Navigate the Competitive Midterm Elections with Connected TV
Political advertising has always impacted advertisers by reducing available inventory and driving up costs, but that impact is no longer tethered to general elections. In fact, MediaPost shared that political strategists & analysts project that 2022 political spending levels will not only surpass every previous midterm race, but might even approach the last presidential election cycle. Today, politicians, political action committees (PACs), and special interest groups all have access to the same targeting capabilities and channels as advertisers and are willing to invest their ever-growing political war chests to capture consumers’ attention.
To fight shrinking inventory and rising costs during this midterm season that begins in some states as early as May, advertisers will need to deftly navigate the media marketplace, including reaching into potentially new channels like connected TV (CTV) where they might see more success. Here’s what you need to know to come out of this year’s midterm season on top.
The new normal: high political spending for all elections
Election seasons have always limited inventory and increased rates for advertisers. Why? Legally, television and radio stations must offer equal time to all candidates, offering the lowest unit rate (LUR) to politicians first before they offer any inventory to advertisers. Naturally, this means that inventory for advertisers shrinks, and rates increase during election seasons.
The midterm election season varies by state, so the spending and inventory impacts will depend on the region. Texas started midterms first in March, with several Midwest, Southern, and Eastern states joining in May, and running through the rest of the year until the final primary election in November in Louisiana. Review a full list of midterm elections to see how specific midterms could impact your business by region.
In the past, these election seasons really only impacted advertisers during the “political window,” or 45 days before primary elections and 60 days before general elections when political candidates get these LURs. That is no longer the case. We anticipate that this year’s midterm elections may bring higher costs than ever before for advertisers because Democrats and Republicans are breaking fundraising records as they compete for the narrowly divided House and Senate. And to make matters worse? PACs and special interest groups are not beholden to the same advertising laws that bind candidates; they can and do spend well beyond the LUR and outside the political window. In fact, midterm election spending prognostications for TV, radio, and digital ads are higher than they’ve been for comparative midterm election cycles and are close to the 2020 presidential election. But just how much?
Kantar and CMAG estimate that the 2022 cycle will have $7.8 billion in political spending and AdImpact estimates this number to be $8.9 billion. While not as large as 2020’s presidential election spend ($9.02 billion), these numbers are still a roughly 200%–250% increase in spend compared to 2018’s midterm.
The hyper-polarized political climate and unprecedented budgets from PACs and special interest groups mean that traditional advertising channels like linear TV will be even more competitive this midterm season. Advertisers should expect limited inventory and higher rates, but more importantly, should look to alternative channels to reach their audience.
Using connected TV to combat high spends
Connected TV (CTV) is simply a device that connects a television to streaming content without a traditional cable connection (like Roku, Apple TV, the Fire stick, and smart TVs). CTV used to be for early adopters, those cord cutters who used Roku and other streaming connected devices. But thanks in large part to the pandemic, Americans quickly accepted and adopted CTV as a part of their media consumption. In fact, according to the Leichtman Research Group, 80% of TV households have at least one connected TV device — higher than cable TV at 56% — and 60% of adults watch streaming video content weekly. Today, users think of CTV as simply TV.
For advertisers, CTV has allowed for increased targeting efficiency in a way that other mass reach tactics like broadcast or linear TV aren’t able to. Placing ads on CTV still captures the TV audience, but the targeting is more effective and may, in fact, be a more efficient use of budget. But of course, because this ad format is available to advertisers, it will be for politicians, too.
Ad buyers expect the 2022 midterm elections to be the first campaign cycle where CTV ads will take a meaningful market share of political spend due, in part, to the shift away from third-party cookies. Political advertisers will be leveraging the data capabilities and precise targeting of CTV in addition to their linear television inventory to bolster ad effectiveness. Both Kantar and AdImpact project CTV expenditures to range from 15%–17% of their total respective spending projections, higher than cable TV.
As linear TV spots sell out in battleground states like Arizona, Georgia, Pennsylvania, and Wisconsin, CTV will become the best option to find inventory with more reasonable costs to still reach your audience during this intensely competitive midterm election season. That said, there may be cost increases in CTV because, despite higher inventory than linear during an election season, there is not endless inventory. According to FreeWheel, the Comcast-owned video ad-tech company, as CTV inventory shrinks due to purchase by politicians and PACs, there is the potential for runaway CTV cost increases that could reach as high as $100 cost per thousand (CPM).
What does this mean for marketers?
First and foremost, it’s incumbent upon marketers to stay informed of media spending in their local markets. This is critical because not all markets will be affected by political media spending equally. However, having a proactive plan of action prior to the political season will increase your chances of having your message run in market according to plan. Here are three key things to keep in mind:
- Stay in close contact with media partners. Occasionally, candidates or PACs will enter the marketplace and shift the supply and demand curve overnight. More often though, it is a gradual burn of political media investment with inventory being eaten up until existing advertisers’ schedules are impacted with preemptions. The easiest way to combat this is to stay in close contact with your media vendors and inquire about the political movement in the marketplace. Your vendors will have their fingers on the pulse of how much money is moving in and the potential impact it might have on your linear TV schedules.
- Finalize your linear TV buy now. If you are advertising in a DMA that is located in a battleground state, the likelihood of being affected by politicians leveraging linear TV is high. Proactively reallocate funds to your TV schedule so that you have a cushion between the rate you pay and the lowest unit rate on the stations. Why? This way, your advertising schedule won’t be the first to go if demand outstrips inventory supply. Of course, there’s no guarantee that your schedules won’t get preempted, but it is an insurance policy against having a schedule blown out.
- Proactively identify where your media efforts can flex. Knowing channels like linear TV are going to face rising costs and limited inventory as the political season starts to ramp up, proactively move media weight out of television and other channels that won’t be as negatively impacted like CTV. Bear in mind that television station cancellation clauses may not allow you to shift media as quickly as you might desire. But if you have the ability to do so, what you may lose in mass reach, you will regain in targeted reach of message to a qualified audience that runs as ordered.