Below you will find a big notification for the 2020 Election cycle. Philipjay@gmail.com

The 2020 Elections Will Set (Another) Ad Spending Record

 

Brad AdgateContributor 

Media

Brad Adgate is an Independent Media Consultant

Tom Steyer, a businessman and 2020 presidential candidate, speaks at the Des Moines Register Soapbox during the Iowa State Fair in Des Moines, Iowa, U.S., on Sunday, Aug. 11, 2019. Since launching his presidential bid, billionaire Steyer has booked more air time than any of his rivals, and even outpaced President Donald Trump's campaign in online ad spending. Steyer could spend $100 million of his own money on political ads.  Photographer: Daniel Acker/Bloomberg

 © 2019 BLOOMBERG FINANCE LP

With Election Day still more than one year away, media companies are expecting a significant windfall in political advertising dollars, with industry analysts forecasting a record amount being spent by candidates. Local television is expected to be the largest recipient, but candidates are continuing to invest more ad dollars in other media including OTT, local cable and digital, among others

Industry Estimates

Kantar Media CMAG group estimates that political ads for the 2020 election could reach $6 billion. Group M, a prominent ad agency, estimates spending for political ads will reach $10 billion, an increase of 59% from the 2016 election year when an estimated $6.3 billion was  spent.

BIA Advisory Service estimates $6.55 billion will be spent on local political advertising in 2020, with over-the-air TV receiving the largest share of $3.08 billion – 47% of total political spend in 2020. This represents a potential 16.5% of total local broadcast TV advertising revenue for 2020. Digital media is forecast for 21% of political ads, cable TV 14% and radio nearly 5%.

Cross Screen Media and Advertising Analytics estimates the video ad market for politics will grow by 50% from 2018 to 2020, reaching a projected $6 billion. The study estimates political advertising will account for 4-5% of the total video ad dollars and account for 17% of total growth. Local broadcast TV is expected to get a lion share of the political ad dollars with stronger ad growth from digital media and local cable.

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These estimates follow a record high $4 billion that was spent on the 2018 midterm elections.

Political Ads

The number of political ads, especially in TV markets in battleground states such as Florida, could tighten commercial inventory for traditional advertisers, including automotive, driving up ad rates and making ads on premium programs unavailable. The FCC has strict guidelines on how much a station can charge for a political ad. According to Cross Screen Media, there could be eight million broadcast airings of political ads in 2020, an increase from 5.5 million in 2018. A lot of the political ads will air on local newscasts. According to a report from Kantar CMAG, political advertising took up 43% of available slots on local news in battleground markets, compared to just 10% at the start of the season.

According to a Kantar CMAG report, an extended Democratic primary fight would likely be short term, with a “sugar high” in second quarter 2020. In fact, the report says a long primary and a Democratic convention fight would most likely reduce total campaign spending as it would reduce the amount of time the eventual Democratic nominee and his/her allies would have to raise and spend money in the general election. It would also likely create challenges for Democrats raising money for Congressional races if the nomination fight gobbled up most of the political enthusiasm oxygen.

Toss Up States

As with previous elections, there will be a focus on several toss-up states. Kantar identifies six of them for the 2020 Presidential election: Arizona, Wisconsin, Michigan, Pennsylvania, North Carolina and Florida. Other states that will get some media attention might be Iowa, Maine, Nevada and New Hampshire. TV stations and other media outlets in those states can expect to see a significant financial windfall through Election Day.

There will be several competitive races in the U.S. Senate that will also see a substantial amount of ad dollars. These states are Arizona, Colorado, Maine, North Carolina, Georgia and Kentucky. According to Advertising Analytics/Cross Screen Media, an estimated $789 million will be spent on U.S. Senate races, a figure below the 2018 mid-term figure. There will be a few gubernatorial races that are expected to be competitive, most notably in North Carolina, Kentucky, Montana, Mississippi and Louisiana. Advertising Analytics/Cross Screen Media estimates $252 million ad dollars will be spent in statewide gubernatorial races.

In another survey, BIA Advisory forecasts that local media outlets Los Angeles, Phoenix and Philadelphia will receive over $250 million in political ad dollars. Additionally, with an anticipated Senate seat up for grabs, Maine’s two largest TV markets, Portland and Bangor, could see over half of their local TV advertising revenue coming from political dollars. BIA also expects TV viewers in Nevada to be inundated with political ads.

Stations Groups Expect Huge Profits

After a strong fourth quarter in 2018, TV station group owners are anticipating another financial windfall with the 2019-20 election cycle. In a recent earnings call, Steven Marks, an EVP at Sinclair said, “There is going to be quite a robust fourth quarter [this year] and in 2020 we are not going to be able to get out of the way of the money. It’s literally going to be hand over fist.” In 2018, Sinclair said ad spending for political reached a record $255 million. Mark Fratrik, Senior Vice President, Chief Economist of BIA Advisory Service, noted, “Most of the large groups with stations throughout the U.S. will benefit noticeably from the political advertising expected in 2020; groups with strong stations in battleground states will benefit to an even greater extent. These groups include Hearst, Gray, Tegna, Sinclair and Nexstar.”

Contributions

There are a few reasons for the political windfall in advertising dollars. The current political climate is polarized. With more than one year before the convention, there are two dozen Democrat candidates running for President. Besides record high fundraising dollars from Donald Trump’s campaign, Democratic candidates are also getting significant financial contributions although they are divided among the candidates. Also, the 2010 Supreme Court decision has allowed for unlimited spending by corporations and individuals, with super PACs spending more money on political and advocacy advertising.

The same day he announced his candidacy for President in July 2019, Democrat billionaire Tom Steyer spent a reported $1.05 million on TV advertising in  early primary and caucus battlegrounds  Iowa, Nevada, South Carolina and Boston (which covers the populated counties of southern New Hampshire). The Iowa caucus is scheduled for February 3, 2020, with the New Hampshire primary eight days later.  Steyer said he will spend $100 million of his own money on his campaign. Already, President Donald Trump has spent over $10 million on digital advertising in battleground states Michigan, Florida, Wisconsin and Pennsylvania. The Trump campaign could spend up to $1 billion in advertising by November 2020. In late August several Democrat candidates have begun to air political ads in Iowa including Joe Biden, Kamala Harris, Pete Buttigieg, Julian Castro and Kirsten Gillibrand (who dropped her candidacy) with the states caucus more than five months away.

Local Cable TV

Along with besides broadcast stations, local cable also is expecting a windfall in political ad dollars. Tim Kay, the Vice President of Political Strategy at NCC, said, cable’s advantage is in using data to reach voters on a sub-DMA level. Kay noted that besides the Presidential election, both parties are under intense pressure to win a majority of seats in Congress. Kay believes up to 85 seats in the House could be competitive. There will be significant ad dollars spent in Florida, Pennsylvania, Michigan and Wisconsin, but up to 15 states could be in play. Kay said the eight weeks prior to the election will see the heaviest activity and cable’s multi-screen products -- OTT, VOD and digital – whose users are lighter viewers of traditional television, will be also see significant political dollars. Kay expects ad volume to exceed the estimated $1.1 billion from the 2018 mid-terms.

OTT/CTV

Political advertisers will also be looking at other emerging media opportunities to reach voters, including OTT/CTV. According to Steve Passwaiter, the Vice President and General Manager of Kantar CMAG, “OTT does a few things: extends reach given the ongoing declines in linear TV ratings, allows great geotargeting and voter segment targeting and brings in the younger viewers that don’t consume much linear TV, all in combination with shorter commercial segments.” Passwaiter said YouTube TV, PlutoTV, Hulu, Roku, Sling TV, CBS AllAccess, and others are all going to see political ad dollars. Passwaiter also thinks Sinclair’s OTT effort, Stirr, will merit watching. Tru Optik estimates political ads on OTT /CTV platforms will see $500 million to $720 million for 2020, with $70 million to $90 million for streaming audio. One of the key elements that still impacting OTT/CTV is scale but this issue is being slowly but steadily addressed.

 

COMMENTARY

Linear TV Loses Half Its Viewers As Streaming Services Soar

• by Mario Carrasco , Columnist, 3 hours ago

It’s true. Within just three years, linear television has lost nearly half its viewers. What factors are driving the shift, and how can marketers adapt to -- and profit from -- the changes? 

Our nationwide survey of consumers’ media consumption habits on platforms such as live TV, streaming services, gaming, and social media produced several useful insights.

Viewers are “Streaming” to Quality Content

Despite losing subscribers for the first time in eight years -- and no doubt aided by the drastic decline of live television -- Netflix remains the preferred method (61%) for watching TV programs among U.S. consumers, followed closely by YouTube.

Players like Hulu are also gaining viewers, with popular original programming such as “The Handmaid’s Tale,” and a just-announced Disney+ bundle that includes Hulu and ESPN+ for $12 a month, set to launch in November.

Convenience Drives the Shift to Streaming

Convenience is still the top reason consumers prefer streaming methods over cable or satellite. For Gen Z, virtually born with connected devices in hand, streaming is the preferred viewing method by far.

Highly anticipated streaming services from recognized brands like Apple will proffer even more choices. If these options live up to expectations, it could spell disaster for linear TV and cable/satellite.

Another factor impacting cable/satellite is insufficient programming. DirectTV, for example, recently dropped CBS-owned stations in select markets after the network and AT&T failed to reach a new agreement. The biggest loser? Consumers. As their paid-for channels go dark, the solution for many will be to drop cable/satellite and start streaming content when and where they please.

Habit may be all that’s keeping cable/satellite in play since switching on the TV is second nature for older generations. 

On a positive note, cable/satellite companies’ continued investment in Spanish-language content is paying off. But is it enough to retain cable subscribers?

Gaming and Social Continue a Steady Climb

Streaming isn’t the only media seeing an uptick in usage. Gaming and social media enjoy a dedicated following and have become increasingly mobile. 

Gaming on consoles and desktops dropped from 41% in 2017 to just under 30% in 2019 and will likely continue to decline as younger generations use mobile devices for online gaming.

Social media users spend nearly two and a half hours a day on social media, and 40% of users aged 18-22 say they’re addicted to it. 

Brands take note: Gen Y is the least trustful of brands on social media. To elude brand targeting, they use private social media apps such as WhatsApp.

What It All Means

Live TV, while clearly in decline, still enjoys a fair percentage of the total market. But as consumers play “musical chairs” with online options, marketers and content creators have a unique opportunity to observe what works and what elicits a collective "meh" from consumers, and then apply these insights to create audience-pleasing content and offers that rise above the din. The music hasn’t stopped yet.

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Which Half of my Advertising is Wasted — and It Is Only Half?

Author

Darren Woolley

Publish date

September 04, 2019

Thought Leaders

“Half my advertising spend is wasted; the trouble is, I don’t know which half.”  This quote is regularly attributed to either U.S. retail magnate John Wanamaker or to UK industrialist Lord Leverhulme, depending on which side of the Atlantic you were trained. The quote has become a cliché for the uncertainty about the effectiveness (or ineffectiveness) of advertising.

When you Google the phrase “half my advertising is wasted,” you get about 21,700,000 results, showing that, even in the age of Internet advertising, this “waste” is vividly real.

Every time the quote is trotted out at an industry event, half the audience groans while the other half giggles nervously, eyes down, averting contact. It is unclear if this reaction comes from those who are ashamed to be caught at an advertising conference or from a belief that the 50 percent figure is ridiculously low or ridiculously high. What seems to be acknowledged, though, is the belief that advertising is an unaccountable cost of business. Unaccountable is not a good place to be in an era that worships increased shareholder value.

Why does the industry do little to prove John Wanamaker (or Lord Leverhulme) wrong?
Imagine any other profession, and I use the term advisedly, tolerating the belief that half of its effort is wasted? Who would work with an accountant who files tax returns that are right only half the time? Who would work with a lawyer who loses half of his cases? Who would seek out a doctor whose diagnostic hit-rate is only 50 percent right?

The advertising industry loves to perpetuate the myth that half of its spend is wasted — and that’s just how it is; you can’t win all the time. Is the click real or fraudulent? Human or bot? Who cares? It’s a flip of a coin, heads or tails, wasted or not. It’s the 50 percent rule.

Researchers Rex Briggs and Greg Stuart tackled the myth directly in 2006, publishing their book What Sticks: Why Most Advertising Fails and How to Guarantee Yours Succeeds. After examining more than $1 billion of marketing spend for one million consumers by 30 major corporations, they discovered that the marketing spend in question had an overall effectiveness rate of no more than 37 percent.

If marketers said “63 percent of my adverting spend is wasted,” this would not have quite the same ring as John Wanamaker’s 50 percent phrase, but it would be more accurate. Briggs and Stuart figured out why nearly two-thirds of marketing expenditures were wasted, concluding that the waste came from a poor understanding of consumer motivations, coupled with inaccurate messaging delivered with an inappropriate media mix. Bingo. Target missed.

This is worse than the flip of a coin. Getting consumer motivations wrong is a serious problem. So is inaccurate messaging. So is an inappropriate media mix. If this is the best that marketing can do, it’s a sad commentary on the professionalism of its marketing practitioners.

The Briggs and Stuart results were from 2006, roughly in line with when marketers pivoted to deal with the challenges of digital and social marketing. Digital and social challenges added complexity and may have distracted marketers from correcting the underlying consumer, messaging, and media mix mistakes that Briggs and Stuart identified. Digital and social adds fraud to waste levels. Recent analyses show fraud levels of 23 percent for social display ads and 31 percent for news video ads on iPhones. Fraud levels increase waste levels above the original 63 percent level Briggs and Stuart calculated.

Fifty years of Marketing Effectiveness Awards from various organizations demonstrate that advertisers and their agencies have an interest in becoming more effective, and we have recently seen an increased desire among marketers to drive brand growth for their organizations. This is both good and important.

Equally important, then, is the need to be more honest and to declare that Wanamaker and Lord Leverhulme were hopeless optimists who left us with the unrealistic belief that we were wasting only 50 percent of our marketing spend.

Commentary

Maybe Cable TV Won't Go Away After All?

• by Cory Treffiletti , Featured Contributor, 3 hours ago

A few weeks ago, I wrote about cutting the cord.  I did some research and was 100% convinced it was time to switch, wave a fond farewell to cable and pursue a network of streaming entertainment.
I may still go that route, but I’m no longer 100% sure.  Upon further review, the reasons to switch may not be a clear as I originally thought.

I am typically impulsive, but this time through I decided to do my homework and analyze all the options.

From everything I could see, the biggest reason cutting the cord makes sense is to save money, but it all depends on what you want to watch.

For those consumers who want the basic cable stations, premium networks and local TV alongside the “standards” like Netflix, the costs add up to be about the same.  For streamers, you need a core platform like YouTube TV or Hulu Live and these run $45-$55, so once you add on the other platforms like Netflix, Disney+, Amazon Prime or a couple of others, the price becomes very close.

This could be a wash, but the X factor in all of this are the costs associated with Internet access.  Most cable companies package Internet with cable or phone and for years people have been ditching their home phone lines so Internet is really the only option they have left, and Internet is not cheap!  Internet can be as much as $120 of that monthly bill if you have a high bandwidth line.   It’s super-sneaky, but cable may not be the driver of the monthly bill after all!

I spoke to a mentor of mine who swears by streaming, so his opinion is valuable to me.  That being said, this is a money-driven business and there is simply no way that the cable companies are going to allow streaming to put them six feet under.  The signs are there that cable companies are going to move toward a la carte offerings where you can package the stations you want and customize your offering.

I think that future is less than five years down the road.  If consumers don’t want a station, then the cable providers won’t need to pay the network to distribute it and there will be a reckoning in the cable TV business.  Couple this with the OTT ad marketplace that is apparently finally catching some steam and you end up with a future where customized television with cross-platform targeted advertising will be the primary way consumers interact with entertainment.  It’s inevitable.

Speaking of the OTT ad market — it is almost as over-hyped as the AI category.  I see lots of articles lately that speak to the ways OTT will monetize through ads, but I foresee this being a continuation of the existing changes driven by the death of the cookie.  Third-party cookies are falling by the wayside and ad dollars are consolidated with the primary platforms of Google, Facebook and Amazon plus AT&T and Verizon, with a possible inclusion of Comcast.  These companies own media channels across all platforms (display, TV, mobile, etc.), and can track and target across all the platforms they own with their own proprietary tracking tools.

Creative management and delivery across these platforms will be important -- but data management across these platforms for targeting?  I have to admit I’m not sold.  There’s little to no incentive for them to work together when they compete for budgets, so why should they?

So where does that leave us?  Maybe, just maybe, cable TV is going to be fine.  It depends on the ability of cable providers to evolve in a timely manner.

That's the issue for all types of media.  Newspapers took their sweet time evolving.  Magazines were slow.   Will cable TV learn from the mistakes of the past?  My guess is yes as evidenced by the consolidation in the space, but it’s still a gamble.

FLAT TV AD SPEND FOR Q2, TOTAL 2019 TV SPEND PROJECTED TO BE DOWN 4%

Flat TV Ad Spend For Q2, Total 2019 TV Spend Projected To Be Down 4%

• by Wayne Friedman , Yesterday

As the TV advertising market sees improvements in the second quarter -- posting flat results versus declines in previous months -- total TV advertising is projected to be down around 4% this year, according to one analyst.

Second-quarter ad revenues were estimated to have dropped 0.5% to $12.2 billion, according to Moffett Nathanson research.

Total TV advertising is projected to reach $76.1 billion in 2019, down from $79.3 billion a year ago. In 2020 -- due to political and Olympic advertising spending -- TV advertising is projected to rise 4%.

TV advertising improvements came in the midst of a strong scatter market in the second quarter -- which then kicked off a strong upfront advertising selling period for the 2019-2020 TV season.

TV networks posted healthy 12% to 15% gains in the cost per thousand viewers versus a year ago, with overall upfront advertising volume up 3% to 4%.

Michael Nathanson, media analyst at MoffettNathanson research, wrote that this is good news for the future -- and the economy overall.

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“If the economy is on the brink of a recession, the strong demand in the TV scatter market -- as seen in massive CPM inflation -- would be an unusual and atypical data point.” He adds: “Even though viewership continues to fall on TV, these core national advertisers are keeping TV ad spend afloat.”

Second-quarter TV advertising dollars were was essentially flat in the second quarter versus a 7% decline in the first quarter, due to comparisons to the Olympics a year before.

Local TV stations are now forecast to decline 9% this year in advertising to $20.9 billion, with the top four broadcast networks sinking 4.3% to $15.3 billion, while national cable is forecast to be flat at $30.6 billion, with local cable 10.6% lower to $4.9 billion and syndication (including some smaller broadcast networks) down 1% to $4.4 billion.

Commentary

Regional Sports Networks Take Subscriber Loss Hits

• by Wayne Friedman , Staff Writer, August 28, 2019

For a long time, regional sports networks have been easy money-makers -- even when specific team competitive fortunes haven’t been all that promising.

Hedging its bets for the future, Sinclair Broadcast Group went big to acquire all 21 Fox regional sports networks and Fox College Sports -- a $9.6 billion agreement from Walt Disney. It came after Disney’s deal to buy about half of 21st Century Fox's TV/film businesses.
That deal is now officially closed.

All that would seem to be good news for Sinclair -- the biggest owner of TV stations in the U.S. -- which looks to leverage its regional/local TV content status by expanding beyond its growing local TV news content. For many, the thinking follows what Fox Corp. is doing nationally -- when it comes to TV news and sports.

Regional sports networks may seem to be immune to advertising revenue hits -- as well as paid subscriber losses. But our eyes were opened when looking at MSG Networks in New York.

Recently, we learned the regional cable TV group lost around 6.5% of its subscribers -- roughly double the declining rate of many national cable TV networks.
Much of MSG Network's sports content is built around the New York Knicks and New York Rangers games.

While the Rangers continue to perform decently as a competitive team (though missing the playoffs the last two years), the same can’t be said of the New York Knicks, a team that hasn’t been in the playoffs since the 2012-2013 season.

What’s going on? Perhaps there’s some real spillover from the nonsports cable TV side of things, where subscribers are steadily leaving virtually all U.S. cable TV networks in looking for cheaper alternatives.

This is especially true for regional sports networks charging an $8 to $10 a month added fee to the monthly pay-TV package cost.

ESPN, the big cable TV sports programming group, has also seen sinking subscribers. But its focus is on a national sports perspective -- with little individual team-hometown boosting content.
Sports TV subscribers are still a resilience bunch — win or lose. Local streaming services have been a slow-growing next step for growth.

Still, one wonders if the growing world of legalized sports waging across many states will help major sports franchises maintain their value and that of their respective regional TV networks.

How Sales Teams Can Recruit & Retain College Grads in the Tight Labor Market

How Sales Teams Can Recruit & Retain College Grads in the Tight Labor Market

Wed, 08/28/2019 - 06:27

Author: 

Mike DeLeonardis, President, North America at beqom

Generation Z graduates, or those born between 1997 and 2012, are flooding the workplace, and with a flowing economy and tight labor market, it can be difficult for companies to recruit and retain these entry-level employees. Gen Zs have the advantage to be choosy about the jobs they take, but they are also more likely to be continually looking for better opportunities. In fact, according to recent research from Gartner, 40% of Gen Z employees would not repeat their decision to accept a job offer they had accepted, and only 51% said they see themselves having a long career at their current organization. Since it can cost one-third of an employee’s salary to find their replacement, it’s important that companies work to implement policies that help retain employees.

So how can organizations, particularly sales teams whose salaries are usually based on a commission structure, successfully recruit and retain top Gen Z talent to help carry their business forward? Let’s explore tactics sales teams in any industry can replicate to maintain their entry level talent through 2019 and beyond.

Personalize Compensation Packages

Personalization is important to Generation Z in every aspect of their lives. In fact, a recent report found that nearly half (44%) of Gen Zs will provide their personal data to a company to enable a more personalized experience over an anonymous one. This appetite for a customized experience is relevant in the workplace as it applies to compensation as well. Compensation and sales performance technology can create a channel for sales teams and HR managers to integrate personalization into the compensation experience.

Implementing compensation technology that uses AI will help sales managers and HR managers create a customized total reward package that best fits with employees’ needs. Catering their commission structure, non-cash rewards, benefits and overall salary to meet Gen Z’s desires helps to ensure that these new employees stay engaged in their current position and interested in growing with the company. In a commission-based compensation structure within sales teams, it’s important to provide more immediate motivators to keep employees working hard and bringing in new deals. Since Gen Zs are known to value companies that give back to the community, providing extra paid time off for volunteering at a charity of their choice or promoting match donations to nonprofit groups that are important to them can go a long way in creating trust with Gen Zs.

Additionally, technology creates an opportunity for employers to identify employees that may be considered a “flight risk” by using data to identify waning engagement, slowing performance, or multiple unusual absences. Once risky employees are identified, HR management and sales team leads can work together to get the employee back on track in their career with the company. This may mean providing more personal benefits such as work from home opportunities if an employee has a particularly long commute or reevaluating the structure of their quotas for commission.

Creating Transparency for Commission-Based Pay Models

Generation Z will not stand for pay disparities due to gender, race, or age, and they will look for transparency in compensation to determine if they are paid fairly. Gen Zs are also the most likely generation to share salary information with colleagues, proving their commitment to create transparency even when their employers do not provide it. With just nine percent of Gen Zs reporting they feel comfortable discussing salary and compensation with their manager or supervisor (compared with 20% of Millennials), it’s clear companies need provide employees with more reasoning to trust that they are being paid fairly.

Sales teams can create greater salary and total compensation transparency for their employees through total rewards statements. These statements provide an overview of employee’s salary, benefits, commission structure, non-cash rewards, and so on, which creates a full picture of an employee’s true value to the company. For Gen Zs, this is particularly important, as 58% rank non-monetary elements as the most important workplace benefits. Sales team leads can leverage compensation benchmarks for the greater industry and use advanced data analytics to show team members that they are being paid fairly and that their quotas and benchmarks are comparable to similar positions in the industry. This kind of transparency in the workplace is critical in making Gen Zs  feel fulfilled and engaged while creating an environment that promotes open dialogue and fairness in compensation.

For sales teams to recruit and retain new Generation Z employees, they must implement policies to promote personalization and transparency in compensation. Armed with this knowledge, how will your sales team work to recruit and retain top Gen Z talent?

Mike DeLeonardis is the President of North America at beqom, a cloud-based total compensation and performance management solution. Mike has 20 years of experience managing enterprise cloud software and service businesses.