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Hillary Turner

Cord Cutters and Cord Nevers: Should this Growing Trend Affect Your TV and Cable Dollars?

I’m sure you’ve heard these terms around your dealership before:
Cord Cutters – people who have cut all ties with pay TV.
Cord Nevers – people who have never even had a pay TV service.
The growing popularity of ‘Over the Top’ (OTT) viewing with the use of paid subscriptions such as Netflix and Hulu are hard to ignore. But is this trend as detrimental to the world of pay TV as some would have you believe? The short answer is no.

Who is Using Pay TV?

According to Nielsen, as of 2016, 16% of households do not subscribe to pay TV. Although this number has consistently grown since 2012 there are still over 98 million households in the U.S. that subscribe to pay TV, vs only 19 million that don’t. Despite this, advertisers still need to understand the demographics of who Cord Cutters are and what influences them to pull the plug.

Many people, understandingly, assume that Millennials (age 18-34) make up the majority of Cord Cutters, but interestingly that’s not the case. Seniors and Baby Boomers (age 50+) lead the pack when it comes to cutting the TV/Cable cord. Perhaps even more surprising, this same demographic trend is also true with Cord Nevers.

Although age is important to identify, it turns out that the most significant indicator of likely cord cutting behavior is income. Those who make less than $50,000 a year are 59% more likely to be a Cord Cutter than those that make more than $50,000. Both findings were uncovered by media studies done by SNL Kagan.

Target Audience

As marketers in the auto dealer industry, income and age are two key demographics our dealership marketing agency uses to target consumers. We all understand the most desirable customer is one who has the need and the means to buy a car. So it’s easy to conclude Cord Cutters or Cord Nevers may not be the target market you are trying to reach. But what about the audience you are trying to reach? According to Comscore, as of April 2017, there are 51 million users of OTT services. The majority of people who use subscription based services do so in conjunction with their pay TV. To them quality content is the driving force and having quick access to that content is key. For these folks, streaming is more of an enhancement to their viewing habits than a replacement.

Your Investment

This means your investment in TV/Cable will still have an impact on your customers. If your content is relatable, runs during peak viewing periods and on the most popular networks, you will see positive ROI. Bottom line, pay TV still gives you access to your target audience. In fact, a consumer insights survey done by SNL Kagan indicates that many Millennials are opting into pay TV subscriptions once they earn a higher income.  And once they do you will be armed and ready with the right message to draw them off the couch and into your dealership. This surely comes as a surprise to many dealership Owners, General Managers and Marketing Directors who have been told repeatedly that pay TV is dying!

Yet despite this, it would be a mistake to ignore the value of OTT. The media-buying department at our agency’s goal is to explore all avenues to come up with not only the most effective and the most efficient media plan possible for our dealership clients. When utilized in conjunction with pay TV services, OTT and pay TV can each become even more effective, which leads to more sales and better marketing ROI for our dealership clients.

 

Hillary Turner is a Media Buyer at CBC Automotive Marketing, a full-service marketing agency for auto dealers. She can be reached at [email protected], or 800-222-2682, ext 134.

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