Political Advertising Goes Streaming (Wolk)

Kang vs. Kodos
As aliens who crossed our borders illegally, Kang and Kodos have waged bitter negative election campaigns fueled by TV advertising. (Image credit: Disney/20th Century Fox)

Linear television, and local broadcasters in particular, have long reaped the rewards of election-year spending. This is particularly true in years with presidential elections, but this year’s midterms, consequential as they are in our very divided country, have seen an unprecedented level of spending.

Kantar now estimates that $9 billion dollars will be spent on political advertising this year, with $6.2 billion or around 9% of the total estimated 2022 TV ad spend of $65.34 billion going to broadcast and cable.

What’s most notable, however, is not the overall political ad spend, but rather, the amount that Kantar estimates is going to streaming: $1.4 billion, which is just under 7% of the estimated $21.2 billion the IAB expects will be spent on streaming this year.

Clearly there is room for growth.

Streaming and Politics Make Good Bedfellows

The most obvious advantage of streaming is the ability to target specific viewers based on location. This is particularly useful for candidates in large markets as it results in massive cost savings. 

To wit, rather than having to buy spots against the entire Los Angeles TV market, as she would on linear, a Los Angeles-area Congressional candidate can use streaming to target voters in her district, right down to the street they live on, paying only for those voters who actually see her ads. Yes, there will be a higher CPM than traditional linear, but the overall cost of the buy is likely to be considerably less.

The next big advantage of streaming for political campaigns is all of the data that is available. In addition to knowing exactly how many people saw an ad and whether they watched the ad to completion, advertisers can learn whether voters visited a campaign website after seeing an ad and what other actions (email signups, donations) they might have taken as a result, and then alter their creative based on those results.

But the most interesting use of data comes from targeting.

A household that watches Sean Hannity and Fox News on a regular basis is likely a household that will be receptive to messages from GOP candidates and SuperPACs. With streaming, that household can be easily targeted with political ads on whatever shows they are watching, not just news shows, which can help the ads stand out more. 

This is not the case for linear, where ads need to run on programs where there is an assumption that voters are either aligned with the network’s political POV or actively engaged with the news. That generally means a lot of clutter during election season, with political ad after political ad running in each ad bloc -- including many from candidates who may be in the same metro area but are not in the viewer’s Congressional or state legislative district.

This is yet another benefit to streaming -- voters are often confused as to which of the many candidates whose ads they see on linear are actually running in their district. When they go to actually vote, they are often surprised to find that the candidate they had been intending to vote for is actually not on the ballot and are not able to make a well-informed decision.

Context matters.

There is one caveat about targeting voters on streaming though and that is the need to be sensitive to context. Running an ad about guns or drug addiction during a family oriented program might offend more viewers than it wins over -- not so much in that they disagree with the message, but that they find the subject matter inappropriate for shows targeted towards young children. 

So while it is great to be able to run ads in uncluttered environments, it’s also important to ensure that those uncluttered environments are contextually relevant for the subject matter of the ads.

Where the Money's Going

Spending has ramped up this fall -- the aforementioned $9 billion figure from Kantar was recently revised upwards from the $8.6 billion they had estimated this spring. 

Madhive, one of the leading tech companies in the TV advertising space has been tracking political ad spend on streaming this fall and has seen some surprising results from their analysis of bid stream data spanning hundreds of millions of political impressions across the US  that they have cross-referenced with their proprietary device graph consisting of 100+ million households across all US metro areas.

Ad spend is up: Average daily political ad impressions on streaming are up a whopping 96% in October vs. September. This is not all that surprising in that political spending goes up in the period after Labor Day as Election Day looms, but the massive jump from September to October is notable and seems to be proof that streaming is catching on with political campaigns.

California is hot: The biggest boost in streaming ad spend has been in California, where Madhive is seeing a 32% increase in impressions week-over-week from October 3rd to October 10th. Given that California contains three of the most expensive TV markets in the U.S. -- Los Angeles, San Francisco and San Diego --candidates and PACs are wise to turn to streaming as a more cost effective way to reach voters in those markets.

Governor’s races are where the money is: While media attention has been focused on House and Senate races, ad dollars have been focused on governor’s races. According to Madhive, 37% of political ad impressions are in gubernatorial races, 18 percent are in House races, 17% are in state legislative races and just 8 % are in Senate races. Given that these are national totals, it makes sense that House races are garnering more impressions -- all 435 seats are up for grabs, while only 34 out of 100 Senate seats are in play this year.

Wisconsin is a battleground: Of the five Congressional districts with the most overall political ad impressions, three are in Wisconsin. While the House races in those districts (two in Milwaukee, one in Green Bay) are not particularly competitive, the state’s Senate, Governor and State Supreme Court races are very much up for grabs and both parties see potential. Thus they are spending heavily to reach voters in the more densely populated areas of the state.

Bottom Line: 2022 is really a test run for political campaigns to understand how they can make extensive use of streaming to reach a more targeted audience. As more and more viewers are expected to shift to streaming over the next two years, and as big SVOD services like Netflix and Disney roll out ad-supported tiers, we can expect to see a significantly higher percentage of political ad dollars spent on streaming in 2024, which is also a presidential election year.

Alan Wolk

Alan Wolk is the co-founder and lead analyst for media consultancy TV[R]EV