Advertisers looking to replace the reach lost due to pay TV's steadily decreasing subscribers and household penetration should consider moving more of their budgets to network radio, according to an analysis of current trends and sample media plans in Westwood One's weekly blog.
“It is getting harder to build national media plans with sufficient levels of reach,” Cumulus Media/Westwood One Audio Active Group Chief Insights Officer Pierre Bouvard says. “One of the key reasons is the alarming drop in cable TV penetration. Many media plans need cable TV for all of the impressions and the reach it can generate on a national level, but the news has not been good in the world of pay TV penetration.”
The blog cites figures from media analyst firm MoffettNathanson's quarterly “Cord-Cutting Monitor” report showing that cable subscriptions, which trended down just 2-3% in 2015-16, hit a 10% quarterly reduction rate by Q3 2022. Meanwhile, cable's U.S. household penetration, which peaked at 88.9% in 2009, has fallen to 48.4%, a 35-year low. The result, based on MoffettNathanson's estimates, is that there are currently 55 million homes outside the cable network ecosystem, and that half of American homes will not see traditional cable network ads. “This is an unprecedented erosion with no end in sight,” notes Bouvard.
Using models from Nielsen Media Impact, Westwood One's analysis shows that shifting media budgets from linear TV to either digital and social media or connected TV fails to significantly grow incremental reach. In the former case, the blog points out, a shift of 10% of linear to digital and social actually results in a decline in reach, while reallocating 20% of linear to connected TV brings only a 13% reach increase. “One of the challenges of connected TV are the pricey CPMs, so it eats up a lot of your budget to get that pretty expensive lift in incremental reach,” Bouvard says.
Investing in network radio, however, generates a monthly national reach of anywhere from 46% to 59% of Americans, according to Nielsen Media Impact. Using Nielsen's Commspoint media planning tool shows that whether investing $1 million or $5 million, network radio generates greater reach than TV and digital. “In comparison to other national media platforms, these are affordable options,” Bouvard says. “As you increase the investment level up to $5 million, that investment in network radio is reaching far more Americans than the same investment in TV and digital.”
Comparing a media plan that consists of 68% linear TV, 13% CTV, and 20% digital to one with a 10% allocation for network radio with the same spend, the blog shows that, according to Nielsen Media Impact, reach moves from 57% to 80%, representing an increase of 41%.
The analysis goes on to show that at any ad spend, moving 20% of an advertising budget from TV and digital to AM/FM radio results in reach increases, where a half-million dollar outlay moves from reaching 9% of Americans to 19%, at $2 million from 27% to 43%.
“Regardless of budget size, a 20% reallocation to network radio generates really outsized increases in campaign reach,” Bouvard says.