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Tomorrow’s Media, Understood Today

www.BorrellAssociates.com

Your Share of a Billion:

The Promise of Digital Political

C o r e y E l l i o t tV P o f Re s e a r c hB o r r e l l A s s o c i a t e s

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AGENDA

• Headlines

• Methodology

• Opportunities

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AGENDA

• Headlines

• Methodology

• Opportunities

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QUIZ TIME!Between the 4th of July 2015 and Election Day 2016, what amount will be spent on political advertising throughout the nation?

A. $3.3 billion

B. $5.8 billion

C. $9.4 billion

D. $16.4 billion

What will be spent in Broadcast TV in 2016

What will be spent JUST for the Presidential contest

2012 political spend

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$11.4 billion will be spent in 2016

Newspapers

Other Prin

t

Broadcast

TVCable

Radio

Out of H

ome*

Direct

Mail**

Online/D

igital

Telemarketing

$0.000

$1,000.000

$2,000.000

$3,000.000

$4,000.000

$5,000.000

$6,000.000

$7,000.000

$848.0

$180.1

$5,834.1

$1,142.4$827.2

$393.0 $365.4

$1,076.7$720.1

2016 Political

2016 Political

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U.S. President0.1%

U.S. Senate0.2%

U.S. House 2.5%

Governors0.2%

State Attor-neys General

0.3%State As-semblies

4.9%

County & Local Offices

74.4%

Ballot Issues14.0%

Special In-terests3.4%

The vast majority of contests are localin nature

Share of Contests

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Ad Expenditures - 2016

National Local

Contests - 2016

National Local

More contests = More money

National = Pres., Senate, HouseLocal = Gov., State, Local, Ballot

/

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Year 3 and Year 4 spending for national contests began to merge

Year 1 Year 2 Year 3 Year 4

2001 2002 2003 2004

2005 2006 2007 2008

2009 2010 2011 2012

2013 2014 2015 2016

2017 2018 2019 2020

Local “off-year” congressional

Local & Gov. Pres.

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2015 2016$0.0

$1,000.0

$2,000.0

$3,000.0

$4,000.0

$5,000.0

$6,000.0

$7,000.0

$2,332.5

$6,118.6

Ad $

3 out of every 4 dollars spent on National contests for 2016 will be spent IN 2016

Billions have already been spent, but….

U.S. National Contest Political Ad Spending

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JAN FEB MAR APR MAY JUN JUL AUG SEP OCT 0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Market U.S. Average

Only at beginning of ride

% of total spent by month

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NEWSPAPERS; 368.355914974347; 4%OTHER PRINT;

138.921517791195; 2%

BROADCAST TV; 5459.70236909721;

65%

CABLE; 737.756530916662; 9%

RADIO; 399.044095205254; 5%

OUT OF HOME3; 179.419371127172; 2%DIRECT MAIL4;

177.680910849788; 2%

ONLINE/DIGITAL; 664.763835985937; 8%

TELEMARKETING; 325.451639227312; 4%

QUIZ TIME!

What media will capture over 60% of all National Political ad dollars by Election day 2016?Broadcast TV remains dominant this election cycle

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President Senate House Special Interests$0.00

$500.00

$1,000.00

$1,500.00

$2,000.00

$2,500.00

$3,000.00

$3,500.00 $3,308.37

$896.34

$2,161.59 $2,084.79

$3.3 billion will be spent electing our next President (2015-16)

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What about Local?

Ballot Issues

GovernorAttorney General

State Assembly

City/Local

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Newspapers; 588.278998112152; 11%

Other Print; 109.441451398167;

2%

Broadcast TV; 2034.618241488

75; 39%

Cable; 562.951735736413; 11%Radio;

533.710724325467; 10%

Out of Home2; 281.078904493074;

5%

Direct Mail3; 253.479659603447;

5%

Online/Digital; 419.360691245809;

8%Telemarketing;

485.529823263865; 9%

Broadcast is still #1, but does not experience the same dominance

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Newspapers; 5.2%Other Print; 1.1%

Broadcast TV; 56.5%

Cable; 9.4%

Radio; 7.0%

Out of Home2;

1.3%

Direct Mail3; 1.6%

Online/Digital; 13.7%

Tele-market -ing; 4.2%

Newspapers; 14.2%

Other Print; 2.9%

Broadcast TV; 29.5%

Cable; 9.2%Radio; 11.2%

Out of Home2; 7.8%

Direct Mail3; 6.6%

Online/Digital; 6.6%

Telemarketing; 12.1%

There are differences in media spend by kind of contest

Governor Ballot issues

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State Assembly

Ballot Issues

City/Local

Governor

Attorney General

$1,660.88

$1,641.46

$1,602.61

$198.39

$165.12

$798.00

$987.30

$923.77

$19.83

$2.61

Local Contests

2015 2016

Local contests experience less year to year bleed

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AGENDA

• Headlines

• Methodology

• Opportunities/Tools

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Three ways to analyze Political spend

1.Spending per media choice

2.Spending per candidate

3.Spending per eligible voter

All three must agree!

Example Sources

Borrell Advertising DB

Ballotpedia.org

National Conference of State Legislatures

Revenue DB

Opensecrets.org

United States Election Project

Followthemoney.org

FCC filings

Woodes & Poole

Larry Sabato’s Crystal Ball

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Year to year fluctuations are most pronounced at a per voter level

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President $ 22.35 $ 6.44 $ 127.29 Senate $ 9.46 $ 1.36 $ 26.94 House $ 3.61 $ 1.04 $ 102.87 Governor $ - $ 1.77 $ - State AG $ 1.77 $ 0.51 $ 10.06 State Assembly $ 17.77 $ 5.12 $ 101.24 Local/City Positions $ 17.15 $ 4.94 $ 97.69 Ballot Issues $ 17.57 $ 5.06 $ 100.05 Special Interests $ 16.21 $ 4.67 $ 92.36 TOTAL $ 105.89 $ 30.92 $ 658.49 per eligble voter $ 31.33 $ 53.99 $ 48.35 Pop. Voters 3.379 .573 13.62

(in millions)

Average spend per voter changesfrom market to market

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Spending per eligible voter can differ market to market because:

• Population

• Number of contests

• Hot/Cold contests

• Ballot Issues

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Springfield, MA

Des Moines, IA

A Tale of Two Cities

Same population

Different Spending Profile

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Des Moines-West Des Moines, IA Metropolitan Area 2016 Prelimenary Political Ad Spending EstimatesEstimated Eligible Voters: 453,390 All Estimates in $ Millions.

Media US State State State Local Local Special Media Media Per VoterChoice President US Senate US House Governor Atty Gen Assembly Offices Ballot Issues Interests3 Totals Share Spend

Broadcast TV $5.97 $0.61 $2.69 $0.00 $0.20 $1.72 $1.39 $1.12 $2.33 $16.03 52.7% $35Cable $0.99 $0.10 $0.47 $0.00 $0.05 $0.51 $0.35 $0.35 $0.25 $3.07 10.1% $7

Direct Mail1 $0.14 $0.02 $0.08 $0.00 $0.01 $0.09 $0.23 $0.25 $0.09 $0.91 3.0% $2Digital/On Line $1.05 $0.13 $0.55 $0.00 $0.04 $0.31 $0.31 $0.25 $0.30 $2.93 9.6% $6

Newspapers $0.45 $0.05 $0.18 $0.00 $0.03 $0.37 $0.40 $0.54 $0.13 $2.14 7.0% $5Out of Home $0.20 $0.01 $0.08 $0.00 $0.01 $0.12 $0.22 $0.30 $0.06 $1.00 3.3% $2

Other Print $0.12 $0.01 $0.04 $0.00 $0.00 $0.07 $0.07 $0.11 $0.04 $0.47 1.5% $1Radio $0.37 $0.06 $0.33 $0.00 $0.03 $0.37 $0.37 $0.42 $0.13 $2.08 6.9% $5

Telemarketing2 $0.35 $0.04 $0.16 $0.00 $0.02 $0.27 $0.36 $0.46 $0.16 $1.81 5.9% $4Market Totals $9.63 $1.04 $4.58 $0.00 $0.38 $3.83 $3.69 $3.78 $3.49 $30.43 100% $67

Spending Share 31.6% 3.4% 15.1% 0.0% 1.3% 12.6% 12.1% 12.4% 11.5% 100%Per Voter Spend: $21 $2 $10 $0 $1 $8 $8 $8 $8 $67

Notes: 1. Includes postage and handling only.2. Includes robocalls.3. Includes PAC and Super PAC spending.

Des Moines – More National $

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Springfield, MA Metropolitan Area 2016 Prelimenary Political Ad Spending EstimatesEstimated Eligible Voters: 514,390 All Estimates in $ Millions.

Media US State State State Local Local Special Media Media Per VoterChoice President US Senate US House Governor Atty Gen Assembly Offices Ballot Issues Interests3 Totals Share Spend

Broadcast TV $3.30 $0.00 $0.50 $0.00 $0.22 $1.91 $1.54 $1.23 $2.58 $11.27 49.1% $22Cable $0.55 $0.00 $0.09 $0.00 $0.05 $0.57 $0.38 $0.38 $0.28 $2.30 10.0% $4

Direct Mail1 $0.08 $0.00 $0.02 $0.00 $0.01 $0.10 $0.25 $0.28 $0.10 $0.83 3.6% $2Digital/On Line $0.58 $0.00 $0.10 $0.00 $0.04 $0.34 $0.34 $0.27 $0.33 $2.01 8.7% $4

Newspapers $0.25 $0.00 $0.03 $0.00 $0.03 $0.41 $0.44 $0.59 $0.14 $1.90 8.3% $4Out of Home $0.11 $0.00 $0.02 $0.00 $0.01 $0.14 $0.24 $0.33 $0.07 $0.90 3.9% $2

Other Print $0.07 $0.00 $0.01 $0.00 $0.01 $0.07 $0.08 $0.12 $0.04 $0.39 1.7% $1Radio $0.20 $0.00 $0.06 $0.00 $0.04 $0.41 $0.41 $0.47 $0.15 $1.74 7.6% $3

Telemarketing2 $0.19 $0.00 $0.03 $0.00 $0.02 $0.30 $0.39 $0.50 $0.18 $1.62 7.0% $3Market Totals $5.33 $0.00 $0.85 $0.00 $0.42 $4.23 $4.08 $4.18 $3.86 $22.96 100% $45

Spending Share 23.2% 0.0% 3.7% 0.0% 1.8% 18.4% 17.8% 18.2% 16.8% 100%Per Voter Spend: $10 $0 $2 $0 $1 $8 $8 $8 $8 $45

Notes: 1. Includes postage and handling only.2. Includes robocalls.3. Includes PAC and Super PAC spending.

Springfield – More Local $

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AGENDA

• Headlines

• Methodology

• Opportunities

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LookAt Local

Opportunity #1

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Local is

STATE/LOCAL CONTESTS SHARE (with

National Contests)

NEWSPAPERS $985.23 72.8%

OTHER PRINT $239.92 63.3%

BROADCAST TV $3,073.32 36.0%

CABLE $729.20 49.7%

RADIO $787.77 66.4%

OUT OF HOME3 $651.70 78.4%

DIRECT MAIL4 $369.32 67.5%

ONLINE/DIGITAL $423.84 38.9%

TELEMARKETING $739.67 69.4%

$7,999.96 48.6%

Local is worth $8 billion (2015-16)

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LookBeyond TV

Opportunity #2

NEXT SLIDE CONTAINS A LOT OF NUMBERS

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'16-'202017 '17 (F) '13-'17 2018 '18 (F) '14-'18 2019 '19 (F) '15-'19 2020 '20 (F) '16-'20 '08-'20 Share Point

Media Choice Forecast Share % Change Forecast Share % Change Forecast Share % Change Forecast Share % Change % Change ShiftNewspapers $517.709 9.1% (3.2) $586.900 6.4% (11.1) $390.676 6.8% (22.7) $743.396 5.9% (12.3) 36.2 (1.6)

Other Print $270.129 4.7% 27.6 $109.062 1.2% (14.2) $179.327 3.1% (9.8) $146.242 1.2% (18.8) 50.0 (0.4)Broadcast TV $1,843.942 32.3% (36.4) $3,562.697 38.6% (25.7) $2,504.167 43.4% (7.2) $4,721.303 37.4% (19.1) 9.3 (13.8)

Cable $682.431 11.9% 43.2 $854.320 9.3% 46.0 $570.002 9.9% 75.7 $1,322.790 10.5% 15.8 182.7 0.4Radio $554.475 9.7% 33.7 $717.993 7.8% 15.9 $371.462 6.4% 3.3 $1,114.573 8.8% 34.7 101.7 1.6

Out of Home* $611.344 10.7% 27.9 $736.170 8.0% 15.9 $544.384 9.4% 24.3 $465.426 3.7% 18.4 88.4 0.2Direct Mail** $319.762 5.6% 12.7 $263.567 2.9% (7.2) $147.304 2.6% (18.9) $318.450 2.5% (12.9) 40.0 (0.7)

Online/Digital $480.039 8.4% 2,563.2 $1,990.362 21.6% 2,696.9 $725.736 12.6% 6,000.1 $3,278.254 26.0% 204.5 14,634.4 16.5Telemarketing $433.628 7.6% 10.2 $399.895 4.3% (23.1) $339.440 5.9% (1.6) $511.846 4.1% (28.9) 2.3 (2.3)

U. S. Total $5,713.460 100% 0.1 $9,220.965 100% 11.1 $5,772.497 100% 14.0 $12,622.281 100% 10.8 80.8* Includes Cinema.** Includes postage & handling only

Four media choices on the move

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2008 2009 2010 2011 2012 2013 2014 2015 (P)

2016 (F) 2017 (F) 2018 (F) 2019 (F) 2020 (F)

$22.25 $5.39 $14.08 $2.72$159.21

$18.02 $71.16 $11.90

$1,095.90

$480.04

$1,990.36

$725.74

$3,278.25FORECAST

Because digital has been “behind” in Political, it will grow very fast

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2008 2009 2010 2011 2012 2013 2014 2015 (P) 2016 (F) 2017 (F) 2018 (F) 2019 (F) 2020 (F)$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000Broadcast TVOnline/Digital

Digital will gain on TV

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LookToward Programobilesocialatic

Opportunity #3

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'08-'202020 '20 (F) '16-'20 '08-'20 Share Point

Media Choice Forecast Share % Change % Change ShiftTotal Digital $3,278.254 26.0% 204.5 14,634.4 25.7

By CategoryPaid Search $562.367 17.2% 103.7 3,818.4 (47.4)

Display $1,854.366 56.6% 225.9 39,355.2 35.4Email Marketing $435.006 13.3% 241.6 17,921.7 2.4Streaming Video $426.516 13.0% 309.4 13,732.7 9.5

By TargetSocial Media Sites $2,091.370 63.8% 256.0 40,591.9 40.7

Mobile Devices $1,571.530 47.9% 562.5 225,855.4 44.8

By 2020, over 60% of digital spend will be on social sites; nearly half will be mobile

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Programmatic is coming fast to Political digital ad spend

Political Video Bought Via Programmatic Picks

Up In Early Primary States

by Tyler Loechner

It’s over a year away, but the 2016

Presidential election is already coming into

focus for marketers. And with the upcoming

election has come an increased focus on

programmatic ad technologies, which have

long promised efficiencies in targeting precise

audiences -- exactly the type of thing political

marketers aim to do.

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'16 Programmatic DigitalOffice/Contest Estimate Share Share

US President $129.87 37.6% 46.9%US Senate $28.86 8.3% 38.1%US House $67.91 19.6% 38.4%

Total National $226.64 65.5% 42.8%

Governor $8.24 2.4% 30.3%Atty Gen $4.89 1.4% 29.8%

St Assembly $17.70 5.1% 13.3%Local Office $5.56 1.6% 4.1%Local Ballot $27.38 7.9% 25.4%Total Local $63.77 18.4% 15.2%

Special Interests $55.43 16.0% 43.2%'16 Total Estimate $345.84 100% 32.1%

Programmatic is gaining ground

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UPDATES

• Just beginning to cook• Ground game• Bush vs Trump

• Rubio bought TV time• Gone negative early• First major endorsement

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CONCLUSION

• Digital is rising very fast – hits $1 billion• TV is still #1• Mass will be replaced by targeted• By 2020, digital competes with TV• $8 billion in Local races• Each market is different

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Tomorrow’s Media, Understood Today

www.BorrellAssociates.com

THANK YOU!