Political, Sports Betting Buoy Flagging Auto Business For Spot TV

A trio of TVB Forward sessions last week laid out the golden promises of 2022 political spending and the ongoing growth of sports betting, offsetting auto’s precipitous fall.

While automotive advertising has shifted into reverse gear this year, at least one big manufacturer is looking for fresh, creative ideas from stations that will bump up prospects for its models. And there are plenty of indicators that two other advertising categories — sports gambling and political — will have extraordinary upside over the next year. Insights about the three heavyweight spending sectors were divulged during the TVB Forward conference, which took place last week.

There are monumental reasons why stations have felt that giant sucking sound, as the auto category was drained of revenue strength in recent quarters. The auto business has been dramatically upended in the last 20 months, explained Jason Stein, CEO of the auto media services company Flat Six Media.

In late 2019, “our concerns centered on a few key areas: an overabundance of vehicle inventory; dealers fighting against the inability to make money on new cars; and automakers battling the enormous struggle of massive investments in far-flung technologies, such as autonomous vehicles,” Stein said

Today, there’s a new world order for auto companies. “Consider that dealers have no inventory. In some states, for some dealers, there are 30 cars on the lot, whereas once there were 300 on a monthly basis. Dealers could not possibly be making more money than they are off new cars,” Stein said. “And, funny enough, nobody’s talking about autonomous vehicles” — at least not in the near-term.

Over 8 million cars and trucks have been eliminated from factory schedules due to the chip shortage, Stein said. With the demand high and supply low, there’s little wonder why auto advertisers — which traditionally spent more money on spot than any other industry sector save political — isn’t what it used to be.

Regardless, Hyundai is among the brands that are still big believers in TV. “Even though it’s a little bit of a waning medium, it’s still massive,” said Angela Zepeda, CMO of the company. “[TV] really helps elevate us and gets us in front of a lot of people in a very consistent way.”

BRAND CONNECTIONS

Zepeda encouraged spot sellers to come to Hyundai with unique creative ideas. As an example, she noted a partnership with Walt Disney Co.’s various media platforms tied to its campaign for the compact SUV Tucson. “We actually had Loki from Marvel driving a Hyundai in one of our commercials. The fandom that’s behind some of these shows and platforms — we really love that,” she said.

Political Wave Coming

As the auto industry continues to grapple with challenges, broadcasters are getting ready for a massive wave of political advertising, which is likely to collect force earlier than ever. Candidates need to do that in order to break through the clutter of other political ads, said Ali Lapp, president of the House Majority PAC, which is focused on Democratic politicos. “You try to be ahead of some of the other candidates so you’re not one of 80,000 ads being aired in the last week of the campaign,” she said. “Now the clutter lasts longer, over more and more weeks.”

Lapp expects that in the 2022 cycle, her political action committee will do more advertising on over-the-top (OTT) platforms than it’s ever done before in order to find voters where they’re watching.

Her group isn’t the only one eyeing OTT. Steve Passwaiter, VP, growth and strategy at Kantar Media Intelligence, estimates that $1.2 billion will be spent on OTT and connected TV (CTV) in the 2022 cycle — the equivalent of what he expects the digital sector (largely Facebook and Google) will draw.

There’s a question tied to that: “Is there enough [OTT and CTV] inventory to support all that? We’ll find out,” Passwaiter said.

Overall, $7.8 billion will flow into media coffers from politicos during the upcoming political season, Kantar projects. Broadcasters are likely to garner $3.8 billion, versus $3.05 billion during the 2018 midterm cycle and $4.8 billion during the 2020 presidential cycle.

Cable and satellite are expected to rake in $1.4 billion in 2022, up from $1.2 billion in 2018. Radio should pull in $215 million, Passwaiter predicted.

There are 469 U.S. Congressional seats up for grabs (34 in the Senate and 435 in the House contests). In addition, there are 38 governors races this year and next (two in 2021 and 36 in 2022), Passwaiter noted.

Pitched battles across a multitude of states and markets is all but guaranteed because the stakes are high. There’s a 50-50 split between Democrats and Republicans in the Senate. The House is divided between 222 Democratic-controlled seats and 213 Republican. And Republicans currently hold 27 governor seats, whereas the Democrats have 23.

The bottom line is, there’s going to be plenty of money for everybody,” Passwaiter said.

Sports Betting Shines

As broadcasters await that deluge, halleluiah choruses have been ringing in a many of their ears about ads tied to sports betting. The category seemed to come out of nowhere over the last year, filling coffers that were depleted as 2020 election spending ended, and auto advertising pulled back along with other categories badly hit during the pandemic.

The gambling category isn’t done working its miracles yet. “Currently 55% of the U.S. population has access to some form of legal sports betting,” said Chris Grove, a partner in the consulting firm Eilers & Krejcik Gaming. “For online sports betting specifically, that number is 47%.”

Grove expects penetration to grow with time, as more states legalize the activity, and those states that allow only retail sports gambling lift restrictions on online operations. Eventually, “we expect online sports betting to account for roughly 80% of legal sports betting,” Grove said.

“There are a handful of states where we think the chances for progress are exceptional over the course of the remainder of this year and into 2022. That’s Massachusetts, Ohio, North Carolina and Texas,” Grove added. “What we’ve seen in all of these states is a mix of existing legislative momentum; strong support from key stakeholders that have an interest in moving legal sports betting forward; and in many of these states pressure from neighboring states [where sports betting is already legal].”

Eilers & Krejcik projects that sports gambling operators will garner an estimated $4 billion in revenue this year, and $12 billion in 2025. It’s likely to mature at $21 billion. At that point, it’s expected to represent about a third of the entire gambling industry’s revenue base.

Half of all the revenue that sports gambling operations take in is used for marketing, focused on consumer acquisition and retention, Grove explained. And while the National Football League season is the busiest for those companies, there are expectations that gambling tied to National Basketball Association games will grow, boosting revenue in other parts of the calendar year.

Eric Hession, co-president of Caesars Sports & Online Gaming, discussed how his company strategizes television promotions. Ads tied to “commentary or pregame shows or [programming] based on things that are similar to sports betting might be a great market,” he said.

“We also really try to get the broadcasters, and the folks that were buying the media, to think how we can incorporate our product [into programs],” Hession added.

Stories about customers are one example of what he’s looking for. “That’s really appealing to us because it goes towards our overall goal of getting a customer base that’s really attractive from a retention perspective — that wants to stay with us for a long time and isn’t just out for the free bets they can get from anybody that’s out there.”


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