RESEARCH UPDATE

INTERMEDIA’S VIEW OF THE EFFECT OF POLITICAL ADVERTISING ON THE DRTV LANDSCAPE DURING ELECTION YEAR 2016

In case you missed it, the 2016 political races have been heating up earlier, it seems, and with greater intensity. The purpose of this document is to present some of the advice InterMedia Advertising is sharing with our clients because DRTV advertisers will have to effectively juggle business demands against the complications of election campaigns in order to survive.

WHAT WE LEARNED FROM THE 2012 AND 2014 CAMPAIGNS

Not surprisingly, the closer to voting day the greater the pressure, especially on local TV station inventory. We found three distinct phases during the last two federal elections:

• During the initial 20 days of the political window when Political ads account for 14% of affiliate broadcast stations early morning, evening, and late news inventory,
• Over the next 20 days when candidate and ballot measure advertising increases to 30% of total inventory,
• In the final push (the last 20 days) when as much as 75% of local news or prime time breaks are filled by campaign messaging.

We found similar patterns on Cable TV, primarily on the News channels. But the Democratic and Republican parties both have been investing in data models informed by voter profiles matched to set-top box data. It’s no secret that candidates and their consultants plan to exploit these models to target voters. There’s little doubt that these investments will result in campaign messages running across a wide set of entertainment and lifestyle networks. There’s no escaping the complications that additional demand on Cable network inventory will cause.

Our conclusions are based upon Nielsen Ad Intel[1] competitive media reporting for all Cable and Broadcast TV networks, as well as for Spot TV markets and those stations. We can share a deeper look at those findings upon request.

IMPLICATIONS FOR 2016

A simple, straight-line projection points to a 16% increase in Political spending on Cable and Spot TV during 2016. InterMedia is convinced this is a very conservative estimate.

For one thing, candidates have and will raise larger sums than ever before. Compounding this dynamic is that the field includes at least one independently wealthy Republican front-runner, who (despite pledging not to) cannot be ruled out running as a third-party candidate. If that comes to pass, given that candidate’s personal wealth, spending on the Presidential race could increase by over 50% over 2012.

Needless to say, all this spending will force general market advertisers out of dayparts populated by campaign ads and into programming where DRTV campaigns are normally concentrated. The result—fewer avails and higher rates—challenges both the performance and profitability of DR offers.

KEY DATES AND DEADLINES

So, beginning January 16, 2016 and continuing on through November 5, 2016, at least one local TV market will be inside a Primary or the General election window. If that’s not enough, there’s the Rio Summer Olympics running August 5 through 21st. Those occur almost immediately after the Republican National Convention (starting July 18), and the Democratic National Convention (starting July 25).

But then, just when you might think it’s over, it’s not; Broadcast Year 2016 will have one less week falling between Thanksgiving and Christmas. That will pull holiday ad spending forward by at least one week, maybe even two, again impacting TV avails across all marketplaces.

THE OPTIONS ARE

Our review uncovered promising ‘coping’ strategies among the data. Certain advertisers, in order to maintain clearance and response volume, had no choice but to pay elevated rates. Other brands pulled their campaigns back while electioneering was at its peak only to re-accelerate them, literally, as soon as the polls closed. But the most prominent tactic we found was for advertisers to shift from network affiliate to independent stations, abandon early and late news programming, and convert from 120- or 60-second ads to 30-second units.

But right now, its’ our opinion that the best course of action is to incorporate Radio into the media mix. It’s an option that holds audience impressions at pre-election levels, which prevent offers from ‘going grey,’ which is the natural result of decreased spending or higher rates.

To that end we offer clients our proprietary CPM Network® Radio Group which, in combination with InterMedia’s CPM Network® of unwired National Cable TV inventory, delivers media impressions to national or spot markets at lowest-possible CPM. Add to that our MediaPoint Network® performance-based media platform and InterMedia provides advertisers with value-oriented, non-traditional media options that serve as an effective hedge against high media costs.

Again, InterMedia can schedule a further conversation about responding strategically to upcoming challenges upon request.

IN CONCLUSION

2016 will be a year presenting several challenges. It’s another ‘Perfect Storm,’ with a Presidential election, special events, and a fluke calendar all combining to dramatically impact the DRTV landscape. We, at InterMedia, are convinced that now is the time to start planning, for those who wait too long run the risk of events overtaking their ability to cope with a most unusual set of circumstances.

[1] Ad Intel, and Nielsen are trademarks or registered trademarks of The Nielsen Company (US), LLC.