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Changing consumption patterns: More Americans are watching video on non-TV devices

Political Ads Will Target Cord Cutters

March 29th, 2016   ||    by Todd Wasserman

Political ads usually mean TV advertising. Groups affiliated with the candidates are expected to burn through $1.1 billion on digital advertising in 2016, according to an estimate by Borell Associates in The Wall Street Journal. While that figure is up about 700 percent from the 2012 elections, it’s dwarfed by the expected $4.4 billion in political ads earmarked for TV.

Broadcasters, of course, expect this infusion of cash every four years, and bake it in to their projections. The times are changing though and now cord-cutting should be taken into account, especially when the target is young people.

Tuning Out and Cutting the Cord

The number of cord-cutting households in the United States is still trifling, but is growing fast. A 2015 study by eMarketer found there were 4.9 million US households that used to pay for cable but now no longer do. That figure was up 10.9 percent over the previous year. Looking ahead, eMarketer predicts the figure will rise to 8.4 million by 2019.

Combined with what eMarketer calls “cord-nevers”—households that have never subscribed to cable and don’t plan to—the figure rose to 20.8 million in 2015 and 28.1 million by 2019.

Most troubling, the group likely over-indexes to young voters. As The New York Times noted last year, about one-fifth of adults aged 18–34 “don’t subscribe and are content to connect their TV to the Internet or use antennas for broadcast.” For Democrats, especially, this means that new methods will have to be employed to reach such potential voters, according to The Hill.

TV Time Likely to Sell Out

To compound the problem, local TV stations in swing states will likely find they can’t keep up with the demand this year. As Kip Cassino, executive vice president at Borrell, told USA Today, “In some of these (swing) states, there’s literally going to be no available advertising space left on television. The local TV stations are literally going to have to turn down political ad spending.” In other words, there is a finite amount of ad space available. In October in the battleground state of Pennsylvania, for instance, local TV time is likely to be unavailable as local TV stations are besieged with “wall-to-wall” political TV ads, notes LinkedIn.

What’s a Candidate to Do?

Against such a backdrop, buyers of political advertising will need to switch up their buying methods. As the International Business Times noted, cord-cutting was also an issue in the 2014 election, when pols and politically oriented groups used Hulu to reach cord-cutting voters. Unlike traditional TV ad targeting, which is based on demographic data, targeting on Hulu or TV Everywhere is built on browser-based cookies, which create user profiles based on affinity. For instance, if you like Whole Foods or Waffle House, you’re statistically likely to vote Democrat or Republican, respectively, according to Time.

Such individual targeting used to be reserved exclusively for direct mail and display ads. Programmatic TV has emerged as another tool for political ads. In 2015, some 4 percent of US TV budgets employed programmatic according to Magna Global, reports Ad Age. By 2019, the figure is expected to rise to 17 percent.

Based on various factors including cord-cutting, a dearth of TV time and the efficacy of targeting, the 2016 presidential election might be a key impetus for such growth.

What do political ad buys say about the future of programmatic? Contact Videa to find out.

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