OVERVIEW
Media partners/vendors across channels are starting to see demand for inventory pick up. The biggest spike will occur during September through election day, but many campaigns will start spending after the conventions, which means early activity in August. The best advice for advertisers is to plan and book early.
Earlier this year, Borrell Associates predicted political advertising would reach a record $11.4 billion, up 20% from the past presidential election. However, Borrell recently revised this projection for 2016, adding $357 million. In this new prediction, the highest expected increase came from radio, increasing forecasted radio spend by 10.8%, from $827 million to $916 million. Radio can offer political advertisers a stable and extensive reach throughout the country and across demographics, and can focus on conservative and minority voters. This can be a particularly attractive medium when targeting voters who could potentially decide a local, statewide, or national election. Among independent voters, the following radio formats will be a rich source of Independent voter rating points: Oldies, News/Talk, Country, Sports, AC, AOR/Classic Rock.
(source: Independent voter format rating indexed to overall rating – Nielsen AQH 2015 A18+, M-Su 6a-12m; with Experian Marketing Services’ Simmons National Consumer Study)
Digital had the next highest increase, up 8.2% from $1.076 billion to $1.165 billion.
Broadcast TV retains the lion’s share at 50.1% Cable TV is second at 10.1% followed by online/digital with 9.9% of the total. This represents projected spending from candidates and outside groups.
Broadcast TV remains the most dominant platform for reaching mass audiences. People 18-64 spend almost 5 hours each day with TV, compared to 10 minutes of online video (OLV) viewing. TV is a particular draw for older people, who historically are more likely to vote than their younger counterparts.
With predictions that political advertising spend will skyrocket in 2016 and with only a finite amount of traditional broadcast TV inventory available, many campaigns are looking to other mediums. They will invest more in digital, but also into cable, and not just the news and other “safe” programming that they have relied on in the past. Campaigns will be looking to expand their cable buys, using networks that reach millennials and networks with popular prime time programming who offer better deals than their broadcast counterparts.
Programmatic TV is an option that was not offered in 2012. Advanced targeting of TV is currently being used on a national level. Its ability for qualitative layering promises to help advertisers make more informed decisions for targeted message delivery. But this really is an idea whose time has not yet come. This option is not expected to have a major impact on local TV & Cable for the 2016 election cycle.
Digital is surging. Political agencies have already pre-booked millions of dollars’ worth of online media for their candidates and PACs. The big development for 2016 is video, which wasn’t around for the 2012 election. While political advertisers have a strong comfort level with TV, they are extending the TV video into the digital realm more than ever. Spend here will be particularly focused in premium platforms, where the inventory cannot be skipped. Google (YouTube), Hulu and Facebook will see a significant portion of these dollars. Already, there are digital ad-shortages for premium inventory. Social is predicted to account for about half of all online political spending in 2016, with Facebook poised to capture the lion’s share, due to its wealth of information on 190 million American users.
Spending by presidential candidates for primary elections is estimated to be $280 million. During this particular cycle, advertising numbers showed a very weak correlation to actual votes. Borrell has coined this the “Trump effect”. Meaning, the ratio of earned to paid media for Donald Trump is $189.9 in free airtime. He received twice as much media coverage as all other (GOP) candidates combined. Future candidates will likely try to mimic this approach
POLITICAL IMPACT ON LOCAL BROADCAST MEDIA
Timing & Avails
Prior to the election dates, there are specific political windows that have an impact on rate levels within active markets. The political window for a primary is 45 days prior to the election date; for the general election it is 60 days (September 9 – November 8, 2016).
Within a political window, all legally declared federal political candidates have the right to reasonable access and to receive the lowest unit rate/cost (LUR/ LUC). This means that stations cannot refuse a candidate’s ads and may not charge political candidates any more than the lowest rates that are charged a commercial advertiser for the same class of time. Such conditions for establishing LUR often lead to rate increases within the political window prior to candidates buying spots and the near-abolishment of no charge bonus spots unrelated to underdelivery weight.
Political issue advertisers are not held to any political window conditions and may advertise at any point in time throughout the election cycle. Issue advertisers often cause pre-emptions for other advertisers as they are willing to pay the highest rates on a station to guarantee placement. These higher rates are a factor in driving the overall volume of political ads.
An analysis of spot TV data from Kantar Media, showed that political advertising accounts for nearly 50% of all spot TV expenditures in the final 2-3 weeks of the election cycle.
Stations will give priority to protecting the schedules for candidates (required by law) and issue advertisers (due to premium non-pre-emptible rates), both of whom must pay for schedules in advance of the air date.
And now even more political ads may be on the horizon. A petition before the Federal Communications Commission would give favorable placement to political candidates. This is based on the last-in, first-out (LIFO) rule by which the last ad into a station is the first one bumped for an advertiser willing to pay more. The proposal will allow candidate advertisers to be considered “first in” regardless of order of placement, giving them a huge advantage. Considering that many candidates place schedules late, they’ll no longer be vulnerable for getting bumped by bigger spending advertisers. A decision by the FCC is expected this fall (2015).
Dayparts
Political advertisers need to reach a broad base of potential voters, so no daypart goes untouched by political spending. However, there are some dayparts that are more adversely impacted when political spending consumes a heavy portion of available inventory. The three news dayparts – Early Morning, Early News and Late News – experience the greatest concentration of political expenditures in spot TV. However, Primetime and Sports also see a significant amount of political dollars.
Rates
As a result of these demands on inventory and the higher-than-normal rates for issue advertisers, rate increases are anticipated for spot TV during the window before an election (45 days for primary or 60 days for general).
Rate increases for spot markets vary greatly, depending upon the importance an individual state can have in the outcome of a presidential race in relation to the electoral votes. Swing states attract more attention as the campaigns realize it’s too expensive to switch a solid blue or red state to the opposite party. In addition, the number of senate, congressional and gubernatorial races within a market will also have an impact on demand.
IMPACTS BEYOND SPOT TV
Political advertisers looking to shape the outcome of specific and crucial regions will turn again to options that can hyper-target geography while creating impact. Combining data from local polling of undecided voters, cable set-top data and digital usage data, political advertisers can zero-in on the pockets of swing votes that are the key to winning a tightly contested race.
While the following media can be used for mass reach, they can also serve hyper-targeted geography. What this means is that more than ever local Cable TV, Online Video, Pandora and Facebook will be deployed by many political candidates and issue advertisers to find those last votes that can give them the edge.
LOCAL CABLE TV: By activating zoned cable to target programming heavily consumed by those undecided in small geographic areas (a few zip codes), political advertisers can move away from the heavy reach of broadcast TV.
ONLINE VIDEO: The current situation of Premium Online Video, as discussed in the overview, is that inventory pressures already exist. Alternate video options will need to be considered in planning such as buying inventory through ad networks or programmatically on the ad exchanges.
PANDORA: The ability to specifically target Pandora users with audio and video messaging based on age, gender and zip codes will be a very important tool for political advertisers. Pandora builds data sets to know what music tastes align with a listener’s particular voting preference. Furthermore, Pandora has nearly none of the restrictions on political advertising experienced at the broadcast level. The rule of equal time is of no concern in the digital realm, so a single candidate could make every effort to buy all available impressions to restrict the message of their rivals.
FACEBOOK: Facebook can serve video to hyper-targeted sets of people perhaps better than any other media option. It combines the power of video with sophisticated targeting that can serve different messages to different audiences, based on users’ demographics, behavioral characteristics, and geographic location.
ALLEVIATING THE POLITICAL PROBLEM
With the substantial impact that political advertising will make on the local TV/cable landscape, it can become an opportunity to consider diverting spending from traditional TV campaigns and into alternative media channels. For use of TV and alternative channels, we offer the following methods for mitigating the impact of political ad spending.
Spot TV: If an advertiser must continue to use TV as their primary medium, these are the situations that must be considered:
AVOID POLITICAL WINDOWS: Whenever possible, clients should avoid running spot TV within the later parts of each political window. Whether it’s taking a hiatus or moving to a position before or after the political windows, spot TV schedules should only be run in the final two weeks of an election if the messaging or promotion is absolutely time-sensitive.
UNDERSTAND THE MARKETS: Advertisers must be aware of the political conditions in all active and planned TV markets. Races for federal (U.S. Senate & House), state (governor, legislature, judicial) and local (mayor, city council) elections as well as state and local ballot initiatives can influence political spending beyond a market’s importance to the presidential election. The TVB offers a guide to all Political Races & DMAs. They will continue to update the information as primaries move and candidates’ positions in the market change. Races defined as “toss-ups” tend to command more spending.
LIMIT USE OF NEWS: The three news dayparts (EM/EN/LN) will be most heavily and regularly impacted by political spending. Daypart mixes should be adjusted – especially in the final 3-4 weeks prior to an election – with either a reduced or eliminated allocation of spending in the news dayparts. This is due not only to the rate issues, but the fact that nearly one in two spots on air during these dayparts will be a political ad, creating a level of clutter and annoyance among viewers that can negatively impact non-political advertisers’ ad effectiveness.
BUY EARLY: Whenever possible, purchase TV as early as possible to manage rate increases and maintain planned schedules. Long-term planning and buying can help to get in front of the start of political spending, which can help to suppress rate increases that will be accelerating as the political window approaches.
PLAN FOR PRE-EMPTS: Pre-emptions are nearly a guarantee in the later stages of the political window, regardless of how far up front a schedule was booked with the station. Advertisers and their agencies must be prepared to manage a spike in pre-empt notices and have a plan in place for identifying acceptable makegoods and allowing for spot movement outside of the originally intended on-air weeks.
BE CAUTIOUS OF MAJOR EVENTS: Since the NFL and college football season and the MLB post-season are within the general election political window, they are often a prized target for candidates and issue advertisers looking to reach a broad male audience. This is even more likely when the teams involved are relevant to a key battleground state.
MOVIE-THEATER VIDEO: Currently, theater venues do not accept political or issue advertising, nor are pre-emptions an issue. Emerging options to purchase theater video in spot markets with Nielsen-generated GRPs will provide buyers with a video option comparable to primetime TV.
Digital Media:
Pandora, Hulu and other premium platforms are expected to experience unprecedented pressure on their inventory, so buy early! At this time, they do not anticipate bumping advertisers that have provided orders in advance.
There are plenty of additional digital channels that will not be much affected such as Display, Mobile and Video bought through ad networks or ad exchanges. The amount of inventory being purchased programmatically by political advertisers is expected to increase dramatically this election cycle. Programmatic buying allows campaigns to use voter file data and layered-in third party data segments to zero-in on their target audience, focusing more on targeting the right voter over targeting specific sites.
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