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How TV Advertisers Can Prepare For The 2020 Election Cycle

May 26, 2020

by AdExchanger // Today’s column is written by Philip Inghelbrecht, co-founder and CEO at Tatari . With the 2020 presidential election only a few months away, it is time for advertisers to take stock and bake the usual inventory tightness into their media plans. This election cycle, however, may prove to be especially tricky given the unprecedented conditions due to the COVID-19 outbreak. An already exceptional calendar year for media has gotten even harder to plan for and predict. One thing will not change, however: Political TV spend will remain a huge force in media, irrespective of where we find ourselves in relation to COVID-19. In fact, we should expect political TV spend to substantially surpass previous high levels. Political TV spending in 2020 was always projected to hit all-time highs. EMarketer predicted $4.55 billion would be spent this cycle, representing an 82% increase over 2016. TV is also the marketing channel of choice for political advertisers, soaking up 66% of their total advertising budget. Furthermore, history tells us that political advertising spend will not be negatively impacted by the economic downturn. During the Great Recession, which took place during the 2008 election cycle,  campaign contributions and expenditures set records, jumping about 40% from 2004. In short, this eMarketer forecast has a good chance of materializing. We are still on pace for a record political advertising cycle. The media markets, however, remain in upheaval. At a high level, we are seeing seismic forces pulling the market in unknown directions. • Lack of programming. The Olympics are pushed back to 2021, sports leagues either shortened the season or have postponed their start and as the lockdown lasts, it won’t be long before we start running out of (new) shows. Content is king, and for publishers and networks, that means there are less highly desirable programs to sell. To complicate things further, viewership is up significantly during shelter-in-place orders. • No guaranteed buys. More than $20 billion in TV inventory, or 30% of what is available, is typically sold through the annual upfront process. Negotiations between advertisers and networks take place in spring and summer for the subsequent fourth quarter. This upfront process did not really take place in 2020 – or at least not as is usually the case – so we’re heading into Q4 with much less inventory pre-sold. For networks, this is outright frightening and financially tricky because it is the upfront dollars that allow them to produce new shows. Worse, many advertisers held, and exercised, cancellation clauses that allowed them to bail out, partially or completely, of their Q3 2020 commitments, which were negotiated in spring of 2019. • Advertisers pulling out. Companies hit the worst by COVID-19, such as travel and hospitality, have cut spend. Networks need to find new buyers. All of this suggests that, unlike other years, the TV market should have little difficulty digesting additional dollars from electoral campaigns. There’s a wrinkle, though:  Political TV dollars are predominantly spent locally , with emphasis on the battleground states Arizona, Florida, Maine, Michigan, Minnesota, New Hampshire, North Carolina, Pennsylvania and Wisconsin. So what should TV advertisers expect, and how can they plan for it? Plan your local buys early (like today) Painful as it is, local TV networks are hurting the most right now. For local advertisers in battleground states, advertisers should secure local inventory today through local upfront commitments with broadcasters and cable providers, including guaranteed impressions deals. Upfront doesn’t mean a total “100% committed”; there is always a great deal of flexibility to be negotiated, such as the ability to cancel within a certain number of weeks. This is particularly the case for news programming and streaming inventory. Americans love their news, and we’re not seeing much change in this. If news programming is your bread and butter, act even more ferociously. With streaming, political advertisers will want to hypergeotarget their campaigns at the ZIP code level if possible. Streaming leans into this much better than cable and broadcast, and more than ever, political dollars will flow into local streaming. The fact that COVID-19 has given  connected TV some major tailwind , via significantly increased viewership, will further encourage political advertisers to invest in streaming. Advertisers would be wise to lock in local pricing, or perhaps try something new such as establishing a fixed markup for geotargeting, for example, a $2 CPM. Diversify away from programmatic streaming Expect political advertisers to embrace programmatic streaming, which targets very defined audiences across multiple publishers, and to start dominating those channels. With the potential of excess demand, it may be tricky to drive sufficient impressions later this year, or auctions might clear at higher pricing. For advertisers currently running smaller programmatic streaming campaigns, now is the time to start testing broader and national audiences and if anything, use the current market instability to drive reach and awareness. For everything else, the prudent course for now is to wait and see. For national cable and broadcast inventory not including news programming, waiting makes sense since future spot rates are likely to be lower, especially if a predicted second wave of COVID-19 comes in the fall. The impact from COVID-19 on the media market isn’t going away overnight, and for less contentious markets and entertainment networks, flexibility is a plus. But that doesn’t mean that you can’t plan ahead. Follow Tatari ( @TatariTV ) and AdExchanger ( @adexchanger ) on Twitter.

Philip Inghelbrecht Investments

1 Investments

Philip Inghelbrecht has made 1 investments. Their latest investment was in TipdOff as part of their Angel on January 1, 2015.

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Philip Inghelbrecht Investments Activity

investments chart

Date

Round

Company

Amount

New?

Co-Investors

Sources

1/20/2015

Angel

TipdOff

$1.16M

Yes

2

Date

1/20/2015

Round

Angel

Company

TipdOff

Amount

$1.16M

New?

Yes

Co-Investors

Sources

2

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