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Political Advertising|By Elizabeth Wilner, October 29, 2013

GRPs aren’t the end all, be all anymore. Elizabeth Wilner’s biweekly column is now a weekly compilation of news and analysis covering the fast-growing junction of advertising, Big Data and politics. Thanks in advance for your tips, comments and gentle critiques: elizabeth.wilner@kantar.com.

FIRST IN “ON POINTS:” LOCAL CABLE REPS SEE 2014 POLITICAL AD SPENDING AT $680M-$800M. Last week, “On Points” published Kantar Media CMAG’s over/under for local broadcast TV ad spending for the 2014 elections: $2.4 billion. This week, we’re rolling out estimates for local cable TV ad spending: between $680 million and $800 million. If all expectations are realized, local cable could account for as much as 25% of political TV ad spending in 2014.

Industry rep NCC Media’s tallies for the past three election cycles, based on NCC’s own totals plus those of its cable system partners Comcast, Cox and Time Warner, are: $340 million in 2008, $455 million in 2010, and $625 million in 2012.

Dan Sinagoga, vice president of political advertising for Comcast Spotlight, thinks local cable will see $680 million to $700 million in political ad revenue in 2014. Similar to CMAG’s outlook for local broadcast, Sinagoga thinks the lack of high-dollar competitive races in 2014 will yield a more modest midterm-to-midterm gain for local cable, as well. As an example, Comcast Spotlight’s political sales manager in Chicago, Richard Brehm, points out that Democratic candidates for governor of Illinois already were on the air at this point four years ago, whereas Gov. Pat Quinn (D) has no primary challenge today.

Another cable industry rep who specializes in political ad sales has higher expectations of $700 million to $800 million for 2014.

The industry is trying to make it easier for political advertisers to spend their ad budgets on local cable by developing new services and applications that enable audience targeting. Among the new offerings NCC Media is rolling out for 2014 is a “Smart Builder” platform that pulls in the market research of leading audience measurement firms Scarborough, MRI and Nielsen Market Breaks to help advertisers build profiles of what their target audiences are watching, including the networks, times of day, and shows. NCC is offering the tool as an option for advertisers who can’t afford to hire analytics consultants or buy Big Datasets from a vendor.

NCC’s “smart map” tool, developed with voter data clearinghouse Labels & Lists, merges voting histories and Census data with cable system coverage to paint a detailed picture of what targeted voters an advertiser could reach within a particular cable system.

NCC is also following the lead of New York’s Cablevision to get into the set-top box data game and provide advertisers with the ability to reach their target audiences without having to worry about cable system or media market boundaries.

MORE ANALYTICS = LESS POLITICAL AD SPEND ON BROADCAST.
Election years have been a boon for broadcasters because of the ever-increasing political ad revenue they send flowing to TV stations. The legacy of 2012, however, is likely to be a slowing of the growth of that revenue. The analytics consultancy boom inspired by President Obama’s Big Data-driven win has elevated a new class of political professional whose goal is to ensure that every ad dollar is spent as efficiently as possible.

For stations, a slowing of growth in political ad revenue would be no small thing. The industry is relying on political ad sales to account for as much as $4 billion of its incremental gain for the decade, according to telecom industry analyst George Reed-Dellinger of Washington Analysis. (For context, the mother lode of new revenue for broadcasters, retransmission fees, is expected to account for around $6 billion of the gain.)

It’s not that campaigns will cease buying “American Idol” altogether, says Elan Kriegel, invoking a program emblematic of the type of expensive airtime campaigns traditionally have felt compelled to buy because it reaches a vast audience. They’ll just buy a lot less of it.

“For a few years in campaigns, it was, ‘You’re going to spend $20 million here, do your work, then as you get things going, call in analytics,’” says Kriegel, a senior analytics staffer on President Obama’s campaign whose new firm BlueLabs is working for Virginia gubernatorial nominee Terry McAuliffe and also worked for Senator-elect Cory Booker. “Now, before you spend the $20 million, you have the conversation about where it’s worth spending.”

Pennsylvania may loom large for in broadcasters’ rearview mirror. A swing state in every presidential race in TV history through 2008, it never quite made it onto the radar screen in 2012. This was no accident: the Obama campaign’s analytics helped them determine that they didn’t need to advertise there. Depending on the identity of the GOP nominee in 2016 (if, say, he hails from neighboring New Jersey), the state might return to the battleground. But barring any dramatic changes to the profiles of the candidates the parties typically nominate, future presidential air wars are likely to be fought over a number of states much closer to 10 than 20.

Being in a battleground market also may cease to guarantee a station a lot of ad revenue. Once a presidential campaign decides to enter a state, reams of viewership data purchased from vendors like FourthWall Media and Rentrak, combined with local cable options, will enable the campaign to pinpoint only the programs with the audiences it needs to win. (Exceptions will include stations in perennially critical swing markets such as Orlando and Tampa, Cleveland and Toledo, where advertisers eventually buy up all available airtime.)

Unlike those who believe broadcast TV’s loss will be digital’s sudden big gain, “On Points” thinks the revenue will largely stay within TV but be more evenly redistributed across broadcast and local cable as well as, by 2016, possibly addressable (i.e., household-addressable cable and satellite advertising) TV. Analysts expect the number of addressable TV households to hit 60 million by 2016, nearly half of the country’s 130 million TV-watching households. “So the volume will be there for meaningful engagement,” another Obama campaign alumnus suggests, assuming ad inventory is made available to buy.

Stations can take comfort in broadcast’s unrivaled ability to reach that last lingering sliver of undecided voters at the end of a campaign—the passive voters who can only be reached through a pricey NFL telecast or a network morning show. They also can take comfort from the eye-popping ad rates they’re able to charge outside groups, the explosion of which is the main reason why political TV ad revenue keeps going up. But outside groups are under pressure from their funders to spend their contributions wisely—for Republican groups, even more so after 2012—and the new analytics firms are happy to work for them, too.

MAKING PRESIDENTIAL TARGETING TACTICS SCALABLE. In 2012, Chicago ate Big Data for breakfast, but they could afford it. Ever since the President’s analytics-powered re-election, the big question for Madison Avenue data vendors has been, how to make offerings scalable for smaller campaigns? As we wrote back then, vendors who are relatively new to politics weren’t used to delivering their data in packages that smaller campaigns can not only afford but also digest. Having the capacity to process all the data and make it actionable can be as much of an issue for a small campaign staff as pricing.

An answer has been gelling in recent months in the form of “partnerships” between vendors and political analytics firms that service multiple clients. A growing number of firms, including Analytics Media Group (D) and GOP firms Deep Root Analytics and 0ptimus, are working with FourthWall Media for the 2014 cycle. These firms will leverage FourthWall’s “MassiveData” panel of 4.7 million people in 1.8 million homes to microtarget campaign and issue advertising. Deep Root was the first firm to announce a relationship with FourthWall for 2014; the Obama campaign in 2012 was the first to use the vendor’s data in a race.

Republican media research and buying powerhouse National Media became the first political media buyer to partner with Rentrak for the 2014 cycle. Having used Rentrak’s viewing behavior data for national campaigns in 2012, NMI will now expand its use of Rentrak data to local spot buys of both broadcast and cable TV for political clients who match their voter files against Rentrak’s household database.

But the market research vendors aren’t the only ones thinking hard about how to make targeting services scalable. Republican digital strategy firm Targeted Victory recently launched an offshoot, Targeted Engagement, which it calls “the first self-service advertising product built exclusively for politics.” Clients can choose between Facebook and pre-roll ad campaigns; target their audience by party, gender and age range; and choose from geographic targets ranging from nationwide down to legislative districts and individual media markets. Interested parties on the right can apply to become (here it is again) “partners” in the forthcoming Beta launch through the firm’s website.

Not long ago, DockYard (D) announced its scalable consulting service, CTO to Go, providing state and local campaigns with technology infrastructure, including vendor hiring and email systems; data management and “basic targeting,” and tech staff recruitment support.

Lest you think Republicans have it all going on, check out our Big Data At-A-Glance and its robust listing of new Democratic analytics firms, most of them started by Obama campaign alumni, and you’ll realize it’s the GOP that’s (energetically) playing catch-up.

Comments on anything you’ve read here? elizabeth.wilner@kantar.com.