Political ad spending shifts regional CTV costs for brands

It’s a week until Election Day and the political rhetoric and advertising are running at a deafening volume and staggering velocity. This last part is making it hard for brands to be heard during the critical holiday shopping season. This is especially true in swing states where CPM has risen significantly.

This year, many national brands anticipated this and diverted some of their budgets away from competitive swing states, according to CTV and programmatic adtech company Keynes Digital. Regional brands in swing states also got some relief, as political advertisers maxed out linear TV, but left some CTV inventory for brands.

Politics drive up CPMs. No surprise that CTV cost-per-mille (CPM) went up in swing states like Georgia, Pennsylvania and Arizona. How much? CPMs rose 8% year-over-year for this election season.

In non-swing states, CPMs decreased 2.5% over last year.

The lower CPMs in non-swing states attract more spending by national advertisers. The reddest and bluest states get fewer political ads and consequently more brand advertising.

“Brands that only have a presence in swing states or focus on growing in those states will feel limited volumes and price increases,” said Dan Larkman, CEO and founder of Keynes Digital. “For brands focused nationwide, ad spending has shifted (slightly) to geography that tends to have higher conversion rates and are not feeling the impact of the elections.”

Non-swing states received 2.2x more CTV spend than in swing states this year. In 2023, non-swing states saw 1.7x more versus swing states.

Swing-state CTV availability. It could be worse. Sure, CPMs are higher in swing states, but inventory is far from getting maxed out, Larkman said. Political campaigns put much of their budgets into linear TV, saturating that channel. Plus, less advertising by national competitors is an opportunity for regional swing-state brands that must advertise in these states.

“Linear TV networks are selling out and pushing these budgets to digital channels. That said, the 10.5% difference in CPM is much lower than we would have expected,” said Larkman.

He added: “This is a polarizing election season, and donations are sky-high. Only a slight increase in CPM tells me there is still a lot of unfilled ad space and a lot of opportunity for brands to capitalize now and/or after the elections.”

Why we care. This year, digital video (including CTV) was projected to surpass linear TV spend for the first time. Major streamers like Netflix and Disney+ now have sizable ad-supported subscription tiers allowing advertisers to reach premium content viewers. So, when major events like elections occur, marketers should take stock of which customers are affected and adjust spending in emerging channels like CTV.

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