US political ad spending is exploding in the run-up to the 2022 midterm elections, with an estimated $8 billion to $13 billion up for grabs this election cycle.
But, while CTV and streaming video are seeing an infusion of political ad cash this year, local news publishers aren’t seeing a dramatic change in their bottom lines.
Political ad revenue pacing for this election cycle is “about the same as other midterm elections,” said Fran Wills, CEO of the Local Media Consortium.
While local news seems like a perfect fit for political campaigns looking to target their messages to politically engaged voters in specific towns and cities, digital channels like connected TV (CTV) and streaming offer more sophisticated targeting capabilities than local newspapers or linear local TV news.
Political ad revenue impact
These days, political ad dollars don’t flow to local newspapers like they may have in the past.
“Newspapers were No. 2 in political advertising behind TV for several decades. Now they seem to be not even an afterthought,” said Gordon Borrell, CEO of media and advertising analyst firm Borrell Associates.
Even if newspapers have seen their share of the political pie diminish over time, some never saw much in the way of political ad spend to begin with.
“Local print and digital newspapers have never been recipients of much political ad spending,” said Michael Zimbalist, chief strategy and innovation officer at Philadelphia Media Network, which owns the Philadelphia Inquirer, the Philadelphia Daily News and other publications.
When it comes to paid media, political advertisers are much more interested in TV, social media and programmatic direct response campaigns, Zimbalist said.
One indicator that political ads aren’t a major revenue generator for local newspapers is the fact that many local news trade organizations don’t track political ad spending as a standalone revenue category.
“My guess is that small-market publishers are still seeing strong local political ad spending,” said H. Dean Ridings, CEO of the trade group America’s Newspapers. “But we haven’t surveyed our members on [whether they’re seeing more or less political ad spending this election cycle], and these issues aren’t something I typically discuss with our members.”
Overall, there seems to be a deficit in reporting on political ad revenue among local news publishers, which doesn’t speak highly of the importance of political ads as a revenue generator for these publishers.
“The key industry people I polled would know if there was any buzz about big political bucks flowing in, and they don’t seem to be in the know,” Borrell said. “Nobody seems to track that information centrally anymore.”
And, even among local news organizations that are seeing exponential increases in political ad spend year over year, these percentage increases yield only a small amount of total revenue.
One large group of small newspapers saw year-to-date political ad spend increase by 10x in print and 2x in digital, but the actual revenue numbers were very low, Borrell said. “My guess is they’ll get less than 2% of revenue from political.”
The rise of CTV
Local news outlets aren’t cashing in as campaigns ramp up advertising because they can’t offer the granular audience targeting capabilities that political campaigns crave. So campaigns are turning to CTV and streaming instead because geotargeting on these channels has become highly sophisticated.
If a campaign is focused on a certain district within a city, then running a CTV campaign that uses narrow geotargeting to only reach constituents in that district is more effective and less wasteful than running a campaign on a local TV news station whose audience reach includes the entire city.
And, because certain linear TV markets cover multiple cities, they also aren’t the most effective way to reach specific constituencies within these cities.
“If you’re running a campaign in New Hampshire, you can [use CTV to] just target there and not have to buy into the Boston media markets,” said Peter Newman, director of forecasting at Insider Intelligence, the parent company of eMarketer.
Advertisers of all types are spending more on CTV than they have in the past, and political advertisers are no exception.
eMarketer increased its forecast for overall CTV ad spending in the US from $9 billion in 2020 to almost $19 billion this year. “CTV is taking a good chunk of what’s happening on the local level because of the combination of improvements in targeting, improvements in tracking and a new wave of political operatives that are more willing to use new techniques,” Newman said.
More efficient targeting methods are appealing to results-driven political agencies and consultants, said Jim Loughran, SVP of convergent video partnerships at Viamedia, an advertising company that specializes in local TV inventory. “That’s why the data firms in DC and [political data firms like] i360 have become such large players in the marketplace over the last eight years.”
Local news programs, which typically air on radio or linear broadcast TV, are likewise losing political revenue share to national cable news programs, digital media and CTV.
“[Political spending on] broadcast finished at about $5.4 billion in 2020, and it’s projected to finish at $4.5 billion in 2022,” said Mike Ball, VP of political and client development at Viamedia. “Radio finished 2020 at $36 million, and they’re projecting about $22 million in 2022. Whereas digital, CTV and cable have all grown.”
The rising tide
However, some news publishers are having success attracting political ad spend in the form of advocacy campaigns that run programmatically.
A group of large newspapers reported a 40% increase in revenue YoY based on booked revenue through Q4, with most of that growth coming from programmatic display, Borrell said. That particular publisher group is “very aggressive in tapping advocacy campaigns working through agencies,” he said.
The need to court advocacy campaigns speaks to a new dynamic that has emerged in political advertising in recent years: the never-ending campaign cycle.
Nowadays, many political advocacy groups keep awareness campaigns running nonstop at the national level to keep certain divisive issues top of mind among voters, even outside of election seasons. And, while some channels are seeing more growth than others, this dynamic has produced the proverbial rising tide that lifts all boats, which is good news for publishers of all sizes.
“Because there’s almost a constant stream of issue ads, we’re seeing the floor for spending even in off-cycle years not being nearly as low,” Newman said.
That means political ad spending has become less cyclical. And publishers that can prove their audience reach among key voter blocs stand to cash in the most.
