Media Mixology: Local Buying Amid Political Chaos Media Agency Perspective

April 18, 2012 – New York, NY

Mike Lewis – Associate Media Director; member of SRDS Agency Advisory Board

Introduction

Kelly Scott Madison

• Chicago-based

• One of the largest independent media agencies in the U.S.

• Full service integrated media solutions including research, buying, planning, and promotions

• Vast client experience across numerous categories

• 110+ media professionals

Overview

POLITICAL MEDIA LEARNINGS & INSIGHTS

Kelly Scott Madison

Political advertising realities…

• Can’t be ignored

• Always changing

• Increasingly confusing and challenging

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So what have we learned?

• 2008 learnings... – Over-promise / under-deliver – Increasingly localized – Clients must be appropriately educated – Rise of social media

• PACs & Super PACs are here to stay • Candidates are increasingly employing

narrowcasting/targeting strategies (what took them so long?!)

• Don’t believe everything you hear in the media

Agencies must stay on top of political advertising seasonality when planning for clients in a political cycle

• KSM maintains a political “heat map” to monitor activity in markets across the country

– Constantly changing and being updated

BROADCAST TV INSIGHT Kelly Scott Madison

Broadcast TV remains the core platform for political spending

• Despite a slight reduction in overall spending share since 2008, TV will likely still account for 57% of total spending

• TV will present additional challenges to non-political advertisers – Super PAC spending

– Candidates increasingly purchasing weight outside core news dayparts

– Other major events will add to a cluttered TV environment (i.e. London Olympics)

Source: Borrell Associates Inc.: 2012

Effective planning will help ensure optimal schedule delivery

• Plan and buy EARLY to lock in rates and CPPs

– Planners must work hand-in-hand with buyers to gauge local realities during planning

– Account for baseline CPP increases when planning budget recommendations

• Counsel clients on the importance of flexibility (incl. makegood packages)

Effective planning will help ensure optimal schedule delivery

• Recommend less affected daypart mixes when planning

• Taking advantage of broader time periods can provide a loophole in avoiding some rate constraints

• Consider over buying TV weight (pending client approval and understanding) in “hot” markets

Consider alternative TV platforms to avoid rate implications and inventory constraints

• Explore short form TV options (i.e. traffic/weather, closed captioning, programming sponsorships)

– Won’t work for all clients given creative/messaging limitations

• Consider public TV for relevant clients; again keeping creative constraints in mind

Consider alternative TV platforms to avoid rate implications and inventory constraints

• In the most severe cases, consider shifting some broadcast TV weight to... – Online video platforms

o71% of online users are video viewers; represents the fastest growing segment of online advertising

– Cinema advertising oHighly targetable; reaches a captive, entertainment

focused audience

– Radio o Significantly less inventory stress, but lacks visual

impact

Source: eMarketer: 2011

While difficult, steps can be taken to help clients avoid being overtaken by non-stop negative campaign messaging

• Consider news break sponsorships that typically run leading out of content into ad breaks (“This portion of ABC 7 News is brought to you by...”)

• Purchase premium positioning to ensure spots run “first in pod”

• Avoid weather, sports, and human interest segments, when most political ads run

• Campaigns typically purchase “plus demos,” so older skewing stations likely more cluttered

Effective account stewardship is important to maintain integrity of client schedules during political

• Ad tracking (“watermarking”) can be employed to provide real time tracking of TV schedules

• Maintaining positive relationships with station contacts important

– Can alert the agency when last minute avails become available

– Including traffic departments!

CABLE TV INSIGHT Kelly Scott Madison

Political cable spending expected to grow substantially in 2012

• Total spend expected to double from 2008, although share remains fairly flat

• No longer considered a “mysterious” platform for political advertisers – I+ advancement addressing penetration concerns

• In general, TV viewers no longer associate broadcast versus cable when choosing what to watch

Source: Borrell Associates Inc.: 2012

Cable provides a key opportunity to reach voters when and where they are watching

• Campaigns are targeting moderate, swing, independent, and younger voters with non-news cable networks

Political advertisers have gotten smarter about how they purchase cable

• Historically campaigns have purchased more specific cable zones than interconnect

• Strategic shift to leverage economies of scale by buying full DMA and running different copy across local zones

• Also purchasing interconnect to achieve reach, and supplementing with specific local messaging via zones buys

• Large percentage of cable buys remain as zoned

Cable still provides solutions for non-political advertisers

• Plan around news networks – While political spending has increased, non-

news networks still offers a less cluttered environment

– During primary season, between two and eight networks are deeply impacted; increases to 10 – 30 networks during general election

• Explore broader buying periods (i.e. 4pm – 12am)

• Consider an interconnect buy for clients who typically use zones

RADIO INSIGHT Kelly Scott Madison

While radio receives substantially less political advertising, spending for 2012 likely to grow approximately 50%

• Radio spots are cheap to produce and can be created quickly, allowing for efficient of rotation of multiple messages

• News Talk formats generally raise rates during political windows in anticipation of avails

• FM stations are generally less impacted unless a candidate has a lot of cash to spend

• However, recent research indentifies FM formats best suited to reach partisan audiences

Non-political advertisers should still be mindful of political implications when considering radio

• Consider relevant FM formats to combat constraints with news talk formats (i.e. country, classic rock)

• Explore short form radio options (i.e. traffic/weather sponsorships)

• Be flexible when it comes to scheduling of promotional campaigns and bonus weight

• Look into streaming pure/play radio platforms to avoid terrestrial constraints altogether

ONLINE INSIGHT Kelly Scott Madison

Despite recent buzz surrounding online political spending, will likely not impact non-political advertisers

• Spending is expected to increase over 600%+, but total spending is “only” $159 million

Campaigns expected to increase social ad spending 100% to capitalize on popularity amongst voters

• Voters will be turning to social media to learn more about candidates

– Top social platforms for campaigns: Facebook, Twitter, YouTube, Google+

Despite increase in digital spending, implications to non-political advertisers is limited

• Amount of baseline inventory available prevents constraints felt elsewhere

• Cost-per-click platforms could see increases in CPCs as more candidates enter the space and drive up competition

• Within the political window, video network CPMs may increase as candidates heavy-up video presence before the election

IN SUMMARY… Kelly Scott Madison

Helping clients navigate a chaotic political cycle is feasible, as long as we keep the following in mind...

• Discuss objectives and educate clients

• Plan early

• Encourage flexibility

• Planners and buyers need to work together

• Maintain strong vendor relationships

• Steward appropriately

• Be sure to VOTE!

Thank you! Questions?

Appendix

Political advertising spending forecast