Google and Facebook Will Dominate the $1 Billion Digital Ad Spend for Election 2016

Digital advertising spending is expected to surpass $1 billion for this first time in an election cycle in 2016. Where is the money coming from, where is it going, and how did we get here?

To understand digital in 2016, you have to go all the way back to 2004, when Yahoo! was still a behemoth and Facebook (FB) was still "Facemash," a sort of "Hot or Not" for Harvard students. It was Howard Dean's 2004 presidential campaign that set in motion a digital revolution in political campaigning and fundraising. The former Vermont governor was the first to harness the power of the internet to bring in campaign donations, organize gatherings and get out the word via the blogosphere.

Barack Obama's camp mastered these techniques in subsequent cycles -- and that meant real money. Like Dean, he raised enormous sums online, $500 million in 2008 and $690 million in 2012. Obama spent about 10% of his campaign war chest on digital in 2008 to best Republican nominee John McCain, pouring millions of dollars into advertising through established platforms like Alphabet's (GOOGL) Google (then just known as "Google") and Yahoo! as well as then-up-and-coming social site Facebook. In 2012, he upped spend to 15%, dedicating 10 times more dollars to digital efforts than challenger Mitt Romney and setting the bar high for digital campaigning. Deep dive: How 2016 is the real "Facebook election"

This year, things are set to change again, if not by the efforts of a single candidate then by the combined forces of campaigns across the country. Digital ad spend is expected to catapult to more than $1 billion in 2016, according to advertising tracking firm Borrell Associates, marking a huge jump from the roughly $160 million spent in 2012. Deep dive: Senate races will dominate spending

"What the more adventurous campaigns have realized is that mass media and mass communications as a mover in politics is on its way out," said Kip Cassino, executive vice president at Borrell Associates. It is no longer enough, especially with millennials, to broadcast a message widely on the assumption that some portion of constituents will react to it -- digital offers an unprecedented ability to hone and target messages in order to persuade voters and motivate them to vote.

While many firms will share in the bounty, it's the usual suspects of Google and Facebook that will take the lion's share. Here's how it will break down.

Starting Early

So, how do we get to $1 billion? First, campaigns started with digital early.

Federal Election Commission (FEC) data show Bernie Sanders' and Hillary Clinton's campaigns tapping Blue State Digital, the consultancy behind Obama's 2008 and 2012 efforts, as early as last summer, and the Clinton camp has already paid more than $9 million to Bully Pulpit Interactive, another digital firm that worked on Obama's re-election campaign as well as with the Democratic National Committee and the DCCC, an organization dedicated to electing Democrats to the House of Representatives.

And while presumptive Republican presidential nominee Donald Trump has largely eschewed data, many others in the GOP have embraced all things digital, and chances are he will have to do at least some spending on it, too. He has already spent more than $130,000 on Facebook placed media and about $3,000 on Twitter (TWTR) , as well as contracting digital consultants like Virginia-based Rick Reed Media. Deep dive: 2016 will be a make-or-break year for Twitter

Social Spend

A major portion of the $1 billion digital total is social media spend, which Borrell Associates estimates will account for at least $570 million of the $1 billion. In 2012, social media spend was just one-tenth that amount, $54 million.

Social media has exploded in recent years. According to data from online statistics portal Statista, the number of monthly active Facebook users worldwide has grown to more than 1.6 billion from just over one billion during election 2012. on Twitter, monthly active users have reached 310 million from 185 million. Snapchat, which was barely on the radar in 2012, today has an estimated 200 million monthly active users, 150 million of them daily. They and others have become increasingly important to advertisers, political and otherwise, in turn.

Twitter is angling to stand out from the pack as an opportunity for political marketers to capitalize on discussions, hashtags and momentum already on its platform surrounding live events through promoted tweets, promoted trends and video. Though it is likely to capture some ad dollars, it won't grab the bulk. "Twitter is making moves, but hasn't quite figured out the paid side as effectively as its competitors," said Sarah Newhall, executive vice president of strategy and insights at Blue State Digital.

Instead, it is Facebook that is likely to see the biggest ad budgets this election cycle. As Vincent Harris, Republican digital strategist and CEO of Austin-based communications firm Harris Media, put it, "it's like all of those Facebook emojis were made for the Trump campaign." One analyst has pegged political ad spending on Facebook in 2016 at $350 million. The social network offers political marketers numerous options to help campaigns and committees build supporter bases, match their voter files and persuade and turn out voters. Strategists say the data it gives them on ads are also extremely useful.

Snapchat is also in the mix this cycle. The app is rising in prominence for native advertising and video, promising access to highly-coveted millennial voters through ads as well as different views, filters and formats. Unlike other platforms where ads compete for space with other items on a screen, Snapchat gives advertisers all the real estate. Strategists are betting on its power even though this is its first election cycle.

"Snapchat has definitely been a driver, particularly for younger voters, particularly for when you want to get a more interesting format in front of people. They've done a lot with news, with different filters, with different formats around geography. Snapchat has been a driver for us," said Mark Skidmore, partner and chief strategist at Bully Pulpit Interactive.

"It's really a medium that can be extremely valuable to [candidates] in this election cycle," said Joe Lavan, vice president of data and insights at online behavioral targeting software developer Netmining. Deep dive: More on social media in the 2016 election

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