Recent reports confirm that the number of consumers who have decided that they don’t need cable companies anymore has increased dramatically lately. Clearly, Wall Street is worried about this trend, with the large media companies losing as much as $60 billion in value in a recent two-day period.
When we listen to cord-cutters, and to those who haven’t cut the cord, it’s clear that the trend has reached a tipping point. Cord-cutters, comprised largely but not wholly of Millennials, are proud of their choice, and are advocating to their friends who haven’t made move. Many of those Millennials who haven’t cut the cord seem slightly embarrassed, feeling the need to explain why they too haven’t cut yet. And then, there’s that group of incoming consumers, the ‘cord-nevers’. These are young Millennials, and the soon-to-be adult group, Gen Z, who move into adulthood and household formation having never established a TV subscriber relationship and who feel no need to do so. Many experienced cord-free college dorm rooms, and learned early that there are many ways to view the content they need without a cable subscription.
But what’s bad for the media companies may actually be good for advertisers – at least those who stay on top of consumer trends and have the agility to adapt to the changing environment. Sure, it was a lot easier to buy advertising impressions when everyone was just watching TV. But many of those impressions didn’t actually make any impression, because so many consumers were so disengaged with what they were tuned in to. In the new world of consumer as CEO of their own entertainment, advertisers can expect a much more engaged audience.
The viewing environment used to be one in which the TV was often the ‘talking lamp’ in the room – constantly on, but often with little attention being paid on the screen. While Nielsen counted every household that had a set on as part of the viewing audience, advertisers had little hope that their target consumer would actually engage with the commercials that lit up the screen for :30 seconds or so. In contrast, today’s cord-cutters have taken control, becoming CEO of their content – what they watch and when they watch it. Sure, for some of the content, the commercials are optional. But the majority of these consumers say they’d prefer to have a few commercials sprinkled in rather than pay for the content. And they are actually watching what they have chosen – giving advertisers a better chance of holding their engagement during those commercial moments.
Commercial content will still need to be captivating, well branded and persuasive to generate in-market results. And the media buying environment is unquestionably becoming more complex. But in the end, advertisers who embrace the new world of video content delivery and viewing have more than a fighting chance of coming out ahead.
