,
SHARE:
Abstract Modern Background, empty futuristic interior with columns and balks, 3D rendering

By David Kang, Managing partner, Emerging Media and Innovation, MEC North America

A recent analysis published on Business Insider estimated that ESPN has lost over $2.5b in subscriber revenue since 2011, attributed to cord-cutting. This headline frames a hot topic and does so with drama.

Will TV viewing change significantly due to cord cutting?  The facts suggest otherwise.

According to Nielsen, 2015 versus 2014 represented a modest change in total pay TV, with only a net decrease of 0.1% in subscribers. The last quarter of 2015, however, indicated a 0.7% decline which may suggest acceleration is ahead. (Wall Street Journal).  Perhaps the most interesting evidence is that millennials, who make up 20% of the American TV audience, have a higher propensity to either cut the cord or shave the cord; reducing but not cutting paid TV. According to Nielsen research, more than 25% of millennials have cut the cord. A recent New York Times article went one step further, predicting 2017 would be the first year in which digital advertising at large exceeds TV advertising.

While change is happening, as an industry we keep looking for a shoe to drop, but it’s not the precipitous fall off the cliff some seem to want to portray. At least not yet.

Bottom line? Marketers must be proactive and make adjustments, but resist cries to “turn marketing on its head” yet again.  As the American business legend and former chairman of General Electric Jack Welch liked to say, “Change before you have to.” So how can you create a winning strategy to manage the risks posed by cord-cutting?

Understand your customer segment(s). This should drive both how much of a shift to expect as well as whether to implement change sooner or later. 

Take a screen agnostic approach. All research show that cord cutters are focused on the content they want, when they want. The medium clearly winning out in this trend are smartphones where millennials in particular spend nearly 40 hours a month. 

Premium content remains… premium content. Cord cutting is not a vote against content, it is a vote in favor of the content that consumers want. It distills the strongest content vehicles, and while there could be cost inflation, it at least affords marketers the clarity of knowing they will get a premium audience. The power of a having a strong program during its season or catching a live sporting event still remains insulated from cord cutting trends. 

Develop a healthy testing approach. Many of the traditional pay TV companies are actively experimenting with new models. CBS All Access continues to reduce ad load but offers targeting with more detailed data to deliver more effective reach. Dish Network’s Sling TV is experimenting with dynamic ad delivery to allow greater personalization in the hopes of stronger ROI. 

Use native and content strategies. Complement ads with other strategies: Native formats, branded entertainment, influencer marketing and a plethora of other concepts are already successful tools in the marketer’s toolkit, and these will continue to evolve. Marketers need to become versed in both paid and earned/owned approaches to maintain reach and effectiveness in the future. 

Utilize data wherever possible. Measurement companies Rentrak and comScore are merging with the stated mission to create the leading cross platform data set to help identify audiences anywhere. ACR chips for real-time audience measurement are also used to verify content that households are viewing on TV screens and then used to map any other properties and screens those households utilize.

Perhaps it helps to have a tolerance for change, but in this case, what’s nice is that it is a progressive and predictable shift.  Marketers must find ways to follow the consumer, while establishing best practices to delight them regardless of the medium or technology.  But don’t lose any sleep for ESPN, I’m betting they will be just fine.

This article first appeared in MEC’s trend publication Review Preview No. 6. Download it here.

SHARE:

Leave a Reply

Your email address will not be published. Required fields are marked *