2016 Election Digital Advertising Spending to Eclipse $1 Billion, up 5,000%

Television ad spending is predicted to rise 18% in 2016 compared to spending on the 2012 Presidential election. But the more significant trend may be the rising budget for digital platforms.

This will be the first year that election digital ad spending will break $1 billion dollars, according to Borrell Associates, a firm that tracks advertising spending. This is a 5,000% increase from the 2008 presidential election, and the strong growth should continue. This partly reflects social media's increasing role in daily life and partly the improvements in digital technology.

"The spend is going to follow the eyeballs," said Jerry Hug, CEO of SITO Mobile, a mobile advertising services agency. "I think what you saw in 2012 was the advent of social media entering into the strategic discussion, which was what a lot of the political pundits credited Obama's victory to his embracing and driving his campaign message across social media channels. As we move to 2016, you've now seen the proliferation of smart phone adoption which allows for a much more immersive ad experience using rich media and video vs. static media and social media." 

Other experts say that improved systems for collecting and analyzing data have made it easier and more cost-efficient to target voters.

"The evolution of hyper-targeting through online sites like Facebook and Google have made it easier for political candidates to focus their funds in a more efficacious way, " said Philip Herman, a digital marketing manager for Strategic Franchising Systems, a provider of services for several franchising brands. "These sites collect information on how you browse the web to determine your interests, spending habits, and even your political preference. As a result, it's much easier for a digital marketer to create a relevant ad to persuade the minds of voters who have interests that fit the candidate's agenda."

As the race heats up, the use of digital media should only continue. The campaigns will be looking to win every possible vote. They will want to identify voters who can still be swayed to their candidate, but they must also keep budget restrictions in mind. Successful campaigns spend wisely.

Where can they garner the most value for their political ad spending? Which devices should they emphasize? How should they tailor their messaging?

"What we do see is that as campaign managers become more savvy on how to reach specific voter segments (Millennials, Hispanics), they are going to be turning to mobile given the pure fact that 60% of Millennials live in a household without a landline phone and only watch TV via a smartphone or tablet," Hug says.

Certainly the candidates have capable teams in-house, but they will also spend on third-party companies that can help them deepen their reach.

Companies that focus on targeting audience segments on a hyper-local basis, such as AdRoll, and then retarget those segments are likely to generate revenue. So are companies that can dynamically deliver ads, leverage data based on voter location and demographic profiles.

Still, the political world is behind other areas. A recent report noted that the $1 billion figure is roughly 9.5% of campaigns' overall advertising budgets. In other industries, digital media often accounts 30% to 50% of advertising spending.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

More from Opinion

Tuesday Turnaround: Micron, Autonomous Driving, and J.C. Penney

Tuesday Turnaround: Micron, Autonomous Driving, and J.C. Penney

Cable Stock Investors Should Keep an Eye On Wireless Broadband's Rise

Cable Stock Investors Should Keep an Eye On Wireless Broadband's Rise

Trump Blinks on China Trade War That's Looking Harder to Win

Trump Blinks on China Trade War That's Looking Harder to Win

Monday Madness: GE, China, and Micron

Monday Madness: GE, China, and Micron

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly