Pay-TV is struggling to survive COVID-19.
Before the onset of the pandemic, Nielsen reported that 69% of Southeast Michigan area households received their television programs from cable systems, telephone companies, or satellite operators. That number, however, is plummeting.
Pay-TV providers in the Detroit area include Xfinity, Dish, AT&T TV, Spectrum, and DirecTV.
"Cord-cutting, people dropping their cable and satellite TV subscriptions, pre-dates the onset of Covid-19. But the pandemic is exaggerating the trend, creating deeper issuers for programming that relies on those services for distribution," Eric Savitz wrote last week in Barron's. This includes non-premium services like ESPN, TBS, TNT, USA, CNN, and Discovery.
"LightShed Partners analyst Richard Greenfield counts a loss of 1.96 million subscribers to cable, satellite TV, and virtual cable services combined in the first quarter," Savitz continued. "This is the worst combined quarterly drop ever, down 6% from a year ago."
Greenfield said in an interview with Barron’s that what is especially sobering is that most of the first quarter activity pre-dated the virus. The numbers are likely to get considerably worse in the second quarter.
For many years, some Metro Detroit small business owners have been choosing to advertise on Pay-TV as an alternative to higher-priced broadcast TV options. Since 2013, however, the households without a subscription to a Pay-TV service have more than doubled. This has profoundly curtailed the number of people who can be reached by an advertiser's message.
Why Reach Is Critical
In a study of advertising effectiveness, Nielsen discovered that of all media considerations, reach has the single greatest effect on sales. It is more important than targeting, branding, context, or recency.
Percent Sales Contribution by Advertising Element
The Wall Street Journal expects the advertising reach for Pay-TV services will only worsen as subscribers continue to cancel in unprecedented numbers.
"Cable and satellite companies warned in recent weeks that the pace of cord-cutting could pick up as the pandemic pinches U.S. households, particularly if live sports, one of the biggest draws of having a cable package, don’t return to action for a long time," the Journal reports.
The Pay-TV defections aren't limited to the living room. The Journal also reports heavy cord-cutting among commercial subscribers like bars, restaurants, and hotels.
As local small business owners prepare to reinvigorate sales post-COVID, they should consider shifting their advertising investments from local Pay-TV to Detroit radio.
Before the onset of the pandemic, Detroit radio reached more adult consumers every week than Pay-TV as well as all other advertising media. This includes broadcast TV, local newspapers, social media, or streaming audio sites like Pandora and Spotify.
Research from Nielsen indicates that during the current COVID-19 crisis listening to local radio remains little changed.
In March, for instance, local radio achieved 96% of the same audience as it did in February, before the start of the chaos. This trend has continued through May as well. Consumers still report they are listening to the same amount or more radio than they did before the pandemic.
The most vigorous Pay-TV cord-cutters are millennials. In Metro Detroit, these 18-34-year-old consumers create almost 1/3 of all economic activity. This is an audience most local business must reach to be successful.
According to Nielsen, of all advertising media, Detroit radio has the largest reach among millennials. This includes a 70% advantage vs. Pay-TV.
In addition to superior reach, advertising on Detroit radio provides an additional benefit for local business owners.
According to Nielsen, a typical Pay-TV subscriber will watch 25 different channels per week. This audience fragmentation makes it very difficult for an advertiser's message to reach a target consumer.
Detroit radio listeners, on the other hand, are very loyal. A typical consumer will limit their station selection to just three stations per week. Unlike Pay-TV services, this makes target listeners much easier to reach.
Cord-cutting is not a byproduct of the Coronavirus. The pandemic, however, has accelerated the erosion of Pay-TV's audience. At the current rate of attrition, a recently published report from Convergence Research Group predicts with great certainty, that by 2022, fewer than half of all homes will still be paying for television programming to be delivered by cable or by satellite.
More Great Advertising Advice For Detroit Small Business Owners
- How To Bring Employees Back To Your Detroit Small Business
- Detroit Small Business Advice: Facebook Advertising During Pandemic
- Reclaim 'Top Of Mind' When Your Detroit Small Business Re-Opens
- Who Do Detroit Consumers Trust During A Crisis?
- Web Traffic Is Soaring For Detroit Small Business Owners
- Who Listens To Commercials On Detroit Radio?
- Advertising On Detroit Radio Remains Best Option During Corona Crisis
- How Do Metro Detroit Consumers Spend Their Money?
