Australia’s Digital Fault-Line: Delivering the Digital Future
enator Coonan last year announced that the analogue television system will be switched off between 2010 and 2012. Given that 2010 will be an election year, we can safely adjust that deadline to 2011 or 2012.The current state of play is that most Australians (71 percent) do not have digital TVs or digital set top boxes.
The minister also recently announced the formation of Digital Australia to achieve this tough target. But the challenge for Digital Australia to get all Australians over the line in less than five years is virtually impossible. That is unless they recognise that a digital fault-line splits Australia in two.
So much time and effort is committed to the supply side of the digital debate. Digitising television in Australia however requires not more discussion about supply or content, it requires a deeper understanding of the demand characteristics of Australian consumers.
A nation divided
The Centre for Customer Strategy has conducted an in-depth analysis of the Australian consumer market in relation to digitisation and reveals that a digital fault-line splits Australia in two. That analysis is based on data from 55,000 respondents on the Roy Morgan Single Source database.
On one side of this digital fault-line, 8 million adult Australians are seriously uninterested in digital television. That’s 50 percent of the adult population to get across the line. And not only do they not care about digital television, they are deeply uninterested. They have traditional social values, are followers rather than leaders, dislike change and are risk averse.
On the other side of the digital fault-line, 24 percent of the adult population, or 4 million Australians, are very interested in digital television. They invented and inhabit the digital world and dominate the households in Australia with free-to-air digital TV and subscription television.
These digital leaders are 71 percent more likely than the laggards to already own a set-top-box and 86 percent more likely to purchase one in the next year. They’re a walk in the park for the government, as are the next 30 percent who will follow the leaders.
Yet another 4.2 million follow these digital leaders – we could call them digital followers – and given that they will do what the leaders do, they are not central to the digital strategy.
The digital leaders are powerful adopters of new technology, with 98 percent of them online frequently.
In fact, Australia’s 8 million digital laggards are not interested in digital TV. Of all Australians who say they are not at all interested in digital TV, 87 percent are digital laggards.
When it comes to digital set-top-boxes, digital leaders are 71 percent more likely than laggards to already own a set-top-box; 92 percent more likely to have purchased one in the past 12 months and 86 percent more likely to purchase one in the next 12 months.
The challenge for the Australian government is to recognise that the digital fault-line splits society into two psychological types, each with radically different attitudes to digitisation and different motivators to switch. This has profound implications for the creation of a digital Australia. It impacts the timing of achieving a digital Australia and for resource allocation on the digital journey.
No easy home run
The minister talks optimistically of an approaching digital tipping point – the point at which the country builds easy momentum to a digital TV future. The more likely probability however, is that a digital barrier – a point of natural saturation – will block the uptake of digitalisation. Rather than getting to a point after which it becomes easier, a digital barrier will be reached in the next four years, after which the job becomes almost impossible.
The move from 29 percent to 60 percent will be a significant challenge, but relatively straightforward. Getting the last 35 to 40 percent across the line is going to be a task of momentous proportion. Indeed, it will be impossible if all Australians are treated as digital equals.
Take for example the intention of Australians to purchase a set-top-box in the next 12 months. If we establish a baseline of 100 for the average Australian, digital leaders are 53 percent more likely than the average Australian to purchase a digital set-top-box in the coming year. On the other hand, digital laggards are 33 percent less likely than the average Australian (and 86 percent less likely than digital leaders) to purchase a digital set-top-box.
That means that for every $100 spent on reaching, educating and motivating Australians to adopt digital TV, digital leaders return $153 on the $100 invested while digital laggards return only $67 on the investment.
The economic and budget implications of this hypothetical example are profound: more digital leaders already own digital TVs and set-top-boxes and are automatically more likely to adopt the new technology.
As a consequence, at least 50 percent less can be spent to reach and motivate them to convert to digital TV.
On the other hand, laggards are reluctant to purchase digital TVs and set-top-boxes. They are automatically less likely to adopt the new technology and as a consequence, 30 percent more needs to be spent to get them across the digital line before analogue switch-off.
This split has the potential to save money and achieve a digital Australia in a shorter time. However regardless of savings, it is the budget split and campaign effectiveness that will make the future more predictable by crossing the digital barrier.
Tailored strategies
To achieve digitisation in an optimal time frame, different communication strategies and different ‘value propositions’ are required for the two different digital types:
For the digital leaders – quality, picture, content, imagination, emotion and ‘whispered secrets’ via new media, editorial and viral marketing.
For the digital laggards – rules, regulations, an ultimatum, no debate, and special deals via traditional media.
This will result in better resource allocation, better targeting, better messaging, better political outcomes and a better result, sooner. However, governments are by their very nature traditional and are used to adopting traditional views of the world.
For the government and industry to rise to the challenge of the digital fault-line and create a digital Australia in the required time frame, it needs to create one strategy, budget, campaign and approach for digital leaders and an entirely different strategy, budget, campaign and approach for digital laggards.
Without this approach, the digital barrier will stop the process in its tracks and the digitisation of Australia will become expensive and elusive.
The most likely scenario if the minister adopts the usual one-size-fits-all approach sees digitisation stalling at 70 percent of the population in 2010 with no chance of getting the digital ducks in a line by the end of 2012. That will make digitisation a major headache for whichever government is in power after this year’s election and create an election-losing issue in the 2010 election.
Ross Honeywill (ross@customerstrategy.com.au) is executive director of the privately funded consumer think-tank, the Centre for Customer Strategy and is co-author of NEO Power: How the new economic order is changing the ways we live, work and play (Scribe, Oct 2006)
