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What Transparency in Political Ads Means for Local Broadcasters

February 21st, 2018   ||    by Oriana Schwindt   ||    No Comments

The world of political advertising today looks a little different than it did just a couple elections ago. Watchdog groups have called for an increase in transparency in political ads. Their rally cries follow a deluge of scandal associated with social media networks that allowed shady front groups to purchase political messages that reached millions of American voters.

In November 2017, the Federal Election Commission (FEC) voted to draft disclosure rules for the small ads that appear on social networks—a fractional step toward transparency. However, a complete overhaul of the current and largely unregulated marketplace for digital content does not appear to be in the offing.

“What we’re talking about is not changing fundamental disclaimer rules,” said Republican Commissioner Lee Goodman to National Public Radio (NPR) in November 2016. “Current law already provides disclaimers and the transparency that they provide, on paid ads, on the Internet and on digital, mobile devices.”

TV vs. Digital

What does this upheaval in digital mean for more traditional marketers? Will stricter regulations on digital ads lead to an increase in campaigns devoting more dollars to the safer harbor of TV—where regulations have been much clearer and there’s less risk of being caught up in another scandal?

Not necessarily, as appetite for digital will only increase. The good news is the massive growth in digital will be additive, with spend on traditional media staying largely steady over the next four years, according to an October 2017 forecast from advertising researcher BIA/Kelsey.

Television is still king and will continue to dwarf digital’s share of political ad budgets. Digital outlets can expect $1.9 billion in revenue from political ads, according to analytics firm Borrell Associates, while total TV ad spend will come in around $3.4 billion.

This is good news for local stations. Overall, market research firm Kantar Media and the Cook Political Report predict a $2.4 billion haul for local broadcast stations thanks to political ads—with another $850 million going to local cable.

The Most Lucrative Races

The focus of various political groups on the 2018 midterm elections was already shaping up to be a boon for local stations, particularly given the number of Senate and House seats in play. Missouri and Minnesota, in particular, look to be contentious—landing on CNN’s list of the 10 Senate seats most likely to flip in 2018. The 17 state governorships up for grabs in big-spend states like Ohio and Florida are also ones to watch.

Several other races—considered sleepy as recently as a few months ago—have suddenly become more competitive thanks to incumbents who’ve suddenly decided to retire.

Arizona’s Senate race is one of these, ending up at the top of CNN’s rankings: Senator Jeff Flake is opting out of a run for another term, making the primary race far more important and attracting outsiders like ex-sheriff Joe Arpaio. The still somewhat surprising result in Alabama’s special election—which saw a Democrat elected to the U.S. Senate for the first time in decades—has raised the stakes for both parties in a few of the other upcoming elections.

The livelier races will no doubt be a boon to local markets, and with transparency for political ads creating headaches for digital, there’s a huge opportunity to capitalize on the reliability of television.

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