Political Ad Spend: Riding the Wave in 2020 and the Years to Come
2020 will be an unprecedented year for political ad spend, thanks in part to one candidate who will set political spend records with advertising that will outpace national brands such as Heineken and Kraft.
For broadcasters, election years equate to a perfect storm of surging demand, rate volatility, and inventory fluctuation leading up to the election. But the 2020 political storm is different. Unlike the flood of inherently bad news that follows most storms, this one comes with an upside for broadcasters.
The good news is playing out prominently in the trades: Political ad spend is projected to be 3x the record-breaking spend of 2016. That equates to $6 billion spent on political ads, 73% of which is projected to be spent on traditional media.
The downside of this unheard-of political spend is being felt by broadcasters nationwide: lowest unit rate (LUR) compliance is a tricky practice, make-good conversations are happening in unusually high volume, and figuring out how to approach pricing and allocation for a station’s precious remaining non-political inventory can seem like playing a game of Tetris.
Capitalize on the Non-Political Ads Revenue Opportunity
The current hyper-focus on political ads could result in missing out on a significant revenue opportunity: appropriately selling non-political ads at the right rate, at the right time, to the right advertisers.
Chances are that non-political inventory blocks sold far in advance are priced according to current sell-out as opposed to projected sell-out. But if you know how incredibly valuable these spots are going to be, why wouldn’t you utilize a more predictive approach, like that taken by next-generation pricing solution RateOptics™?
Spot rates should reflect that demand is increasing exponentially as inventory continues to grow more compressed, but the question is: How high can you go on rates? The only way to know is to have a confident understanding of the relationship between price and demand. This requires predictive algorithms that measure advertiser-level price response, which tells you exactly how much you can push rates on specific inventory at specific points in time.
While broadcasters will surely benefit from an increase in revenue in 2020, budgets in 2021 will be much harder to achieve in the absence of political ad spend. Implementing sustainable, ongoing best practices in terms of pricing intelligence, processes, and discipline is the optimal approach to riding this wave of revenue into the years to come.
All boats are rising in the political surge of 2020. Are you ready to maximize revenue from sharply reduced non-political inventory? Grab some time with us to see RateOptics™, our next-generation pricing solution, in action and learn how it can help you solve your biggest challenges.