nScreenMedia OTT multiscreen media analysis

US political advertisers buck digital trends, stick with TV. Why?

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Half of the global ad spending goes to internet providers, yet three-quarters of US political ad spending next year will go to television. There are plenty of online video ad opportunities available in FAST services, and tens of millions are watching. So, why won’t political advertisers use them?

Internet ad spending exceeds 50% of the total, with online video big driver

According to Zenith Media, 47% of global ad spending goes to internet providers. The company says that internet ad spending will increase its share to 52% in 2021. In the US, it will exceed 50% this year.  Zenith says that, though the market for display and search ads are maturing, it sees one of the biggest drivers of growth as online video.

There has been a dramatic expansion in free ad-supported TV (FAST) over the last year. Services like The Roku Channel, Pluto TV, and Xumo are growing fast and delivering big audiences. Tubi TV says it has 20 million active users; Pluto TV has 16 million; and Xumo 5.5 million.[i] They are also providing television-like engagement. Tubi TV told nScreenMedia average engagement times are more than 2 hours per viewing session. FAST services also make more attractive ad platforms as they are delivering brand-safe ad opportunities, which social TV providers like YouTube and Facebook struggle to do.

Notwithstanding their attractiveness, political advertisers seem likely to ignore them next year.

Political ad spending a bonanza for local TV

Kantar Media says ad spending for US federal office will reach $6 billion during the 2019-2020 campaign, an increase of 14% over 2017-2018. Spending growth will slow from 21% in 2017-2018 to 14% for the next election cycle. However, ad spending will have more than doubled from $2.95 billion spent in 2014. The total political ad spending will be bigger than Kantar’s estimates because they do not include PAC and local election ad spending.

Political ad buyers appear to be even shyer of digital ads than brands. Almost three-quarters of the ad revenue will end up going to television, according to Kantar. $3.2 billion (53.3%) will go to broadcast TV and $1.2 billion (20%) to cable TV.

Much of the broadcast ad spending will go to local broadcast television, rather than national buys. In 2018, according to Steve Lanzano, CEO and President of the Television Bureau of Advertising:

“Campaigns, PACs and other entities spent over $3 billion on local broadcast television advertising in the 2018 midterm cycle.”

The 2020 campaign is liable to be the same.

Why aren’t FAST services attracting political ad dollars?

Speaking during Roku’s Q3 2018 earnings call, Anthony Wood, Roku’s CEO, focused on younger viewers as a strength of the company:

“10% of 18-to-34 year-olds watch their television on Roku. So, if you’re an advertiser and you want to target a video at them, Roku is the place to go to reach them. But 10% of the budget has not moved over to Roku yet, or to streaming.”

Other FAST providers also tout their abilities to reach younger viewers.

While FAST services are having success reaching younger viewers, local TV is losing them. Pew Research says that only 18% of people 18 to 29-years-old often get news from local TV, So, why isn’t more political ad spending transferring from local TV to FAST providers chasing the younger voter?

One of the big reasons the big political ad spending will stay away from FAST services is because there is no accepted standard to measure the audience. The active user numbers quoted earlier in this piece came directly from the companies and received no independent audit.  It is not even clear the companies measure in the same way. While such is the case, political ad dollars will stick with television.

[i] There is no standard for measuring the numbers of “active users” for FAST providers. All the numbers cited are reported by the companies listed and are not independently audited.


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