Around the holiday season, news reports of crowded malls and commercials for surprise Lexus’s fill the airwaves creating a sense of a crowded marketplace for advertisers. Kantar Media predicts an increase in 4^th quarter spending as well as an increase overall as compared to 2010. How does this change affect advertisers in a now apparently crowded marketplace?

When looking at Kantar Media’s data across multiple months and advertising categories, the effect of the holiday shopping blitz is minimal. While the numbers are certainly higher in November and December in the retail category, it is not worthy of an increase of station rates and lack of inventory. While 21% of the dollars spent by retail advertisers are in November and December, it is hardly a gigantic increase over the two smallest months, January and February at 15%. When compared to other categories (ex: auto, political, and telecom), retail only increases from 30% of the marketplace in October to 36% in December. Once you include all the categories, December is not even the highest spending month, which is May and October (due to political ad spending).

Knowing that advertising dollars are spread out more thinly over different categories and months, stations in fact do not jack up rates to capitalize on the shopping buzz, but rather wait for the hectic political season.

http://adage.com/article/special-report-advertising-week/election-12-narrative-data-bad-twitter-behavior/230209/

Advertising Week Panel Predict Billions Spent on Niche-Targeted Micro-Campaigns; Twitter as Negative Campaign Tool

By Ken Wheaton

With the 2012 electoral cycle already well underway, campaign managers overwhelmed by a wealth of new media options, thousands of bytes of data, billions of dollars in advertising spending and multiple third-party players should remember this: “Story telling in political advertising is more important than ever.”

That was Catherine “Kiki” McLean, senior partner, global head of public affairs and managing director for Porter Novelli Public Services, at an afternoon Advertising Week panel discussion about political advertising. Ms. McLean, who worked on Hillary Clinton’s presidential campaign, joined Purple Strategies’ Rob Collins, Smart Media Group’s Kyle Roberts, ASGK Public Strategies’ Eric Sedler and Time Warner Cable Media President Joan Hogan Gillman.

The panel kicked off not with an obsession over what Facebook will mean for the candidates or how Twitter will change everything, but rather with four old-fashioned TV ads, chosen by panel members based on their strengths and, in one case, its weakness. The unfortunate ad was for Maryland gubernatorial candidate Bob Ehrlich, who lost his last try for office.

The problem, said Ms. McLean, wasn’t the tone or even the message, but that the ad “told you nothing about what it would be like” if Mr. Ehrlich won the election. The other three ads — one of which was not a political ad, but an Allstate ad about the recession – ranged from humorous to serious but all had clear narrative voices.

Of course, having great ads will be just one part of an increasingly complex equation. The number of candidates might not be any higher than in previous years, but the number of groups — from candidate’s campaigns to political party committees to SuperPACs — spending money will be up dramatically. While the national media will be caught up in a presidential contest likely to approach $3 billion, Smart Media’s Mr. Roberts pointed out that in 2010 one congressional contest in Roanoke, Va., saw $8 million in outside money. That’s only expected to increase this time around.

Note to media companies, Mr. Roberts said only half-jokingly: “We need a lot more inventory.”

Time Warner’s Ms. Gillman, who has a background in politics, was quick to point out that Time Warner, which happened to sponsor the panel discussion, was in a position to help candidates (as are, one assumes, other cable providers). But cable companies, she added, have had to adapt with the times. Political campaigns are now optimizing their messaging in close to real time and local cable providers have no choice but to be able to put an ad up — or take it down — within a 24-hour time frame.

She also raised the point of data mining and niche targeting, which cable providers, as well as various online outlets, now make available to candidates.

Mr. Sedler, who founded ASGK Public Strategies with top Obama campaign advisor David Axerod, picked up on the data theme. “There is so much data … you’re going to see dozens and dozens of micro campaigns underneath macro campaigns.” He envisioned, for this cycle, “hundreds of campaigns that will be visible only to niche audiences.”

That, of course, is where online and mobile come in — banner ads, YouTube videos, candidate web pages, blogger outreach. And social media?

The panelists spent little time discussing the flavor of the last three years until asked to do so by an audience member. Those spending hours and hours of time on Twitter and Facebook might be forgiven for thinking that large percentages of the billions to be spent will be funneled that way, but the seasoned political consultants see the platforms as an efficient way to, well, preach to the choir and keep the believers engaged.

“Smart campaigns are going to spend significant resources to build a social-media voice” prior to and during next summer, said Purple Strategies’ Mr. Collins. After all, “picking up a Facebook friend on Oct. 31 is not the best use of that platform.” (Mr. Collins, noting the possibility of ad oversaturation and voter exhaustion, emphasized the need for campaigns to distinguish themselves early in the cycle. “Before Labor Day, spending can move numbers,” he said. “After Labor Day, it just locks in numbers.”)

Mr. Sedler noted that the best use of Facebook is as a “mobilization platform not a persuasion platform.” Though he did note that it’s changed dramatically since 2008 now that, theoretically at least, 50% of voters can be reached through the platform.

Perhaps his most interesting comment was made about Twitter. Seen typically as a conversational medium and portrayed as something that’s done good (Haiti and Tsunami relief efforts, Democracy movements), it’s also been a quick way to spread gossip and, from time to time, false information.

Mr. Sedler seemed to think political operatives might be unable to resist the dark side of the medium. “Twitter was a non-actor in 2008,” he said, but “my sense is you’ll see a lot of negative stuff put out via Twitter.”

In July, movie rental industry leader Netflix changed their pricing policy and increased rates, separating their on-demand/streaming and by mail services. This unexpected move outraged customers and led to a 50% drop in stock value.  How does this blunder change the movie watching industry for both consumers and advertisers? 

Netflix developed a following by offering simple and inexpensive movie rentals as an alternative to the rising costs of theater tickets. According to Arbitron research, 51% of adults 18+ have not seen a movie in a theater in the past three months. Meanwhile, during the same time frame, 26% of those surveyed have used Netflix or the other two players in the marketplace, RedBox and Blockbuster.com. How do these companies compare in the now more competitive marketplace?

Each company offers movie watching experiences, but in varying plans and prices. In order to compare each equally, I chose the same movie throughout for the example and used a frequency of five watched movies a month to determine the cost per disc for the monthly plans.

X-Men: First Class opened at the box office on 6/3 and moviegoers shelled out $11 a ticket in order to see it at their local multiplex.  This does not include popcorn, soda, or IMAX.

Three months later, on 9/9, the comic book movie came out on DVD/Blu-Ray exclusively on Blockbuster.com. The former in-store rental giant offers multiple services for their rentals including on-demand/streaming, at a local store, and by mail. Their by mail method is an $8 monthly fee, which comes out to roughly $1.50 a DVD or Blu-Ray. The on-demand rate for this movie is $3 per viewing and an in-store rental is $4.

Meanwhile, Netflix users must wait four weeks in order to get the same movie, and pay $2 a month extra for Blu-Ray discs by mail, for an average of $2 a disc. On the other hand, their on-demand service is an $8 monthly fee for unlimited viewings, and using the same frequency as earlier is $1.50 a viewing.

The other player in the market is RedBox, which offers walk up kiosks for $1 per DVD and $3 per Blu-Ray rental for this particular movie at the same release date as Netflix. With 28,000 locations and no monthly fee or commitment, the Coinstar owned company offers a viable option as well.

The last option for an eager X-Men fan would be to just walk into Best Buy and buy it for $18. 

Each company has competitive edges and disadvantages, but Netflix’s changes increased the competition in the marketplace, benefitting the consumer.

Even though these rental companies are growing in influence due to low cost and ease in use, movie theaters are still the main avenue for advertisers.  Currently Netflix, Blockbuster.com, and RedBox do not sell advertising before the previews accompanying the movie.  Other streaming services, like Hulu, sell 15-30 second spots to various clientele before each of their videos.  Meanwhile, movie theaters have been increasing their sales in the ad space before the trailers to the same clients.  Their audiences are not distracted, unlike viewers at home with DVR, Mobile, or Internet access, and according to research are more likely to remember the advertiser’s message.

Without leaving the couch, moviegoers can watch the latest X-Men movie for $1.50-$3, walk out to their mailbox for $1.50-$2, drive to the local shopping center for $3-$4, see it in a theater for $11 and own it for $18. However, advertisers can only reach the consumers in one of these scenarios. Maybe Netflix can recoup lost revenue by including a 15 second spot for Coke before each of their on-demand videos. Perhaps Blockbuster.com can help recover from bankruptcy by including a coupon flier from Pizza Hut in each of their mailings.  While Netflix’s stumble opened up the marketplace for competitors, the advertising potential is already wide open.  Only time will tell the future of this medium.

While digital radio is still carving out a small niche in the overall radio audience, the numbers are trending up with younger demos. According to Arbitron research, 18% of adults 18+ use the internet to listen to radio online and 14% use their mobile devices for music as well.  Of those surveyed who listen to online radio, 50% are 18-35, 38% college educated, and 58% male, which is 30-50% higher than the average 18+ adult.  Pandora recently released ratings numbers showing they are competitive with traditional radio stations.

Meanwhile, iHeartRadio is coming into this market with Clear Channel’s immense resources. While Pandora boasts 100 million listeners, Clear Channel has 800 stations, in 150 markets, reaching 237 million listeners.  Consequently, iHeartRadio offers a music library of over 11 million songs, compared to 900,000 for Pandora. Both provide websites and mobile apps that offer customizable channels based on a user’s taste in music, while iHeartRadio has the added feature of including local Clear Channel traditional stations anywhere.

What does this mean for consumers and advertisers? Now consumers now have another option when listening to radio on their computers or mobile devices. Clear Channel may tout more songs, but some listeners might enjoy Pandora’s indie/small label feel more than the Ryan Seacrest Top 40. Meanwhile for advertisers, Pandora provides ad space on the site as well as on the app, which we utilized here at Smart Media Group below:

 Currently iHeartRadio does not have advertising on their app or site, but still feeds in 30-60 second ads from the local station.  Therefore, in order to penetrate this growing market, agencies should utilize both services by placing interactive ads on Pandora as well as traditional radio on key Clear Channel stations.

Further reading:  Clear Channel’s iHeartRadio takes on Pandora

By not taking up the case of Cao v. Federal Election Commission, the Supreme Court let stand a decision by the 5th Circuit Court of Appeals that affirmed restrictions on how much parties can spend after consultation with Congressional campaigns. 

Lawyers for former Rep. Anh “Joseph” Cao (R-La.) argued that limits on coordinated spending infringe on the national party committee’s freedom of speech.

“This morning the Supreme Court deferred to precedent and declined to hear this attack on the long-standing limits on party coordinated spending,” said attorney Tara Malloy of the Campaign Legal Center. “Plaintiffs’ challenge would have blown huge loopholes in the federal campaign finance laws and enabled large-scale circumvention of the individual contribution limits.”  

The effects on the 2012 election campaigns will be twofold. First, national party committees and candidates will not be able to tag-team with each other on campaign expenses. Campaign finance reform advocates argued that knocking down these rules could allow large party donors to foot the bill for many candidate expenses. 

Secondly, the decision closes a potential loophole where individuals could indirectly donate more than 12 times the legal limit to a candidate. An individual is allowed to donate $2,500 per election to a federal candidate. But individuals are allowed to give $30,800 to party committees, and if coordinated spending were unlimited, the party committees could spend these dollars the way the candidate requested.

2-National Republican Congressional Committee – $34.5

3-Democratic Senatorial Campaign Committee – $28.9 million

4-American Crossroads – $27.5 million

5-US Chamber of Commerce – $25.5 million

6-American Action Network – $17 million

7-Service Employees International Union – $14.6 million

8-National Republican Senatorial Committee – $13.7 million

9-American Federation of State, County and Municipal Employees – $10.2 million

10-American Future Fund – $8.6 million

Source:  Center for Responsive Politics

Look, we’re in the Stone Age now.  We’re letting 115 million homes be guided by 11,000, which I think in this day and age is ridiculous.  At some point, we are going to take the set-top boxes or DVR info, and at least we have the millions at that point instead of 11,000.  Will some of the data be skewed upscale?  Yeah.  Is there a way of figuring out how to make it more reliable?  Maybe downscale it somehow.  If a company can come up with some kind of metric using DVR data that somehow makes it more reliable across the U.S., you would think they’d make a fortune.

Larry Novenstern
Executive Vice President, Managing Director, NewCast@Optimedia

While I am very pro-advertising, I have to give the thumbs down here.  What benefit did I get from the ad?  It did not allow me a free service, nor was it relevant to my interests.  I guess you could make the same argument for cable and the internet, but at the very least I am getting better programs and faster download speed.  As marketers we need to realize what is at stake, a personalized one-to-one relationship with our audience.  Lets not make mobile ads the next spam.

When looking at the highest spending races, both parties were effective in different ways. The Democratic Congressional Campaign Committee (DCCC) placed over $1 million dollars on TV advertising in 34 different races, while the National Republican Congressional Committee (NRCC) could only match in 7 of those same races. Strangely enough, each committee won 70% of the races they placed in. Even further, the DCCC also spent $2 million or more in 9 races, losing 4 of them (including NJ-07 and NY-26), despite the NRCC not being able to match those amounts.

GOP incumbents were a major target for the DCCC, going on the offensive in 15 of the 34 races they spent a million or more, while only trying to defend 8 Democratic incumbents, while the remaining 11 were open seats. Meanwhile, the NRCC defended 6 of their incumbents in the 7 races they spent 1 million plus, successfully defending 4 of them. Using the limited resources at their disposal, the NRCC was able to defend the same amount of seats that the DCCC spent $2 to even $3 million in losing efforts in other races. While the NRCC appears to have been more efficient, the DCCC had the ability to take more chances in expensive races, but in the end both sides came away with the same winning percentage.

Republican and Democratic Winning Percentage Chart by Spending Level and Incumbency

	Republican		Democratic
	Victories	%	Victories	%
DCCC spent $1 mil+	11	32%	23	68%
NRCC spent $1 mil+	5	71%	2	29%
DCCC spent $2 mil+	4	44%	5	56%
Republican Incumbent	6	40%	9	60%
Democratic Incumbent	2	25%	6	75%

It will be interesting to see how Microsoft’s June 1 launch of Bing will affect the June rankings.