Building on the momentum of Barack Obama’s two presidential campaigns and their savvy use of online media, digital advertisers consider politics a growth industry.
While TV remains the giant of political advertising, topping $3.8 billion in spending in 2012, digital ad buys are on the rise and expected to peak in the weeks leading up to Election Day next year, when political advertising can account for more than half the supply of ads on digital marketplaces.
Two digital ad firms, Playa Vista’s Rubicon Project and Pasadena’s OpenX, are staffing up to ride this wave through the 2016 campaign cycle and beyond.
The firms, which now use sophisticated technology to target voters with specific ads, said they are meeting with political operatives. They are tweaking their offerings and planning for high digital advertising prices come November of next year.
“When it comes to the 2016 calendar year, in terms of what we forecast in political advertising spend, we are really bringing all our resources to bear to support that marketplace,” said Teri Gallo, senior vice president of publisher development for OpenX. “We are adding on additional staff to be very specifically focused on this space.”
For the first time, total digital political advertising spending is expected to hit $1 billion next year, according to research firm Borrell Associates. It’s estimated to hit $3.3 billion by 2020.
Theresa Mueller, head of political ad sales for Rubicon, which in July opened a one-person office in Washington, D.C., said her firm has anticipated this trend for a while.
“Right after the 2014 midterms there really wasn’t a drop in activity,” said Mueller. “You really had to get into the market when we did.”
After Obama’s inaugural presidential campaign pioneered uses of online media, a cottage industry sprung up supporting the surveillance and targeting of potential voters.
“There’s a whole generation of people that started doing this in 2008 that have grown up in digital,” said Jeff Dittus of Audience Partners, a Fort Washington, Penn., software company whose products help political campaigns analyze data and buy online ads through ad exchanges, including Rubicon and OpenX. “When I started this company in 2008, there was no voter targeting at all.”
These days, political consultancies and ad agencies have deep voter rolls, layered with data such as voters’ Web browsing histories, search engine entries, political newsletter signups, online purchases, income levels and credit histories. Armed with mountains of voter data, political operatives are turning to automated ad markets such as Rubicon and OpenX to reach their target slices of the electoral pie.
“You can have over a million data attributes to define a user,” noted Rubicon’s Mueller.
These one-stop-shop markets are attractive to campaigns because they sell online ad space across thousands of media sites, apps and social media platforms at once, making them efficient channels for campaigns to target small prospective audiences.
Moreover, political operatives will often buy ads across multiple exchanges with the goal of reaching a critical mass of swing voters. For example, consider an ad buy targeting 125,000 swing voters within a contested congressional district of about 700,000 people.
“You need a big reach online with lots of sites because those 125,000 people look at lots of different sites,” explained Dittus. “We need multiple (advertising) exchanges and lots of inventory to find them wherever they are.”
While older voters can still be reached through TV commercials or phone banking, online ads are targeted at millennials, many of whom have never had a land line or cable television subscription – or even vote regularly.
Campaigns have reported success in connecting with 18- to 34-year-old voters with online ads.
“They are looking for them to take a number of actions,” said Reed Scharff, OpenX senior analyst of market integrity, who previously worked on Obama’s 2012 campaign. “One is to donate money; two is to volunteer; three is to have a conversation at home, a persuasion conversation; the fourth would be to actually vote.”
There are several ways for a campaign to buy online banner or preroll video ads from an exchange. Advertisers often bid in a kind of real-time spot market, where ad units go to the highest bidder. That method is typically efficient, except late in election season, when competition for limited advertising space heats up and prices can soar.
One insider said during the 2014 election season, standard preroll video ads, which typically cost between $8 and $15 for each 1,000 views, could not even be acquired for twice those rates in hotly contested regions due to a lack of inventory. That trend is expected to continue this time around.
“It’s the November spike,” said Dittus. “The political guys are spending big time in the last two weeks of the campaign.”
That’s why Audience Partners is buying ad inventory in advance from exchanges in regions it speculates will be competitive. It later plans to sell the spots back to its political clients at a healthy markup.
“If there’s a competitive senate, governable and presidential race (all in one state), there’s going to be a shortage of inventory,” said Dittus.