Ad Optimism On The Local TV Front

When it comes to differentiating itself from other media, local television has “lost its way.” And spot must deal with persistent measurement problems at a time when its No. 1 core ad spend category, automotive, is tackling huge quandaries—including the strike now in progress. But there’s one gleaming spire of optimism shining on the horizon for broadcasters: yet another exceptional year of political spending.

Those were some of the major takeaways from the TVB’s Executive Summit, which took place in NBC’s Studio 8H (home of Saturday Night Live) on Thursday.

All Signs Point To Plentiful Political

First, the exceptional news: the research firm CMAG Vivvix is projecting that total political ad spend in the 2024 election cycle will be $11.6 billion out of a total $19 billion raised for political candidates and issues. “We’ve even seen some estimates where it’s more than $19 billion, so that number could go up,” said Mitchel West, director, CMAG Vivvix.

Other political projections came from Kyle Roberts, president-CEO, AdImpact & Smart Media: “We believe the 2024 cycle will bring in just north of $10 billion. It’s an increase in real dollars of $600 million over 2022 and $500 million over 2020.” AdImpact expects that broadcast will rope in about half of that.

CMAG also projects that broadcast networks and stations together are likely to garner $5 billion, up from $4.3 billion in the 2022 midterms. “The real takeaway here is CTV coming in at $1.8 billion,” West said. “That’s an 80% increase from 2022, and it’s taking the second spot from cable for the very first time.”

CTV is followed in the CMAG rankings by Google/Facebook at $1.6 billion; local and network cable at $1.5 billion.

Giving a flavor of how this cycle stands out, West noted that spending in 2023, up until Labor Day, totaled $161.2 million — a dramatic increase over the $95.7 million spent during the same period in 2020.

In speaking of swing states, AdImpact’s Roberts said: “Florida’s going to come out of the equation. If you look at the presidential race in 2020, Florida in the general election got about $300 million in local money. Since it’s not a swing state anymore, that money’s going to get redistributed.”

CMAG Vivvix identifies four tossup states next year: Arizona, Georgia, Pennsylvania and Wisconsin. Three others — Michigan, North Carolina and Nevada — may also be in play. Arizona is likely to attract the most political spending, with a three-way Senate race between Kyrsten Sinema (now an independent), Ruben Gallego (Democrat) and the eventual Republican nominee.

Despite all those new dynamics, one thing remains the same with political spending, as far as Dave Heller of the political ad consultancy Main Street Communications is concerned. If a rival of one of Main Street’s clients doesn’t use broadcast TV and is relying only on CTV, Google, Facebook and radio, “I know I’ve won,” he said. “As a political campaign, you’re going out to dinner. Broadcast is the steak. Broadcast is the entrée. CTV, cable, Facebook, Google, radio — asparagus, a little salad. Radio: dessert.”

That said, Heller added: “I use of all of them. I don’t mind a little rice with my dinner. But it’s rice; it’s not the dinner.”

The Power Of Local

While Heller instigated much exuberance and laughter from the crowd, things were more sobering during sessions that touched on local TV’s biggest challenges. “I think that the model needs to change for local. The power of local is still there, but somewhere along the line we lost our way as far as what local can do that other mediums cannot do,” said Joe Cerone, MAGNA executive vice president, local investment.

“Get local into the community with sponsorships,” he said. “And not just billboards. Another thing that keeps me up at night is the model is broken for makegoods and postings. We need to figure out a better way, and a cleaner way, to get schedules to run—get bills paid quicker and reduce friction between stations and agencies, cleaning up discrepancies.”

When asked by TVB President-CEO Steve Lanzano what he’d like stations to do, Cerone said: “I would love for the industry to agree to one source of truth — and behind that source of truth, to have accountability.”

The Persistent Measurement Problem

Other “wish list” items surfaced during a separate panel on measurement. Jennifer Hungerbuhler, EVP, head of local video and audio investment, Dentsu Media US, said that she’d like Comscore to provide accredited personification. “And for Nielsen, I’d like stability of the panel size and for it to be more reflective of the viewership and population in the marketplace.”

Becky Meyer, SVP national sales, Gray Television, said “we’re really missing the over-the-air viewer. I don’t feel comfortable that those people are being measured accurately in any market. The little guys get left way in the dust because the panel just doesn’t work for some of these marketplaces.”

Meyer added that she’d like Comscore to gain adoption and traction on the currency level and get accreditation.”

Carol Hinnant, Comscore chief revenue officer, responded by saying, “We’ve spent the last year with the [Media Rating] Council to develop a persons measurement. That is founded on big data and our decade’s experience working with big data.”

Hinnant added: “We know we have clients who want to do currency trials with that person-level data, and that will happen. We’re in process now. And we expect to have an outcome on our household level with demographics reporting probably in Q4.”

Pete Doe, Nielsen chief data officer, said that the company is addressing the stability of panels in larger markets. He said he’s initiated work on adding big data to enhance the panels. “It’s clear that there’s huge pain points with zero ratings that our clients are seeing. We’re in talks with the MRC about the methodology that we’ve developed. And it will be available as Impact data in January.” As a result, zero ratings are going away, he said.

Auto Improving, But Beware Of Potholes Ahead

While research companies and their clients wrestle with measurement issues, the automotive industry has a host of issues on its plate — not the least of which is the strike now in progress. And ad sellers need to pay attention to them. Local TV’s No. 1 core ad category continues to be plagued by a shortage of computer chips, needed to meet consumer demand, noted Brian McCord, SVP, executive director, media strategy at the agency RPA.

“The forecast now is for 12 million-12.5 million in retail sales in auto this year. Pre-COVID, we were probably 14-ish. Anywhere between 13 and 15 million was auto for 10 years pre-COVID. So we’re getting there. We hit single digits in 2020,” McCord added. “But just as supply is coming back, and customers therefore should be able to achieve better pricing and not pay over sticker, here comes interest rates. So sure, the purchase price might look a little better, but the monthly payment — unless you’re paying in cash, God bless — is still high,” McCord said.

In a separate session, John Casesa, senior managing director, Guggenheim Partners, said he’s expecting new car sales to reach 15 million next year. “The big thing that’s happened with auto demand, is before COVID, in a healthy economy, we’d sell 17 to 18 million a year at $35,000. Now cars are $50,000 and the industry is used to that. So setting aside [impacts related to the strike] I think we’re going to sell fewer cars at higher prices.”

Chinese manufacturers are expected to enter the U.S. market with lower-cost cars. And foreign car sellers in general should stand to gain if the United Auto Workers strike drags on for very long.

Casesa also noted that the auto industry is going through enormous change because of the transition to electronic vehicles. He likens it to what happened to retail when ecommerce came to the fore, or when mobile phones became popular, upending the telecommunications industry. Manufacturing EVs is very different than building traditional cars, because they are so dependent on software. And a lot of what goes into EVs needs to be purchased from giants like LG, Intel, and Nvidia. “That really changes the economics.”

The automotive business is in a tricky situation, because it needs to optimize its traditional gas-powered car business at the same time that it needs to build the new. “Very few companies have done this successfully,” Casesa said, referring companies in other industries that have gone through similar transitions. Auto companies “are facing tremendous constraints. Most of them are more thinly capitalized than I think people appreciate,” he added.

For TV sellers seeking to attract more auto revenue, “the theme should be about stretching the dollar, adding more value and creativity,” Casesa said. “If you think there were penny pinchers before, it’s going to be worse now.”