An in-depth look into the cord-cutting trend and what new live-streaming capabilities mean for advertisers

I love TV. The intricate story lines, the relevancy of episodes, and the development of characters are captivating. When you find me with the TV on I am most likely catching up on recorded shows like How To Get Away with Murder or binge watching a new series on Netflix. Seriously, if you need suggestions I have you covered.

Until about a year ago I was actually a cord cutter. For those unfamiliar with this term it is the ditching of traditional pay television. You have heard us use it in past blog posts such as “Is Rock the Vote rocking young voters?” and “In Television Ads We Trust”.

For a lot of millennials the shedding of cable or never getting pay TV comes down to one factor. Can I pay my bills? Many young professionals would rather spend their leftover income on craft beer and experiences before giving it to a company whose programming they barely watch. There were two reasons my roommate and I went with cable. The first was that she consumed programing that required a pay-TV subscription – she is a fan of football and The Real Housewives – and the second was that new customer pricing wasn’t much more than stand-alone Internet with Hulu, Sling TV, and Netflix.

Now, a year after our decision, not only are there digital platforms to show broadcast and original entertainment like Amazon Prime, Sling TV, and HBO NOW, but there are also social platforms streaming live content.

cordcutting

With all these new ways to watch, I was curious as to how much the television industry was being affected by the cord-cutting trend. Rhetoric in the media suggests cable and satellite doom. However, in reality, only one-quarter of all US TV watchers go without cable and satellite subscriptions, according to a GfK study. The households with 18-34 year olds are most likely to go for alternative TV content and in a Fortune online article, whose numbers are a tad different, the percentage of cable-free homes will rise from 20.4% to 21.9% by the end of 2016. Not a big significance.

The reasons behind the shift aren’t rocket science but here are some cited justifications.

While the cord-cutting trend is growing, as an advertiser I wouldn’t be too worried. Cable still has a large number of TV subscribers and TV network’s content is still being watched – just in a different way.

According to Adweek’s article “Live Viewership May Be Down, but TV Content Is Still the Main Thing People Are Streaming”, TV consumers are spending more time with time-shifted TV, or TV that is watched after the live broadcast. To put this into context, 67% of Hulu viewers enjoy watching network TV shows the most. In fact, a report from the Video Advertising Bureau (VAB) found that total video consumption has slightly risen over the past year.

The VAB research is particularly interesting as their conclusion was that ad-supported TV brands and video streaming have a symbiotic relationship; they increase viewership. Overall, “there’s been a healthy increase in the amount of time consumers spend with TV brands across platforms – including TV-branded websites, mobile browsers and apps.”

Isn’t that good news?

Looking at these services as complementary instead of conflicting creates a whole new juxtaposition. It brings to mind an old marketing saying – go to where your consumers are.

This is exactly what some brands are choosing to do with their video content and social platforms like Twitter are helping them to do it. Cable and satellite were once sole distributers of live content, but Twitter’s recent deal with the NFL is working to make live sports easily consumable, even for cord cutters.

In preparation for this live-stream of Thursday night football, Twitter partnered with streaming devices like Apple TV, Amazon Fire TV, and Xbox One to integrate the online TV experience. The result? Twitter’s live-stream of the Patriots-Texans game caught the attention of 327,000 people; a relatively low number compared to the 17.5 million it captured on TV. For advertisers these games shed light on live-streaming habits. One notable difference is that consumers of live content on social platforms aren’t watching full games. Viewers tuned in for an average of 22 minutes, which is one-third the amount of time expected of someone watching a football game the traditional way.

live-streaming devices

More impressive was the live-stream of the 2016 presidential debates. Its stream on Twitter passed NFL audience numbers and overall attracted 9.5 million between all live-streaming platforms (Facebook, YouTube, news websites, etc.).

These debates offer insights into the vitality of live-streaming. Andrew Hutchinson from Social Media Today reported an interesting trend. Live-streaming audience numbers increased every debate while TV audience numbers fluctuated. The first debate attracted 84 million people on TV, the highest ever. For the second, TV viewership declined by 20% and then increased again for the third, but it never reached the 84 million the first debate attracted. (Note: overall live-stream audience numbers were drastically less than live TV viewership.)

live-streaming audience size 2016 presidential debate

“As the TV audience declined, more people tuned into the live-streams, showing an increased confidence in, and reliance upon, these platforms as a coverage source.” – Andrew Hutchinson, Social Media Today

Viewership on platforms is one thing but those who are paying to advertise have said these live-streaming platforms under delivered. Advertisers on Twitter said they saw significant underdelivery from their ads during NFL football games. Below are some of the measurements they are referring to.

  • Expectations of audience size 500,000 avg. viewers. Actual, 243,000 avg. viewers.
  • Expectation of number of times each viewer would see an ad, three. Actual, one.

While this reach might be low compared to subscription TV, as people become used to live-streaming the audience will only become larger. Something that Hutchinson’s insights might be foretelling. As audiences grow so will the adsphere, giving advertisers more ways to reach consumers. New ad options like Facebook’s mid-roll video ads are already available in live video.

Keep in mind we are in live-streaming’s heyday. Advertisers who figure it out early will only have more success in the future. As Octagon’s Chief Strategy Officer Simon Wardle stated when speaking about the Summer Olympics, “Media buying is going towards not only wanting those traditional media spots, but integrating them with digital, especially when you have live-streaming. Having a presence on those platforms for brands in my mind is essential, because it’s disproportionately likely to be watched by these 18-to-34-year-olds, the elusive teen and young adult audience.”

-Caroline Robinson

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