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Thursday, August 2, 2012

Poverty, An Aging America, and Television Viewing

Recently, the federal government released their poverty guidelines for 2012. The new standard in the contiguous 48 states for a family of four is $23,050. If your household income is below that, you are considered to be living in poverty.

In the last few weeks, the Associated Press polled a sample of economists, think tanks and academics and asked them to project a poverty rate for the US for this year. The consensus was 15.7% of the population living in poverty, which, if accurate, would be an increase from the 15.1% official figure for 2010 and a new record in modern times.  At the same time 46 million Americans are on food stamps and 6 million Americans currently have no other income but food stamps, which puts them at around one third of the poverty line. The lowest poverty level using the current measurement standards was in 1973 when Dick Nixon presided over a rate of 11.1%.  In 1964 President Lyndon Johnson declared a “War on Poverty” and by 1965 had Medicare and Medicaid in place. Poverty levels declined in Johnson’s term and during the Nixon years that followed but since then, in good times and bad, have tended to inch up.

Part of the problem is that many of the jobs created in recent years have been low paying positions in the service sector. Half of the jobs in the nation pay less than $34,000 according to the Economic Policy Institute. Unless we have more jobs that pay good wages, it may be hard to lower the poverty rate significantly no matter who is elected president or which party wins Congress this November.

Another issue that has come up recently is that Social Security is keeping many millions of elderly from poverty. This is absolutely true despite the heavy attacks of those who attack a system that very much needs reform. But consider this: The “average” woman 65 years old drawing Social Security receives about $950 per month while the average male of the same age gets a monthly check of approximately $1100 (this changes constantly so may be different by the time that you read this post). Also, most do not have defined benefit pensions, large 401k balances or IRA rollovers or private investments spinning off substantial cash. They may not formally be in poverty but most are not living La Dolce Vita either.

Thanks for your patience. Here is how this all ties in to TV. Increasingly, for most Americans TV is their dominant form of entertainment as it is the only one that they can afford. And there are two axioms that you always need to keep in mind when buying television:

1) The less money that you have, the more TV you tend to watch

2) The older you are, the more TV that you tend to watch

So almost by definition, TV has to be becoming more downscale as poverty levels grow and more baby boomers turn 65 (10,000 per day).

Talk to any media planner or media director or media strategist and they will invariably mention the tight targeting that is implicit in any media recommendation that comes from his/her hands or that of the agency team. But, when the buy is executed, is that really true?

Most broadcast negotiators today continue to buy simply on Nielsen’s gender and age statistics. The planner may do analyses from Simmons or MRI and suggest certain programming. That is why for years there has been a two-tiered pricing structure with primetime network TV shows. Negotiators rush in and bid up the cost of programming that delivers a blue chip demographic. As upscale people and particularly upscale younger people view less, advertisers will pay a lot to reach them when they can.

But, in spot broadcast across 200+ markets, a lot of that breaks down. Take local news, for example. Thirty years ago, it may have been marginally upscale in some markets. Now, if you earn six figures plus, you are still at work at 6pm or maybe, if you are lucky, fighting traffic. You are definitely not tuning in to the local news in large numbers at that hour.  If you are buying Adults 18-49, however, those in that age cell watching the news could be moderate to low income and many could be living in poverty. This is not true in every market but definitely the case in many. Ask you local affiliate to do a special tabulation with Nielsen breaking out the income skew of their news or access programming. Even if you are a substantial advertiser, I bet few will be willing to do it. Your salesperson may not even know the real story but I bet the general manager and sales managers do.

Many other programs across the day are increasingly getting more and more downscale. This is a wonderful opportunity for local cable systems to increase market share. Thirty years ago, when cable was beginning to make its mark as a national advertising force, sales people often referred to the new advertising medium as a form of “video publishing.” What they were saying was that with proper channel selection, cable gave you the selectivity of interest that magazines do.  It was a nice positioning and helped the news channels, business channels, Discovery, History Channel, and, of course, ESPN, to gain a nice foothold among viewers.

If cable systems pushed their upscale channels more vigorously, they might see some nice growth. Most advertisers say that they want $50k+ households at a minimum. Well, do the syndicated judge shows give you that? I doubt it across the board. But BBC America, to use an extreme example, does along with dozens of others (As an aside, I tried to find out how many people living in poverty have cable or satellite. I came up empty, as it does not appear to be published anywhere).

As long as buyers use Nielsen for age and gender only, a lot of money will be wasted. A planner may suggest certain programs but how much of that goes out the window when the buy itself is executed? People are busy today, many seriously overworked, and the care and attention to detail that is needed often is not taken. Someone may get a perceived “deal” but the deal means little if the viewers to the programs purchased largely cannot afford or have no interest in your product.  Reaching the downscale and old in many cases does little for your brand.

We all hope for a return to the prosperity of years past. It may be a while or sadly perhaps a long while. In the meantime, the time honored method of buying TV is causing perhaps a billion dollars to be spent in the wrong places.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

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