Are You Paying A Premium To Reach The Wrong Television Audience?
For four decades, the holy grail of television media buyers has been the 18-to-49-year-old demographic.
Advertisers have always paid significant premiums to reach them, and still do. But should they?
During the prime-time television season ending in May, according to Nielsen, advertisers paid networks an average of $35,000 per thousand 18-49 viewers who watched a 30-second commercial. They paid an average of $30,500 to reach the same number of viewers aged 25 to 54 watching the same commercial on the same program. That’s about a 15% premium.
A :30 commercial on CBS’s The Big Bang Theory cost $181,000 to reach 2.28 million 18-49 viewers. Reaching 2.7 million 25-54 viewers with the same commercial on the same show cost $154,000. That meant paying nearly 18% more to reach an 18.4% smaller audience.
And all because of some outdated assumptions about consumer spending.
Myth vs. reality
Best practices, also known as conventional wisdom, said that 18-49 consumers were the low-hanging fruit.
They were too young to have established firm brand preferences. They were just old enough to start making major purchases. With fewer major obligations early in adult life, more of their income was truly discretionary.
The Obama Recession changed all that.
“Consumers aged 18 to 24, many strapped with college debt and living in their parents’ basements, aren’t forming households or starting families the way their predecessors did,” Bloomberg Business Week reports.
Baby Boomers and retirees, by comparison, are doing pretty well, thank you.
While they’re not better off than they were four years ago, the recession has shrunk 45-to-64-year-olds’ median annual income by 2.1%, to $60,700, according to U.S. Census data. Over the same period, 18-to-24-year-olds’ median income fell 9.7%, to $24,140 — and you can’t do a lot of buying with that.
Making up for delayed gratification
Older consumers not only have more money to spend, but also feel freer to spend it. Most have grown children, are in their peak earning years, and are still a decade or more from retiring, says Peter Gardiner, national media buyer at advertising agency Deutsch.
They’re ready, willing and able to make up for years of delayed gratification.
“Now the relatively better-off consumers in their 50s are willing to try new products—and have more cash to buy them,” says Bloomberg Business Week. That willingness extends to all sorts of luxury products — giant-screen HD televisions and other electronics, luxury cars, big-ticket vacations and, as they get older, healthcare and prescription medicines.
They’re not spending their grandchildren’s inheritance, but they are making a dent in it.
No wonder Loren Angelo, general manager of Audi brand marketing, says, ““This demo[graphic] is the cornerstone of what luxury marketers are looking for today.”
New life in the elephants’ graveyard
For years, competitors and media buyers alike tended to look down on CBS, which, with an average viewer age of 57, was regarded as the elephants’ graveyard of broadcast network television.
But now Fox (median viewer age 45), NBC (50) and ABC (52) are the ones playing catchup.
They have to, because in the prime-time season ending this past May, fully half of the 30 shows most watched by viewers 25 to 54 years old aired on CBS.
Follow the money
What’s true nationally is also true for local Richmond advertisers.
If you’re selling anything but the cheapest commodities, it may pay to rethink your target audiences and go after aging Boomers and younger retirees.
That’s where the money is, as well as the desire to spend it.
In any event, you should resist paying higher costs per thousand to reach a smaller group of viewers with substantially less cash on hand.
Oh, and if you’re planning to advertise on prime-time television, you could probably do a lot worse than Channel 6, our local CBS affiliate.