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With So Many Americans Dropping Cable, Will Cord Cutting Doom TV as We Know It?

Observers argue the pace of change is greatly exaggerated

The number of U.S. households giving up cable each year has stayed around 2 percent. Getty Images: Jan Stromme

Cord cutting is happening; that much is not up for debate. Some 300,000 Americans dropped cable service last quarter, and analysts are calling it good news for providers because the number was just half the amount lost in the second quarter, according to Bloomberg estimates.

While reports of the steady stream of households fleeing cable point to an industry in peril, some observers still believe linear TV is here to stay (at least for now). A recent study conducted by Leichtman Research Group found that the percentage of households that subscribe to a pay-TV service of some kind is actually higher in 2015 than it was in 2005. "The misdirection that people take with cord cutting is the idea that there's been a significant acceleration," noted Bruce Leichtman, president and principal analyst of his eponymous firm. While thousands of consumers are indeed abandoning the cable industry, 2010 marked a low point for those who chose to become what researchers once called "non-subs" or non-subscribers, and the number of subscribers has increased incrementally since then.

Leichtman found that about 2.5 percent of TV households dropped their cable service in 2015. That number was 2.3 percent in 2005 and 1.5 percent in 2010, and it has historically hovered around "the 2 percent range." Also, consider that an estimated 100 million U.S. households still subscribe to cable.

"It's a sexy idea," Lisa Herdman, RPA svp, director of national programming, said of the alleged unsubscribe stampede. "But it's not quite happening yet." Ed Mclarnon, head of strategy at The Engine Group holding company, calls the trend "less interesting in terms of where we are right now than as a leading indicator of where TV is going in general."

For millions of Americans, "TV" increasingly can mean both cable and over-the-top services. A survey conducted by the blog Cut Cable Today found that more than two-thirds of Netflix's 43 million U.S. customers still have cable service as well.

Researchers and agency strategists alike back up this larger point. "The term cord cutting is an oversimplification of a very complicated set of behaviors," said Glenn Enoch, Nielsen's svp of audience insights. An April Nielsen report found that consumers are more likely to drop subscription services like Netflix than cable, and, as Enoch noted, "There are homes adding cable every day." Droga5 head of communications strategy Colleen Leddy added, "What people are missing is that consumers are still watching traditional TV in addition to cord cutting," and the opt-out group remains "smaller than headlines would suggest."

Despite the dominant media narrative, most Americans who don't pay for cable currently belong to transient, low-income groups—so they're the very opposite of demographic gold for marketers, according to Herdman. For that reason, the ad experience on YouTube and VOD platforms like Hulu remains a pale imitation of its more expensive "linear TV" cousin. Some agencies similarly struggle to differentiate between traditional and digital-first campaigns both creatively and strategically.

Alex Morrison, vp and managing director of R/GA's content studio, argues that campaigns should be platform-neutral. "We need to think differently about how to make people stop and pay attention instead of having ads foisted upon them," he said.

That's not to say that agencies are ignoring trends. "[Cord cutting] is not on the periphery," noted Droga5's Leddy. "It's top of mind for marketers. But we're not just going to shift to digital video unless we have the numbers telling us that's where our audience is." In some cases, the numbers say just that. For a recent Clearasil campaign, Droga5 combined TV spots with influencer-driven YouTube videos and social media.

Still, agencies risk being left behind if they follow their urge to stick with what has worked in the past. "It's easier to say 'we will wait until the sky is falling to change' and create one message to live everywhere than to think of it holistically so it takes advantage of all available opportunities," said R/GA's Morrison. "Acknowledging the future doesn't mean you're giving up your business."

This story first appeared in the Oct. 26 issue of Adweek magazine. Click here to subscribe.

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