August 23, 2016

Advertisers Must Diversify as Consumers Cut the Cord

  • Subline: Give me what I want, where I want, when I want.

The latest research suggests that 15% of American households are cord cutters - people who once subscribed to cable or satellite services but no longer do so. Add that to the 9% who have never been subscribers, and that’s one-quarter of the country with no cable or satellite provider. And while 24% may not seem like a huge number, it’s the sign of a growing trend: people are getting their media from a variety of places.

This shift in viewing is driven by two main factors: rising costs of cable subscriptions and the exponential growth of streaming services like Netflix, Hulu and Amazon Prime. In fact, more than 40% of American households subscribe to at least one streaming service. Some people have adapted their viewing expectations. They want the flexibility of watching what they want, where they want and when they want.

So, what does this mean for advertisers?

It means they will have to be flexible and adaptable. Just because consumers are viewing their media on streaming services doesn’t mean there aren’t opportunities for advertisers. In fact, as the market continues to grow and evolve, I’d even venture to say there’s a huge opportunity to capture available inventory at relatively low prices compared to cable advertising.

It means if advertisers don’t want to miss out on getting their message to nearly one-quarter of Americans - millennials in particular - they’ll have to add placement on streaming services to their marketing mix.

Certainly, some advertisers will view cord-cutting as more of a fad that will never truly reach critical mass. After all, 76% of American households still have cable or satellite service. Perhaps they view the impact as not important enough to re-strategize.

Take the leap

However, advertisers who are willing to take a leap of faith into a segment that’s not fully defined may reap serious rewards. Cord-cutters still want content. They still want to watch TV shows in the current season or watch their favorite sports live. They just don’t mind watching them on their phone, their tablet, or their internet-connected TV.

Advertisers who understand this - and can make the connection with consumers via these devices - stand to dominate an uncluttered environment that is poised for exceptional growth in the coming years.