Political ad spending could surpass $10 billion in 2020
Coming off a rough 2019, TV ad sales chiefs are hoping the new year brings not only good tidings, but better prosperity when it comes to advertising revenue. Lucky for them, 2020 is looking much brighter thanks to an election that is setting up to bring in record ad dollars.
Political advertising spending is expected to near $10 billion next year (a 63% increase from 2016), with TV looking to get the biggest chunk. The influx of campaign money has led GroupM, the largest media-buying firm, to predict that TV ad revenue will increase by more than 5% in 2020. That $10 billion may only be the tip of the iceberg. By the time we hit Election Day next November, that amount could be much, much higher.
Brian Wieser, global president, business intelligence for GroupM, told TheWrap that since GroupM drew up its ad forecast for 2020, two things happened. First, they saw that campaign fundraising for the first half of 2019 was pacing 45% higher when compared to the first-half of 2017 (for the 2018 midterms). Then last month, former New York mayor Michael Bloomberg entered the Democratic primary.
Bloomberg has already committed $109 million in TV ads, which include pre-bookings for early 2020. Bloomberg alone has spent more than every other Democratic candidate combined.
“This is where there could be some relief,” Wieser said.
Typically, political TV ad dollars are funneled towards local TV — Wieser says “maybe half” of all political TV ad spending will be on the local level — and targeted towards primary voters, and then later voters in swing states like Wisconsin, Florida and Ohio. Then you factor in elections on the local level, from Senate and House seats to State Legislatures. But Wieser says the deep-pocketed Bloomberg is taking on a different tactic.
“It looks like that campaign’s play is to go for Super Tuesday. That means you’re going to run ads nationwide, and that means national TV may very well be a primary beneficiary,” Wiser continued. That doesn’t even factor Donald Trump’s expected re-election campaign ad blitz.
Though one-time frontrunner Kamala Harris dropped out of the race earlier this month, the Democratic primary figures to go down to the wire, with Elizabeth Warren, Bernie Sanders, Joe Biden and Pete Buttigieg all expected to stay in the race for a while. Then you add in Bloomberg and fellow deep-pocketed billionaire Tom Steyer, and there’s two more candidates that can stay in as long they want to keep throwing money around.
“It does help that you have a competitive primary that likely will drag out,” Wieser said. “Assuming Bloomberg is still in the race around March, there is going to be meaningful extra money going into all sorts of media.”
That’s music to the ears of any TV advertising executive, many of who are licking their wounds from this year, which saw ad revenue decline 7% in 2019 to $65 billion and saw its market share drop two percentage points from 2018 to 26.4%.
Even if you take out political advertising, which vacillates more wildly from year-to-year, the TV ad marketplace was still down 2% in 2019. By 2024, GroupM predicts TV ad dollars (excluding political) will fall to $60.3 billion, accounting for only 21.2% of the entire market.
But political ad spending is rising to levels we’ve never seen before, which gives the TV space something to look forward to every other year. Historically, election years have resulted in a 3-4% bump in TV advertising revenue over the past decade. For the 2018 midterms, that growth was 5%, the same increase that GroupM expects for next year.
Here is how political TV spending has grown since 2008:
- 2008: $2.4 billion
- 2010: $2.9 billion
- 2012: $2.9 billion
- 2014: $2.5 billion
- 2016: $3 billion
- 2018: $4.2 billion
- 2020 (estimated): $4.5 billion
If you’re in the Comcast family, 2020 brings double the fun with next summer’s Tokyo Olympics, which puts NBC front and center for a two-week stretch in late July/early August. The Rio Olympics in 2016 averaged 25.8 million viewers over 17 nights on NBC, far outpacing the usual summer ratings lull.
But Wieser argues that while the Olympics are undoubtedly a great thing for NBC, which has already secured more than $1 billion in advertising commitments and should easily surpass the $1.2 billion it garnered four years ago, it does so at the detriment to everyone else.
“The Olympics, mostly, it represents a reallocation of spending rather than anything incremental.” he said. “What does happen, is the network group with the higher share of audience gets a higher share of whatever that pool of spending is. So it clearly matters if you’re NBC. It hurts everyone else.”
Next year’s Olympics run July 24-August 9, placing it in between the Democratic and Republican National Conventions. But don’t expect political campaign spending to mix with the Olympics.
“The Olympics historically was something different from an advertiser perspective. You had a certain number of marketers making these multi-year commitments,” Wieser said.
At most, he added, it’s possible a few local NBC affiliates may take ads from local candidates or issue-based groups.
“If you’re a political campaign, the brand association with the Olympics isn’t really the thing you’re trying to do. You could, but it’s almost certain the IOC would not want any candidate associating themselves in that way.”