‘A blunt instrument’: Is TV’s 25-54 trading demographic still relevant?

Over the last few decades, the 25-54 demographic has become the most important to advertisers looking to purchase slots on television. So much so that if a broadcaster reports on figures outside that window, it is immediately criticised as not being reflective of what advertisers want.

‘Advertisers are only interested in the 25-54 demographic’ is a common response to ratings reports that fall outside this core demographic. But this statement isn’t even remotely true. In online media, advertisers are increasingly pinpointing specific groups of people that may or may not lie within that demographic group. And what’s more is that programmatic networks enable advertisers to target in terms of interests rather than demographics.

This approach has also been adopted by Netflix, as indicated by the company’s vice president of product innovation Todd Yellin who said earlier this year that demographics were “almost useless” in terms of understanding its audience.     

“Everyone’s instinct was, ‘Yeah, if you find out their age and gender data, that’s fantastic’. But what we learned is: it’s almost useless,” Yellin said at South by Southwest this year. “Because, here’s a shocker for you, there are actually 19-year-old guys who watch Dance Moms, and there are 73-year-old women who are watching Breaking Bad and Avengers.”

Of course, Netflix is in the privileged position of not being beholden to advertisers and this enables the company to criticise the system that has until now been used by traditional TV players to generate revenue.

It’s also worth noting that with a mass media platform like television, the aim has traditionally been to reach as many people in the demographic group that is perceived to be the most attractive to advertisers.

“TV still packs more punch in terms of mass reach than any other channel, for most demographics including this one, but compared to other options it is increasingly a blunt instrument,” says JustOne managing director Ben Goodale.

The phrase ‘blunt instrument’ also reared its head in our correspondence with ANZA chief executive Lindsay Mouat, who said: “We are dealing with a much more complex media environment than when demographic targeting was established. If you take 25-54 for example, in a homogeneous media market that tended to deliver a 55-plus audience as well. No longer can you make those assumptions.”

Mouat points to the fact that age is not necessarily indicative of consumers’ preferences in the modern age.

“Demographics have been a hugely useful planning and buying tool for many years but now seems like a rather blunt instrument,” says Mouat. “Behaviours and attitudes transcend life stages to a much greater extent. New parents can be found from 15 to 50-plus and that doesn’t take into account the grandparents who are reinventing themselves as parents on behalf of their adult children.”

This statement resonates with TVNZ research showing significant changes in the nation’s demographic makeup.

“A quarter of the population is over 55 now,” says TVNZ group insights manager Kathryn Mitchell.

What this means is that over one million New Zealanders fall outside the core demographic group used in the buying and selling of advertising. So why is this standard still being used?

“It’s probably quite a historical thing,” says Mitchell. “We talked about it internally at TVNZ, and asked ‘why do we do this and where does it come from?’ It’s just been the way that life has evolved. Going back 20 to 30 years that was the demographic people were targeting and that was the demographic that was buying. Things have really changed.”

But just because they aren’t explicitly included in the core demographic doesn’t mean they’re left out entirely.

MediaWorks’ head of insight Sharon Daly explains: “25-54 is one of the demographic groups that TV broadcasters use to target some channel brands towards, and while it is a demographic which is commonly used by advertisers both here and internationally, it is just one of more than 30 commercial trading demographics which operate in this market. Add to that, advertisers can analyse and report on an almost limitless combination of audience segments – so they are not restricted in any way to using 25-54. Channel targets act as a bullseye for the channel – they help guide decisions around the acquisition and commissioning of programme content, but are not prescriptive. In fact, individual channels are targeted across a variety of target groups which extend well beyond pure demographics. And a ‘bullseye’ target for a channel does not mean that audiences outside of that demographic do not come to enjoy content.”

Goodale agrees with the notion that the approach used in television doesn’t exclude the older demographic.

“I’m not sure they are excluded,” he says. “It’s just they tend to be viewed by mainstream advertisers as being mopped up by the wider reach. But as we know, 55 is the new 45 or even 40, so to be honest increasingly media planners will be re-cutting that variable. Again, as we see a massive fragmentation of media, this group will become more important as part of a media buy.”

Mitchell points out that advances in technology and medicine means that those born in today’s generation are likely to live to the age of 95 on average—meaning the gap between the traditional retirement age of 65 and likely age of death has stretched to 30 years.

Because of the longer life expectancy, people are staying in the workforce for longer and they’re maintaining their buying power.

“They are buying new cars for the first time and spending lots on travel,” says Mitchell of those over 65.

The trend of the older generation purchasing new cars was brilliantly covered by Bob Hoffman on his blog, The Ad Contrarian, in a post that criticised automobile marketers for “their idiotic habit of targeting people 18-34 for ‘youth cars’ despite the fact that 88 percent of the people who buy these cars are over 35″.

According to Hoffman, many marketers refuse to target older consumers because of the fear that younger consumers might veer away from a product on account of it being perceived as old or uncool. This misconception, says Hoffman, overlooks the fact that people such as Barack Obama, Jerry Seinfeld and Meryl Streep are all older than 50 and living healthy, active lifestyles.

Another reason why marketers tend to stick to the younger demographics is because people often perceive themselves as younger than they actually are—and this was again proven true in the TVNZ study, which showed that those surveyed felt seven years younger on average than they actually were.  

Mitchell says the reason why TVNZ looked into older demographic was to see their behaviour.

“Because the ageing demographic is getting so much larger, it’s still a very worthwhile demographic to be looking at. It’s less about targeting by age and more about targeting by behaviour. It’s about who they are, what they’re doing and how they’re feeling about things.”

These insights are more closely aligned with those that Netflix uses in deciding what programming to invest in.

And Goodale points out that television networks have for sometime also based many of its programming decisions on broader interests rather than on a set age group. 

“They’ve done this for years through developing thematic strands such as cooking, gardening and DIY shows and then offering advertising and sponsorship packages around them,” says Goodale. “Sport is another key strand, and Sky have built their channel on access to sport. It’s no coincidence that a lot of the major investment the networks are doing are in these lifestyle strands where they can deliver unique local content that can’t be delivered via platforms like Lightbox and Netflix.”

However, these packages are only part of the picture when it comes to a broadcaster’s revenue, and television companies still rely on ratings, predominantly in the 25-54 demographic, to sell ads around most of their programmes. And Goodale believes there’s definitely room for improvement in terms of how these ad placements are sold.   

“Media owners could deliver a better solution; Sky for instance have their own decoders and these have always had the potential to deliver highly granular audience information,” says Goodale.  

“However, as there hasn’t been the market pressure, this hasn’t occurred before. But now with the tsunami of intelligence being delivered via big data for our online media planning, it would be a surprise if Sky and the other networks weren’t investing in providing richer analytics.”

While Sky has always had access to extensive user information through its subscriber model, the free-to-air players haven’t been privy to anything comparable.

To fill this gap, TVNZ introduced a subscriber model to its on-demand offering earlier this year. And since then, over 750,000 verified users have already signed up and are using the service regularly. 

“Even though linear is still the bulk of our revenue train, the business model is changing,” says Mitchell.

“It’s all about video now, and that’s why we’re putting a lot of money into on-demand … Being able to use the subscriber information, we’ve got age brackets and gender and obviously which shows people are watching. It just gives us multiple data sources to be able to paint a much better picture. It definitely has helped.”

Adding further context to viewers’ habits and preferences is the TVNZ’s Green Room initiative, which gives TVNZ direct access to active members of its audiences.

“I’m a strong believer in the fact that different data sources provide you with that full story,” says Mitchell. “And through forecasts and doing research we can learn so much, but now we can also go into the Green Room to understand TV and viewing habits.”

TVNZ’s investment in this research has been made strictly because the accuracy of online targeting has changed the rules of advertising.  

And as Goodale says: “The vagueness, which perhaps in the past has worked for [TV], is unlikely to work going forward.”

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