Midterm Elections and Media

The 2018 midterm elections are now behind us and while there were winners and losers on both sides – the real winners were the publishers, networks, stations, and social media sites which took in a generous amount of advertising dollars.

Overall, $8.9 billion dollars were spent in advertising for the 2018 mid-term elections which is on par with the 2016 presidential elections. That’s impressive considering the mid-term elections have a lower turn out and are typically considered less important by the general public. This is also telling of what can be expected come 2020.

But why are advertising dollars increasing so significantly year over year? What supports this arms race among candidates?

First and foremost, most campaign consultants have an incentive to push ads because they’re in the media business. They are not only forced to inherently believe in ads’ effectiveness but they often times get a cut of the media spending. So, it only makes sense that they’re going to continuously push that narrative. That’s one reason. But more importantly, the individual that wins the arms race – also tends to win the election. Almost every single time the candidate who spends more money is the candidate who comes out on top. Looking back from 2000 (and through 2018) the candidate dropping the most loot wins, at worst, 73% of the time. This trend is stronger in the House than in the Senate but still applies to both chambers. Based on preliminary 2018 figures, 90% of house seats and 84% of senate seats went to the candidate with the most money.

Source: https://www.opensecrets.org/elections-overview/did-money-win

So where was the money spent? TV is still the number one tactic used by all candidates. It garners major reach (over 85% of Adults 18+), raises mass awareness, and is one of the most effective vehicles in terms of boosting lesser-known candidates. According to forecaster, Borrell Associates, television advertising accounts for a little more than half of the $8.9 billion with digital media accounting for approximately $1.8 billion. The remaining dollars are largely split among Newspapers, Radio, Direct Mail, and Out of Home. Interestingly, digital spending accounted for less than one percent of spend in 2014 and now lies closer to 22%. To put the TV spending figures in perspective – the ENTIRE advertising industry is projected to spend $70B in 2018. That means political accounted for 10% of the ALL TV advertising spend. Wrap your heads around that. They’re pushing more Betos than McDonalds is nuggets.

So what happens when politicians get all up in our TV buying business? Well, we (the advertiser or agency) generally lose a ton of inventory and get booted from the spots we were originally scheduled to air in. See, when candidates want to advertise with a TV station, the station is required to give them not only the guaranteed lowest rate for spots but also preference in placement. PACs further muddy the waters by eating up the remainder of the inventory. It’s also worth mentioning that PACs generally aren’t as concerned with how much they have to pay to get on air – so they tend to outbid most advertisers – further limiting available inventory. All this forces stations to raise their prices significantly for most everyday advertisers to the point that CPPs (cost per points) are almost 3X higher than usual. In these cases, everyday advertisers are not only paying more for placement but they’re also getting bumped. Stations tend to offer up “makegoods” to account for this but given this year’s incredible level of spending – they are likely going to have trouble doing even that. In fact – some are even offering credits as opposed to those makegoods given their inability to provide placements in equitable dayparts. Generally speaking, most stations will bring their rates down after the election season but that’s unlikely to happen in 2018 since so many advertisers have pushed their October/November budgets into December and beyond. As for the digital front, this is where things are getting super interesting. Yes, more campaigns are moving to the programmatic side of things – but as you know, the really hot stuff is happening on social media (and not just on Snapchat).

Unlike traditional advertising media — TV, radio and print — online platforms like Facebook, Twitter and Google don’t have to follow Federal Election Commission regulations. What is most interesting about this election cycle is how little Facebook has actually done to prevent a repeat of the 2016 election. Facebook has spent the past year or so doing this big song-and-dance about how they’re going to be more transparent. They’ve spent time and money on creating new tools so that people can understand who’s actually behind all the political ads they’re seeing but it appears to mostly be a sham.

Last year, Mark Zuckerberg said that making political advertising more transparent was one of the most important things the company would do, but according to multiple tests conducted by VICE News and Business Insider, the new features Facebook rolled out this year are clearly, at a minimum, not effective. VICE News was able to promote multiple fake ads on behalf of the Veep, Mike Pence, ISIS (?!), and 100 US senators. Business Insider put out fake ads that were captioned as being “paid for by Cambridge Analytica” – the very same political advertising firm that harvested Facebook data and was unequivocally banned from the platform earlier this year.

The reality is these platforms should not be self-regulating and they have clearly proven as much. Expect some things to change as we approach 2020. Or let’s at least hope they do. With 2018 behind us – we have what is likely to be a very exciting and very expensive 2020 election ahead of us.

Sources
https://news.vice.com/en_us/article/wj9mny/facebooks-political-ad-tool-let-us-buy-ads-paid-for-by-mike-pence-and-isis
https://www.businessinsider.com/facebook-approved-political-ads-paid-for-by-cambridge-analytica-2018-10
https://www.cnn.com/2018/10/15/politics/digital-advertising-midterm-elections/index.html
https://www.mediapost.com/publications/article/324674/midterm-political-ads-forecast-to-hit-nearly-9-bi.html