She admitted that working with YouTubers and other digital influencers can be tricky for brands because most older adults don't know the talent.
The fact of the matter is millennials who grew up digitally native and the rest of the generations are living in different worlds, said Terry Young, CEO of marketing agency sparks & honey.
"The people who are 50-plus, they're not tuned into memeable moments, what creates a good GIF, and what gets put on (online image sharing community) Imgur," Young said. "They don't know what a discussion thread is on Reddit. They're lucky to be logging into Facebook."
Sayani points out while advertisers still are interested in everyone, reaching millennials is becoming more valuable to certain brands.
"I think awareness of the younger demographic is increasing," she said. "What advertisers are realizing is the striations are getting much smaller, and it's not one size fits all anymore."
Disclosure: NBCUniversal, the parent company of NBC and CNBC.