Sixty-four per cent of US households with at least one screen have cut the cord with cable TV, are planning to cut the cord, or never subscribed, according to a recent survey of more than 2,600 US consumers by advertising technology specialist The Trade Desk. The survey also highlighted major differences in cord-cutting behaviour by age group.
The percentage of US households that have cut the cable TV cord, are planning to, or have never subscribed:
The 18-34 age group has long been coveted by advertisers because of their disproportionally high disposable income, because they are at a stage in life where they are starting to build long-term brand loyalties, and because they are trendsetters for all age groups. That they are aggressively moving toward a new model of TV consumption means TV broadcasters and advertisers will have to develop new strategies for reaching them.
While the majority of American households currently subscribe to cable, the research indicates that cord-cutting will accelerate in the future. The urgency of these shifts is only becoming more apparent as almost all US consumers stay at home. Of those households that do still have cable TV subscriptions, 11 per cent plan to cut the cord by the end of the year. That figure jumps to 18 per cent within the 18-34 age group. This data represents a significant increase over the approximately three per cent annual decrease in traditional pay-TV subscriptions as predicted by eMarketer in July 2019 (prior to the stay-at-home directives).
These trends are expected to accelerate the longer that live sports programming remains suspended in the US. According to the survey, the majority of Americans – 60 per cent – say watching live sports is the primary reason they have kept their cable TV subscriptions.
“With only a quarter of young adults having any long-term interest in traditional cable TV, in a few years we won’t be talking about linear or cable TV at all. It will all be online and streaming,” predicts Brian Stempeck, Chief Strategy Officer, The Trade Desk. “For broadcasters and advertisers, it’s now all about how quickly they can pivot to where the eyeballs are moving and many of them are already investing heavily in order to succeed in a world of connected TV.”
The survey indicates that American TV consumers favour ad-supported streaming over subscription-based streaming as more and more Americans watch TV content via connected devices such as smart TVs – and 18-to-34-year-olds are once again leading that trend. Overall, 35 per cent of these consumers would rather watch a free streaming service with advertising or some ads for a cheaper subscription, versus 31 per cent who would prefer to pay for a subscription with no ads.
The preference for ad-supported services increases when the viewer receives value in return. For example, 66 per cent of 18-to-34-year-olds would prefer to watch a streaming service with ads every other episode in order to lower their monthly streaming costs. That number drops to 55 per cent for the 35-54 age group and 47 per cent for the 55+ age group.
Younger age groups also have a larger appetite for ads that are relevant to their interests. By a ratio of 3-2, the 18-34 age group prefers tailored ads, the highest ratio of any age group. This suggests that younger viewers have the greatest awareness and appreciation for the value exchange between relevant advertising and access to free premium content.
The research also shows that the leading cause of frustration with streaming advertising among American subscribers is having to watch the same ad repeated multiple times (cited by 48 per cent of subscribers). The second leading cause of frustration is having to watch too many ads overall (cited by 45 per cent), followed by the number of ad breaks (cited by 37 per cent).
“As more consumers shift to connected TV, broadcasters and advertisers can more easily address issues of ad frequency and ad volume, in ways that are not possible in a traditional TV environment,” suggests Stempeck. “With CTV, the advertiser can work with an ad tech partner to understand who was exposed to an ad, even across devices, and can reduce ad frequency as a result. In addition, with CTV, advertisers can apply more data science to their advertising, making it more relevant to the consumer without compromising their privacy. This increases the value of the ads, which means lower ad volume, over time.”