Advertisers have a problem, and it’s worse than they thought. The decline of ad-supported television is driving down audience engagement with brands. A new analysis of consumer conversation patterns by Engagement Labs reveals conversation frequency among the most prolific consumer conversationalists—young people—has plummeted.
As cord-cutting and advertising avoidance expands to older segments, brands will find it increasingly difficult to achieve their marketing ROI objectives, unless they respond with new approaches that not only reach consumers but also inspire brand engagement. Why does this matter? Because conversations among consumers drive about 19% of purchases, according to a new paper published in the MIT Sloan Management Review, including conversations that are triggered by paid advertising.
The analytics behind the new report, “Cutting the Cord That Engages Us,” reveal that over the last five years, the number of consumer conversations about brands per week among teens have dropped from 115 per person per week to 95, while among twenty-somethings the drop is from 102 to 93 per person.
There is reason to believe that the culprit is declining exposure to television commercials, as millennials are cutting their cable cords in favor of streaming services—or never getting a cord in the first place, becoming members of the so-called “cord never” cohort. Television ads have historically played a large role in helping to drive conversation, according to Engagement Labs.
“The golden era of television made it relatively easy for brands to engage consumers, by inducing them to watch commercials with full motion and sound,” said Ed Keller, CEO of Engagement Labs. “To succeed in this new era, advertisers will need to be more creative, more relevant, and more interesting if they are going to engage consumers and earn a return on their marketing investment.”
Among paid-ad related conversations, there is a large shift away from TV and other traditional advertising channels toward digital. Desktop and mobile ads have leapt into first place among the leading channels, with 31.8% of all paid-ad inspired conversations related to a digital paid ad, up from 16.6% five years ago. Meantime, TV ads have dropped from first place at 37.4% in 2013 to second place at 31.6%.
The Engagement Lab report identifies that across the U.S. population overall, the biggest declines in conversations are concentrated in our most innovative industries—technology, telecommunications, automotive, media/ entertainment, and sports. All these categories have seen a double-digit percentage decline in the number of conversations consumers have each week over the last five years.
In addition to tech, telecom, and media, younger consumers are talking less about beauty, retail, food/dining, and beverages.
Looking at 15 brands suffering some of the biggest fall-offs in conversations in those categories, 13 are on the list of the biggest advertisers of 2017, including four of five tech and telecom brands, and all five automotive brands. This supports the idea that declining ad effectiveness is a key issue.