Political Spending Set to Pressure Digital Video

2.11.20 | Kevin Stoll

Previously in Inline Media’s blogging series on the political advertising ecosystem we’ve covered the two most predominant media channels utilized by political advertisers in recent campaign cycles: broadcast and digital. As media experts, we look at both the impact political spending will have on those channels specifically, and holistically at the entire media landscape as both political and commercial advertisers search for alternative avenues to run their campaigns. In this edition we turn to a quickly developing medium relatively new to the political scene, and one where a considerable amount of the influx in spending this year is likely to take root: Over-The-Top (OTT).

Blending the branding power and premium screen size of traditional TV with the targeting capabilities of digital video, OTT refers to streaming video content accessed via the internet, bypassing traditional TV distribution channels. Examples of OTT channels include Netflix, YouTube, Hulu, Amazon Prime and Crackle. OTT includes video accessed through a Connected TV (CTV) device, as well as content streamed on smartphones, tablets and desktop devices.

OTT and CTV are becoming a more appealing platform for political advertisers for many reasons. First and foremost, the audience is significantly larger than it was even for the 2018 midterms. As consumers continue to walk away from paid cable subscriptions and view more content on streaming services, the landscape of TV consumption has changed dramatically. According to a December 2019 report from the Interactive Advertising Bureau (IAB), 97 million homes now have a CTV device, equating to over 75% of all homes in the United States, and surpassing the number of Cable TV households. In addition to a growing audience, the ability to layer third party data through OTT provides advertisers with significantly advanced targeting capabilities. This allows political advertisers to use their budget more efficiently and focus their messaging on key undecided voters in priority swing zip codes, as opposed to the DMA-wide demo targeting of traditional TV.

Inventory security is another factor political advertisers find appealing with OTT. The political landscape is already wildly contentious this year and will only get worse. With an influx of candidates having significant financial support, political spending is expected to increase 60% from the 2016 primary and eclipse $6 billion in 2020, according to estimates from Kantar Media. The problem is there is only so much traditional TV inventory to go around, and digital mainstays like Google, Facebook and Twitter are changing their political advertising policies, meaning political advertisers will increasingly run into situations this year where there is more demand than supply. These inventory challenges from tried-and-true media channels position OTT as an alternative in a high-stakes race.

These factors and others have resulted in the adoption of OTT advertising within the political landscape being observable already in Q4 of 2019, and a trend we expect to see continue in 2020. Spending in CTV was up 72% YOY in 2019, fueled largely by political campaigns. Although digital spending as a whole still pales in comparison to traditional TV, digital video is expected to reach $1.6 billion in US political ad spending in 2020, according to Cross Screen Media (compared to $4.4 billion allocated towards broadcast and cable TV).

These numbers are projections and where the channel ends up and to what degree political advertisers adopt OTT is yet to be seen, but what we know for sure is that commercial advertisers will need to monitor the unprecedented spending in political advertising this year and adjust strategies accordingly.

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Sources:

https://www.adexchanger.com/politics/voters-will-see-fewer-political-ads-this-year-thanks-to-ott-targeting/

https://content-na1.emarketer.com/political-advertising-year-in-review-pressure-builds-on-digital-ad-sellers

https://www.campaignsandelections.com/campaign-insider/can-campaigns-capitalize-on-the-rise-of-ott

https://premion.com/expert-insights/why-political-advertisers-should-embrace-connected-tv-for-the-midterms/

https://www.iab.com/insights/ott-video-streaming-playbook-for-advanced-marketers/