Making The Universe Make Sense
In my world, much of what is going on in online metrics converges around 3MS, “Making Measurement Make Sense,” a collaborative initiative among the IAB, the 4As, and the ANA. I admit, I might have been a little skeptical about 3MS at first; but it has done a really nice job of assessing the landscape -- with an emphasis on what advertisers, who ultimately pay all our salaries, really need. Making digital as hospitable as possible to big brand advertisers is of critical importance as we continue our collective robust growth, and 3MS is corralling the various constituencies toward driving this goal. So I’ll probably offer a couple of posts in this space about 3MS.
Here’s the first one.
Not long ago, I saw a presentation update on 3MS. Something caught my eye on one of those fancy Bain consultant slides, something that I originally assumed was a typo: that the relevant universe for evaluating digital campaign reach should be TV households. I know that at comScore, we periodically field inquiries about whether the base for digital campaign reach should be Internet users or the total U.S. population. And of course the consensus answer is, the total population. Advertisers are interested in selling goods and services to all persons, not just those who accessed the Internet from a home-owned or work-owned computer in the past month. So naturally I assumed the same applied to TV users -- that advertisers wanted to reach all consumers, not just those with a TV set in the home.
I mean, think about it. No one would define their potential marketing target as limited to households that subscribe to newspapers -- or households where members read magazines, or own a radio.
Turns out, though, that this wasn’t a typo. As it was explained to me, using a base of TV households -- even to evaluate digital delivery -- is necessary because those big brand advertisers for whom we’re trying to make digital more hospitable, want to compare everything to TV.
I think this is wrong. And I’m hoping that by the end of this column, you’ll agree.
First off, it’s worth considering why a base of TV households has been accepted to be a reasonable universe surrogate in defining marketing targets. It is understandable: Historically, TV households represented about 98%-99% of total households, and the working assumption about the remaining 1%-2% was that you were mostly dealing with the indigent poor.
Clearly, though, this is no longer the case.
Cord-cutting -- the phenomenon in which consumers eschew not only cable and satellite TV, but also broadcast TV, relying solely on digital streaming and DVD rental and purchase -- is on the rise. We’ve tracked it at about 6%; most estimates I see peg it in the 4%-6% range. Nielsen, the company that provides network TV ratings in the U.S., showed the first decline in households with TV sets in 20 years in 2011, with TV household penetration declining from 98.9% to 96.7%. That’s not a trivial di
But let me offer two points to place this in context. One is that the profile of cord-cutters is one of extremely desirable consumers: they tend to be young, upscale, and tech-savvy. The key point here, dear digerati, is that these are lucrative consumers with a long and valuable customer life cycle ahead of them -- and you can deliver them, while TV cannot. Do you really want them excluded from the base when your audiences are calculated?
Second, take a look at this chart. That’s a trend of data from the CDC’s NHIS (National Health Institute Survey), the de facto industry source on the size of the cell-phone-only (or, let’s call it the telephone cord-cutter) population. Circa 2003, 2004, telephone cord-cutters ran around 4% or 5%, right where TV cord-cutters are at today -- and that number hasn’t stopped growing. As of the latest survey, 30.2% of U.S. adults live in households without landlines, but with mobile phones (having replaced traditional service with strictly digital, wireless service.) But that’s total households; when you look at specific demographics, the phenomenon is even more pronounced. Fully 47% of 18- to 24-year-olds are telephone cord-cutters, as are a whopping 58% of 25- to 29-year-olds. (The 18-24 demo is lower because some of them still live with their folks.)
And the thing is, these people are not going to wake up one morning, look in the mirror, and say, “Good gracious! I’m 40, I have a mortgage, I’m married with 2 kids -- I need me a landline!” That’s never going to happen. Once the cord is cut, it’s cut for life.
If the growth of TV cord-cutting turns out to resemble the growth of telephone cord-cutting even a little -- and I’m betting it will -- then the sooner advertisers abandon the 20th-century TV household construct, the better for everyone. And no less an authority than, well, Bain itself forecasts that “Almost one-third of households are likely to cut the cord given the right alternative.”
Let’s not kid ourselves. When the universe is TV households, then no matter how pervasive digital is, and how dramatically the traditional TV household universe erodes, TV will always fare better than other media on the scorecard. Just as newspapers still reach 100% of people who read the paper.
I’ve always found that marketing and media people at advertiser companies are eminently reasonable. And moving all media -- even TV -- to a total population base is the eminently reasonable thing to do. But for those of us in the digital space, I would call it imperative; otherwise, we collectively institutionalize an inappropriate bias in favor of TV, by specifically excluding from audience reach calculations a very desirable, elusive and high-value segment of the population -- one that can really only be reached effectively via digital media.