Market Data Key For Mapping Your Future

Up-to-the-minute market data is all the rage in the media industry. Advertisers are increasingly demanding data that go beyond the traditional gender and age demographics. In fact, as Advertising Age recently reported, the TV upfronts included networks such as Hallmark offering secondary guarantees to deliver impressions on more specific targets, such as heavy frozen food purchasers.

At the same time stations look for big data solutions to meet these demands from product marketers, Nielsen demographer Ken Hodges points out the need to be aware of market trends that are evolving over longer periods of time. U.S. Census Bureau reports are a good place to find that information.

“Census data speaks to larger trends of growth and decline as well as peculiarities of smaller geographic pockets that can impact media strategies,” observes Hodges in an article appearing in the current issue of MFM’s TFM – The Financial Manager magazine. He includes examples of trends that can influence such things as a station’s private market value and its programming decisions.

As Hodges explains: “Demographic trends can be inexorable, with impacts that are powerful and long-lasting. Media companies need to monitor such trends to better understand the populations they serve, and how they are changing.”

He goes on to say that the U.S. Census Bureau’s population projections are valuable not because they reveal anything very surprising, but because they tell us where we are headed, barring a startling development, such as Hurricane Katrina’s impact on the New Orleans DMA.

In an approach similar to that used by advertisers who combine general demographic data with more specific purchasing characteristics of viewers, the Census data starts with a general look at overall populations shifts and then drills into characteristics concerning the individuals comprised in these numbers.

As Hodges points out, the formula demographers use to model the future is simple enough that it can be represented by a single sentence instead of a complex mathematical equation: An area’s future population is equal to its current population plus people born, minus people who die, plus people who move in, minus people who move out.

Hodges says: “No one has data on future births, deaths, and immigration, but a population’s current age/sex composition says a lot about what we can expect.” So, the Census Bureau used this component-of-change approach to project year-by-year changes that take us from a population of 309 million in 2010 to a 2060 population of 420 million.

This type of Census data projection can point out trends that need to be considered when making business decisions such as programming acquisitions. Here are some examples of the overall market trends that Hodges says become apparent when studying U.S. Census data:

• The U.S population is getting older. Median age increased from 28.1 in the 1970 census to 37.2 in 2010, and the projections tell us it is likely to rise to 38.3 in 2020 and over 40 by 2040.
• The aging of the population is not just about how many people are getting older, but how few are being born. The population under age 5 was as high as 11.3% of total in 1960, but fell to 6.5% in 2010, and is projected to drop slowly to 5.9% in 2060.
• The population is also becoming more racially and ethnically diverse. The Hispanic population has grown from 6.5% of total in 1980 to 16.4% in 2010, and is projected to reach 30.6% by 2060. Asians have grown from 1.5% in 1980 to 4.9% in 2010, and are projected to reach 8.2% by 2060.
• As a result of immigration and cultural influences, demographers see a younger and more diverse population replacing an older, less diverse population. They expect the U.S. will become a “majority-minority” population by 2043, with white non-Hispanics accounting for less than half of the population.

“Immigration is the wild card in these population projections, as it is influenced by economic, political and social circumstances — often in other countries,” Hodges warns. However, he believes the data revealing modest fertility rates and the elevated mortality of an aging population makes it clear that total population growth will depend heavily on immigration.

The Census can also provide details on the characteristics of local populations that may contrast with national trends. One of the examples Hodges cites in his article has to do with aging of America. While the total U.S. population is getting older, the latest Census Bureau estimates identified four states (Alaska, Hawaii, North Dakota and South Dakota) and 506 counties where median age has actually declined since 2010.

There are also instances where local markets seem to be bucking the trend toward greater diversity. Census estimates show 1,167 counties (37% of the national total) where 90% or more of the population is white non-Hispanic. There are also 178 counties where the percent of population that is white non-Hispanic has increased since 2010.

Hodges says a valuable tool for tracking local demographics is the Census Bureau’s American Community Survey (ACS). While it doesn’t provide future projections, it offers “a huge amount of information” on specific communities, including data on income, employment, education, language and commuting as well as computer and Internet use.

As Hodges concludes, “There is no guarantee that population will change exactly as projected, but headline-grabbing surprises are unlikely. As long as people continue to be born, die and move around as demographers expect, we have a solid picture of our demographic future.”

A complimentary copy of the September-October issue of TFM which includes Hodges’ article is currently available on our website, www.mediafinance.org. His insights coincide with a number of developments that make it imperative to have a good grasp on the on the demographic data that can predict the future of a TV market.

In addition to the role this data can play as part of programming acquisition and network affiliation decisions, market trends factor into the valuation of a station that is being purchased or is part of an asset exchange.

We also have the looming FCC auction of broadcast spectrum. As the NAB has warned, the methodology that has been proposed by the FCC will result in many licensees losing coverage area and population served during the auction’s repacking and reassignment process. NAB has also warned “broadcasters will be out of pocket at least $500 million dollars by the conclusion of the auction and repack.”

Knowing how your market is likely to change over the coming years — and the future value of your audience to advertisers that will result from these demographic shifts —  should help to put a value on the population you would be losing in the event your station relinquishes some or all of its spectrum. When examined from the future-view of your market’s value, the government’s check may turn out to be a worse (or better) offer than it initially appears to be.

Mary M. Collins is president and CEO of the Media Financial Management Association and its BCCA subsidiary. She can be reached at [email protected]. Her column appears in TVNewsCheck every other week. You can read her earlier columns here.