For more than five decades, traditional TV commercials were king when it came to advertising, with marketers spending a combined $80 billion on TV ads each year.1 But with new technology emerging and people consuming content in new ways, there is a major shift happening as millennials, a group with more than $2 billion in spending power,2 trend away from cable TV.
Traditional TV usage among 18-34 year-olds has steadily decreased approximately 4 percent every year since 2012, with it dropping a whopping 10.6 percent between September 2014 and January 2015. Nearly 20 percent fewer millennials are tuning into TV compared to four years ago, with Nielsen figures reporting that 21.7 million young adults tuned in to their TV sets in 2011 versus 17.8 million by January 2015.1
For marketers who use traditional TV advertising, those numbers may be alarming. It’s important to understand why millennials are trending away from TV so marketers can make smart decisions about how to spend their budgets. So why are millennials cutting the cable cord? And what does it mean for marketers?
Priorities are shifting among millennials, with 21 percent saying that TV is their primary medium for entertainment, compared to 50 percent who say they can’t live without their smartphones.3 Approximately 50 percent of millennials consume their film and TV content on a smartphone, computer, or tablet versus 20 percent of those 30 and older.4 With millennials being tech savvy and always on the go, it’s natural that they want to take their “TV” with them. This poses a problem for cable TV, however, which isn’t easily accessed through these devices.
Millennials cited convenience, fewer commercials, and the ability to watch on their own schedule as main reasons to stream content.5 Wanting to consume content when they want, where they want, and how they want, millennials are increasingly watching online video from Netflix, Amazon Prime, HBO GO, and other streaming sources. In fact, researchers saw a 22 percent increase in subscription video viewing from 2013 to 2014 and a 26 percent rise in “binge viewing,”1 with Netflix being most popular (49 percent of millennials subscribe).5 Live TV doesn’t provide the instant gratification that streaming services do, and cable on-demand comes at a premium.
For many millennials, the price of cable TV isn’t worth it. The average cost of cable has increased an average of 6.1 percent annually since 1995, up to about $65 a month. At that cost, even a combination of several streaming options ends up costing less than traditional cable.3 Many millennials said that they still want live TV, especially for sports viewing, but that they want a cheaper, more accessible online option.3
The silver lining for marketers is that even though millennials are cutting the cable cord, they are still consuming content – just in new ways.
More so now than ever, marketers need to understand who their audiences are, what content they’re consuming, and how they’re consuming it. While it may not be best to ditch traditional TV advertising altogether, it’s important to explore other options that will reach millennials through mediums that offer a combination of portability, instant gratification and affordability. From new types of media buys to new types of content altogether, there are a variety of ways to get started. Not sure how? Let’s talk.