Will Cord-Cutters Upset the Traditional TV Paradigm?

By November 11, 2014 Uncategorized No Comments
medium_3098201219

Much has been made of the pending demise of the cable TV industry at the hands of the “cord-cutters” –viewers dead-set against paying another dime to the likes of Comcast, Dish Network and their ilk. But this demise is likely exaggerated as “Big Cable” rolls out more flexible bundles for accessing content and better user experiences with online viewing platforms.

Furthermore, it’s unlikely that the sector of the advertising industry that supports TV content is headed for demise. Forget the fact that TV advertising dollars are as plentiful as ever, and consider the fact that most network-specific offerings include mandatory ad viewing as the price of admission for digital consumers.

Why Cord-Cutters are Worthwhile

Ultimately, OTT (content that bypasses the traditional cable delivery model for TV programming) viewers are a worthwhile audience for brands to pursue. Despite their eagerness to “cut the cord,” they engage with TV programming 1.6x more than the public at large – so while they may be willing to cut cable subscriptions from their monthly expenditures (for costs, on principle, or just because they can) they are far from willing to give up the content TV provides.

The real opportunity cord-cutters present lies with the advertisers who can benefit by aligning TV media buys with the right online programming faster than competitors. At Networked Insights, we expect the profile of the “typical” cord-cutter or over-the-top (OTT) viewer to change a lot as the segment matures. Today, however, these consumers have distinct habits.

Opportunities for Brands

Which brands are likely to have the greatest success reaching out to cord-cutters today? Based on Networked Insights’ Affinity Ranker, which ranks consumers’ engagement levels with brands on a score from -3 (no engagement) to +3 (very high engagement), brands in a variety of categories should see a positive reaction when messaging to this crowd.

Brand Category Affinity Score
HSBC Financial Services +1.2
Johnny Cupcakes Retail – Clothing & Fashion Stores +1.1
On The Border Restaurant, Restaurant – Casual Dining +0.7
Walmart Retail – Mass Merchandiser/Discount Stores +0.7
Bed Bath and Beyond Retail – Home Goods +0.6
Burger King Restaurant, Restaurant – Fast Food +0.6
Kool-Aid CPG – Food & Beverage +0.6
Costco Retail – Mass Merchandiser/Discount Stores +0.5
Home Depot Retail – Home Repair/Supplies +0.5
GameStop Retail – Electronics +0.5

Source: Networked Insights Affinity Ranker, 2014
Affinity Score Note: -3 = poor brand engagement, +3 = high brand engagement

An additional concern voiced by marketers regarding cord-cutters also seems unfounded: the idea that they are migrating to programming that endemically offers advertisers little opportunity (For example, Game of Thrones on HBO or Orange is the New Black on Netflix, which contain no ads). 

Where Do Cord-Cutters Gravitate?

An additional concern voiced by marketers regarding cord-cutters also seems unfounded: the idea that they are migrating to programming that endemically offers advertisers little opportunity (For example, Game of Thrones on HBO or Orange is the New Black on Netflix, which contain no ads).

When we look at programs toward which cord-cutters gravitate, however, we see that Game of Thrones is the only commercial-free content with which they over-index en masse. For the brands that will resonate well with this audience, there are plenty of media opportunities – most still with ad supported broadcast or cable networks.

TV Programs Cord-Cutters Were Watching – August-October

Program Genre/Network Type Affinity Score
The Walking Dead Genre: Drama — Network Type -Sci-Fi – Cable +1.4
Super Soul Sunday Genre: Talk Show — Network Type – Cable +1.1
Hardball Genre: News — Network Type – Cable +1.0
@Midnight Genre: Comedy, Talk Show — Network Type – Cable +0.9
The Simpsons Genre: Comedy, Sitcom — Network Type – Broadcast +0.6
The Following Genre: Action/Suspense, Drama, Mystery/Thriller
Network Type – Broadcast
+0.6
Meet the Press Genre: News — Network Type – Broadcast +0.6
Tyrant Genre: Drama — Network Type – Cable +0.5
Emmy Awards Genre: Award Show — Network Type – Broadcast +0.5
Game of Thrones Genre: Action/Suspense, Drama, Fantasy,
Network Type – Premium
+0.5

Source: Networked Insights Affinity Ranker, 2014
Affinity Score Note: -3 = poor brand engagement, +3 = high brand engagement

Cord-cutters don’t represent the demise of the advertising or entertainment industries. Advertisers who quickly recognize how cord-cutter consumers are behaving and shift their emphasis to the appropriate programming will enjoy plenty of success.