As Election Nears, Ad Tech Looks Toward New Opportunities – And To Avoid Past Mistakes

With the 2020 US presidential election cycle heating up, advertising and technology companies are once again jockeying to secure their share of the coming deluge of political media budgets.

But the commercial tech crowd is taking a more judicious approach to political advertising this time around, having learned some hard lessons in 2015 and 2016, when vendors invested heavily into DC offices, with little to show for it.

This time, ad tech companies aren’t basing earnings goals on high election advertising forecasts, as many did four years ago, said Jeff Cosgrove, Conversant’s director of politics and advocacy.

“You also don’t hear the old lines like, ‘There’s going to be X billion dollars in play, and we’re going to get our 2%,’” he said.

Here is how the ad tech world hopes to seize the opportunity of the 2020 election, and not make the same mistakes.

Stay in the background

In the 2016 cycle, companies such as Rocket Fuel and Quantcast tried to work directly with campaign teams, seeing a chance to contribute similarly to pollsters, partisan agencies and media strategists. The big three – Google, Facebook and Twitter – had a similar approach with liberal and conservative account teams that bridged campaigns and the digital media platform.

But those direct relationships are fading into the background this time around.

Rather than setting up large DC business operations, commercial ad tech is increasingly operating behind the scenes with partisan agencies working directly with candidates. Ad tech is white-labeled or licensed by partisan agencies or consultants.

Many political agencies and strategists raise money for a candidate and decide where and how to spend it, but they then outsource the execution to a commercial vendor, said Semcasting CEO Ray Kingman.

The large conservative media agency National Media integrates with Centro, for instance, to execute campaigns and centralize analytics. This approach, more like white-labeling the data or technology, creates a layer of separation between the ad tech vendor and the candidate.

Another example: Ampersand (formerly NCC Media) is curating TV audiences for political advertisers by matching set-top box data to voter files from data companies like L2, said VP of political strategy Timothy Kay.

Ampersand does the segmentation and execution so those buyers can score TV shows for candidates based on their political targets.

Unlike with brands and their agencies, the most valuable political accounts can be those where the campaign team or super PAC don’t know which commercial ad tech or data companies are in the chain, Kingman said.

Sometimes, it’s better not to be in the room where it happens.

Being a behind-the-scenes player is much less arduous than working directly with a candidate or campaign, whose demands can be overwhelming.

An order placed now is meant to go live 20 minutes ago, Kingman said. “And if you don’t come through, it doesn’t take much for a political campaign to sour on the company.”

The duopoly opportunity

The way political campaigns use Google and Facebook has evolved, as both giants made more restrictive political ad policy changes in 2019. Where they once allowed individual-level targeting, they now have disabled one-to-one messaging based on behavioral data, in favor of cohorts.

While politicians won’t ditch Google or Facebook, they still want highly data-driven and granular campaigns in line with the targeting used in 2016, Welch said.

So major political advertisers are now using a profile-based approach for advertising and outreach, creating IDs that sync with the walled gardens, Cosgrove said.

Instead of matching political data sets such as state voter files with Facebook, political campaigns are using consumer data companies like Epsilon and Neustar to connect names and home addresses with online audiences.

Data players such as i360, a conservative data warehouse, and the nonpartisan voter file targeting company L2 Political have integrated with commercial tech companies without complicating their political focus with candidates, Cosgrove said.

While the walled gardens’ restrictions on granular data for targeting initially seemed like an advantage for the rest of the ecosystem, that opportunity hasn’t borne out.

Candidates or super PACs prefer walled gardens to the open internet, unless there’s a way to demonstrate “apples-to-apples comparisons” based on their email and direct mailing lists, Cosgrove said.

Extend TV buys to digital

Political advertisers typically have certain TV networks or shows they know index highly for their followers and perform well, but they aren’t sure where to start online beyond Facebook and Google, said Allan Welch, director of political and government affairs at SpotX, which he joined in October.

Digital opens up as a kind of reach extension and look-alike audience pool for TV campaigns. It’s good business too, Welch said, since peeling off 10 to 20% of the TV budget is more lucrative for commercial ad tech than winning a share of social media or preset budgets for digital video.

Make TV more efficient

Allocating political TV budgets is a good starting place for change because it’s riddled with inefficiency. And that’s particularly true of presidential primaries, when candidates’ large TV buys may cover states or markets that they aren’t actively targeting.

New Hampshire is a key early state, yet in the past year, political candidates have spent more of their linear TV budgets in Massachusetts, based on data from a political commercial tracker by FiveThirtyEight. That’s because campaigns must buy ads in the pricey Boston DMA if they want to reach voters in southern New Hampshire. Illinois has likewise received more TV ad dollars than New Hampshire, because the Chicago market covers part of Iowa, the first state to vote in the primaries.

But for the OTT ad tech company Telaria, Iowa and New Hampshire were the two biggest states for political advertising in 2019 because candidates could target viewers in specific states, rather than city-based DMAs, said senior director of agency and brand relations Dan Fairclough, who’s heading up political biz dev for 2020. Neither Massachusetts nor Illinois register as more than a blip.

Right-sizing spend in TV markets, where commercials are often wasted on residents of a different state or district, represents a pathway to political dollars as campaigns seek more precise methods of reaching voters, and new data- driven video ads purport to be alternatives for television.

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