Advertisers Must Keep Up With Cord-Cutters or Else Brands Risk Creating ‘Lost Generation’

A hard pivot into streaming will build brand awareness

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A coup d’etat is taking place across the television industry. It used to be that cable providers were the reigning powers of television, declaring what consumers would watch and when. Not home in time? Sorry, you missed this week’s episode of Seinfeld.

But no longer. The last year has marked a distinct shift in power away from the traditional thrones of cable networks and into the hands of consumers. This is no more evident than with Disney’s acquisition of 20th Century Fox late last year, as content companies race to become media aggregators in an effort to reach consumers wherever they are. Not all consumers, though. The power lies with a new and growing segment of society: the people switching away from traditional television (if they ever used it at all) in favor of internet-driven TV.

The consequence? For advertisers who don’t shift with them, it means losing an opportunity to build brand awareness and affinity with an entire generation of increasingly connected consumers. And this connected generation could become a ‘lost generation’ for brands who stick with only traditional TV. For those who do, it means incorporating a new and powerful approach into their typical TV advertising plan.

Introducing TV’s connected generation

The connected generation is made up of two distinct pieces of today’s media-consuming population: cord-cutters, or the ones trading in coaxial cables for Ethernet ones, and cord-nevers, or those who never had coaxial cables in the first place. They’re typically aged 34 and younger, and they’ve spent most of their lives in our current digitally-driven world. They’re no longer bothering with traditional television sets or cable subscriptions but instead rely on the likes of smart TVs, PlayStations and Roku devices to stream live or on demand TV.

According to eMarketer, the primary driver of the shift for cord-cutters is two-fold: price and convenience. 85 percent of surveyed cord-cutters agreed that traditional cable subscriptions are too expensive, especially with the rise of skinny bundles like DirectTV Now, or when paid for alongside streaming services like Hulu—it’s just not worth it.

This connected generation could become a ‘lost generation’ for brands who stick with only traditional TV.

As far as convenience goes, internet streaming services offer capabilities including search, autoplay and personalized recommendations. Not to mention, the binge boom is real, with 40 percent of millennials and 87 percent of Gen-Z admitting to binge-watching, or watching roughly 5 hours of content in a single sitting on a weekly basis. As for cord-nevers, this is simply the world they’ve grown up in. They are no longer forced to wait until next week’s episode. They can spend their Saturday catching up on the full first season of NBC’s This is Us if they so choose. And they expect nothing less.

It’s precisely these expectations—for quality television, on demand, at affordable prices—that empowers these connected consumers. And as new generations continue to emerge, they too will contribute to the growing movement away from traditional, linear television. In fact, eMarketer estimates that traditional TV viewers will drop 2.4 percent (or by roughly 5 million people) by the end of 2018, while the cord-cutter and cord-never populations will grow by a total of 15 percent (or by almost 7 million people) this year.

Don’t be alarmed, it’s happened before

This shift in power, while a seemingly dramatic change for the industry, is not a new phenomenon. We saw a similar transition years ago with the rise of mobile smart phones back in 2007. The release of Apple’s first iPhone placed “the internet in everyone’s pocket,” as Recode put it. Because of its adoption rate, the iPhone is responsible for transforming how people consume media, allowing them to be always-on and ever-connected. But, let’s not forget, the iPhone wasn’t actually the first smartphone. It was simply the game-changing one that skyrocketed smartphone use across the board, forcing marketers to chase the mobile trend which, until that point, they’d underestimated.

Tim Sims

Television is following a similar trajectory, with smart TVs and over-the-top (OTT) devices like Rokus serving as the new disruptive technology that is driving a massive industry shift. Notions of on-demand television and internet-connected live TV via streaming devices are by no means new ideas, just as the smart phone wasn’t a new phenomenon when the iPhone came around. What is new, however, is the high-quality entertainment we’ve seen from these streaming options lately. With Hulu winning an Emmy this year for The Handmaid’s Tale and NBC’s top rated drama This Is Us revealing that 20 percent of its total viewership comes from connected television, it’s no wonder eMarketer lowered its estimate for traditional TV ad spend, assuming an acceleration in the growth of the cord-cutting audience.

And this time, marketers are getting on board fast, following the accelerating connected television consumption rates. So, while the adoption of connected television is following a similar course to that of smartphones, there remains a key difference. This time marketers can follow in suit, using the tools and technology of programmatic to stay ahead of the curve and reach consumers with a customized message at their connected television sets from the get go.

Nor is it an end, but a new beginning

So, as the connected generation grows, there’s no question that Ethernet cables are destined to replace coaxial cables, eventually. But that’s not going to happen today, or even tomorrow—maybe not even in the next few years. Just as smart phones have yet to replace desktops and laptops (or landline phones, for that matter), the emergence of connected television options doesn’t signal the end of traditional television, but rather a new and growing opportunity for TV advertising strategies.

Traditional TV has long been the highest impact medium for reaching consumers at scale. And on-demand, streaming alternatives have made it all the more true. Advertisers that take an audience-first approach and communicate with consumers across both linear and connected devices will reach and engage with their target audiences at a new scale. They’ll find themselves at the forefront of the shift to connected TV, with the connected generation already at their fingertips.

The data available to be unlocked by advertisers on connected TV coupled with the sheer power of television has brought us to the brink of a TV revolution—offering better experiences for all viewers and rewarding the advertisers who take part with a larger and more engaged audience pool.

So, considering major broadcast networks took a hit during last fall’s premiere week as viewers continue to shift away from traditional television schedules, here’s a suggestion for TV advertisers everywhere: try shifting with your consumers. You might just reap more reward from TV than you ever thought possible.

Tim Sims is senior vp of Inventory Partnerships at The Trade Desk (@TheTradeDeskInc).

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