Do you have a "canary" or radar for predicting disruptive trends?
Early coal mines did not have ventilation systems. So, miners would bring a caged canary into new mine shafts. The reason was that canaries are especially sensitive to methane gas and carbon dioxide. The canary's life was often short, but meaningful in terms serving as an early warning system for lethal conditions the miners could not detect. Retailers and brand marketers have been relying on the same metrics and "alerts" for many decades. But, the recent shifts in consumer consumption behaviors may not even show up on these outdated systems. For example, millennials are ditching their TVs in record numbers. What does that mean for retailers? What is the "canary in the coal mine" for todays' omnichannel consumer?
Why this is important: Old habits die hard. Many marketers are clinging to media and metrics of the past when consumers are literally disappearing. The changing pattern of omnichannel consumption requires detecting trends … early!
Millennials are ditching their TV sets at record rates
I was actually a bit surprised to see how much press the NY Post article received. Perhaps, it was the elegant title that captured the essence of this significant trend: "Millennials ditching their TV sets at record rate". Here are some of the salient stats for millennials in the US:
- In 2011, 21.7 million young adults tuned into TVs to watch their shows
- By 2015, that number has dropped to just 17.8 million, a decline of 20%
- Yet, in 2014 the consumption of video viewing grew 22%
In the words of Alan Wurtzel, NBCUniversal's audience research chief, "The change in behavior is stunning. The use of streaming and smartphones … is double digit increases. I've never seen that kind of change in behavior."
Old media and metrics are being totally disrupted by consumer behavior
The implications for marketers will be profound. More than $80 billion is still being spent on the TV ad market in the US. The core audience segment that marketers depend upon reaching is the 18-49 year old demographic. Given the shift in viewing behavior of millennials, the median age of viewers watching TV sets hit 50 this past year.
The gold standards of measuring traditional media like TV and print media are:
- Reach
- Frequency
- Impressions
- Ads watched/viewed
- Conversion … or at least action
If 20% of the core 18-49 demographic disappeared from TV sets, are those traditional metrics still valid? More importantly, where are those missing TV viewers and how do we measure them in today's omnichannel world?
In search of the missing millennials … and even their parents
The key to finding the missing millennials in front of TV sets is their changing behavior. Instead of being a stationary couch potato, the millennials are much more likely to be mobile and use their tablet or mobile device to consume media. Like the omnichannel shopper, millennials are now consuming entertainment any time and everywhere. And, the key to this changing consumption pattern is streaming media on HD mobile devices.
Television sets were king when most media came via broadcast, cable and DVDs. The ability to stream media means that millennials can literally cut the cord. And, it's not just the millennials cutting the cord. Wurtzel's research shows that subscription viewing increased 22% in 2014. Millennials, and even their parents, are watching online streaming video from Netflix, Amazon Prime, Hulu, and HBO Go. While the standard broadcast networks are now realizing revenue by packaging their TV series for purchase via streaming sites, there is a critical behavioral difference … people aren't viewing the ads, or the ads that would have been present on the TV set broadcast have been removed entirely from the streamed version.
In search of new metrics …
Some have argued that the new smart TVs connected to the internet will bring viewers back in front of the TV set in the living room. Perhaps, it will bring some viewers back to the bigger screen, but the connection to Wi-Fi only accelerates the potential that views will be surfing and signing up for streaming video that enables them watching what they want, when … and without all those annoying ads!
In short, millennials are the digital natives who are most comfortable with a tablet than a TV. They are also the "canary in the mine" for traditional broadcast media and metrics. The historical metrics TV reach, frequency and impressions mean nothing if the viewer is not watching broadcast programs, or even being exposed to the TV ads the marketer paid for.
Viacom CEO Philipe Dauman has accurately pinpointed the core issue for marketers: "Industrywide declines in ratings are generating debate about ways to close the gap between currently accepted ratings and actual consumption".
The major shift in millennials viewing behavior highlights the need for:
- Ways to track consumers across media, especially across social media
- Measuring actual consumption of media, regardless of device
- What kinds of "ads" they respond to in the context of viewing streaming feeds
- Developing new metrics to measure consumer engagement with a brand
Why retailers and marketers need their "canary in the mine"
As I travel around the world working with retailers, the one comment I hear again and again is: "Things are just not working the way they used to." Guess what, they will never work the same way again, because of the fundamental change in consumer omnichannel behavior. Omnichannel is the new normal! It's not just shopping for products. It's everything … including how consumers are actually consuming entertainment.
I suppose that marketing has never been stable or consistent. Catalog retailers and marketers had a wakeup call as consumers gradually turned to email and then ecommerce. What is so different about today's shift in consumer behavior is the accelerated pace of change … 22% increase in streaming video viewing in 2014 alone!
The challenge for today's retailers and marketers is that their scorecards are filled with metrics from tracking predictable consumer patterns based upon behaviors of the past. The canary in the coal mine is the appropriate metaphor for the need to develop early warning alerts for dramatic shifts that pose significant disruption risks to business success. Chances are, Blockbuster did not have a "canary" focused on how major shifts in consumer behaviors resulted in lethal shifts away from old patterns of consuming media.
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Sources:
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New York Post: Millennials ditching their TV sets at a record rate, Claire Atkinson; February 16, 2015
- Canary Bird Image: Gualberto107; Freedigitalphotos.net
- Millennials Watching TV Image: Imagerymajestic; Freedigitalphotos.net
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