Tracking The Spending Of The $9.8 Billion Midterm Elections – Kyle Roberts (AdImpact)

Kyle Roberts:

One campaign always wants to know what the other campaign is up to.

Eric Wilson:

I'm Eric Wilson, managing Partner of Startup Caucus, the home of campaign tech innovation on the right. Welcome to the Business of Politics Show. On this podcast, you are joining in on a conversation with entrepreneurs, operatives, and experts who make professional politics happen. Kyle Roberts, the CEO of Ad Impact, joins us on the show today to discuss the latest data around political advertising and the 2022 midterms, the trends underlying those numbers and his strategies for selling software in the political industry. Kyle, in July, 2021, ad impact projected that the 2022 political cycle would see about 8.9 billion in political ad spending a year later, just this summer, you revised your projections upwards to 9.7 billion. What do we attribute that increase to?

Kyle Roberts:

You know, there's a couple of pieces to that, Eric, You know what, When you're writing these predictions, it's, you know, we wrote that in July of 2021. We're 18 months away from the election. It's hard to know everything that's going to happen in the environment. You're running the prediction, right? You're looking at what was the historical spend what states will be coming up in 2022, What's the size of the markets? How competitive will the races be? How competitive have they been historically? How are they trying to, you're looking at all that stuff and then you're trying to figure out, okay, well what's the number gonna be? I think it's important when you do that type of stuff to be really transparent about how you're doing it, because people have a lot of questions, and we notice in the marketplace, people take the information very seriously, and so we wanna be really responsible with how we handle it and how we put it out.

All that being said, right? We thought it was gonna be eight, seven, I think in, in July of 2021, but then as, as the cycle took over and we saw, you know, you've got some stakes that have some expensive crowded primaries, we saw just earlier in the year spend trend much higher. So we thought, Okay, let's come back. Now it's, it's July of 2022, let's come back and, and let's sort of revamp what we know, and then let's see if we would make a change in our prediction. So we did that and we, we kicked it up, you know, almost a billion dollars. And what were the main reasons? I would say one of the main pieces was that actually off year election spending in 2021 was north of a billion dollars. It was the highest we had ever seen. But yeah, that kind of kicked it up. And then we saw some really, you know, the Pennsylvania gubernatorial, I mean, senatorial primaries were huge. Ohio was huge. And then you saw states like Arizona and, and Nevada seem to get a lot, much earlier spending than they had in the past. So all these things really kicked into it. And so we thought, Okay, let's go back to the marketplace and let's revise the prediction and let's, let's put it out and make it public. And, you know, that's what we did.

Eric Wilson:

Well, it's really helpful data, and I'm glad you guys are putting it out. The thing that surprises me, I guess one, it makes sense, we have some really robust spending in these primaries. You had Peter Teal, for example, being very active. You had some really big self funders in a few of these races. My instinct would have been that, Oh, we need to revise our projections down. This just completely my my gut feeling, but there's no data behind it because of inflation. And, you know, we are seeing some reports that fundraising is down for Republicans. Does that impact those numbers at all, or our politics pretty insensitive to inflation?

Kyle Roberts:

You know, that's a great question. On the inflation side, we did not factor in inflation. When we wrote the second prediction, we revised it up because when we looked at the spending trends for early 2022, everything was outpacing the 2020 numbers, which was a presidential year,

Eric Wilson:

Which is crazy.

Kyle Roberts:

I it is crazy. I totally agree with you. Not only that, think about this, Eric. The presidential race in 2020 was 3 billion. Okay? So there's no presidential in 2022, you gotta take 3 billion out, but that 3 billion goes right back in. You know, the fundraising piece is a really good question. When you say fundraising, you really mean, don't you mean low dollar fundraising? You mean small individual contributions?

Eric Wilson:

Exactly. Right. So that's being made up with the major donors.

Kyle Roberts:

There you go. There's always seems to be something else in the system that fills the gap.

Eric Wilson:

So that is what I think is a big headline here, that we're going to see more spending in the 2022 midterms than in the 2020 presidential cycle. It's astonishing. And so much of that spending is on broadcast television followed by cable tv. But what about the other digital platforms, Things like Connected TV or, you know, some people call ott. What level of spending are we seeing there?

Kyle Roberts:

So in our prediction, it's the first time we've done this, we now have visibility in, into ctv which we're calling Connected tv, right? You have these, you know, you have, you have these different terms, right? Streaming, you have ott, ctv. We're, we're, we're kind of putting everything in one box and calling it just connected tv. So that's our general term for the entire piece. We now track it because we can detect the ads and so we can track how many impressions get delivered, and then we're basically calculating off of that to say, here's the approximate spend. So for the first time, you know, we're predicting that the CTV space will be roughly 1.4 billion.

Eric Wilson:

Wow.

Kyle Roberts:

Yeah. So that's a lot. And then on the digital side, and specifically for the purposes of our, again, we like to be really specific about what's in the prediction. We're tracking everything out of the transparency reports for Facebook and Google, and those we think will pace at about 1.1 billion. So, you know, digital, right? If you include CTV and, and, and Facebook, Google, all, all in one, it's two and a half billion space.

Eric Wilson:

Okay. So when I presume that that's going to be the largest we've, we've seen, or, or certainly that you've

Kyle Roberts:

Tracked that is correct. Combined, that will be the largest we've ever tracked. That is. Right.

Eric Wilson:

And I would just remind listeners of our episode with Adam Meldrum from AD Victory for a more thorough conversation on acr, which is one of the technologies that you're using to monitor these streaming activities and, and measure the impressions, right? That

Kyle Roberts:

Is correct.

Eric Wilson:

Kyle, another finding from the report that jumped out at me is the spending for political advertising in down ballot races. It's about $3 billion so far. That's more than the House Senate or gubernatorial races. I'm personally excited to see this because in Startup Caucus we're really focused on building software for that long tail of campaigns, those state and local candidates. What's driving that huge share of down ballot political advertising This year,

Kyle Roberts:

I'll get you to give you a one Stack California ballot prop twenty seven two hundred and eighty 8 million this year. The next closest race is 40 million. Lighter than that. So number of factors on the down ballot piece, our visibility into them as a company is greater than ever. Why we have access to Facebook's transparency report are detection system on detecting these ads. Most people, Eric, really don't pay much attention to the down ballots. They don't pay attention to state ledge races. They don't pay a, there's just a lot of pieces to, we refine the detection system in 19 to make sure that we find all those ads and that we track everything. So our ability to track it has gotten much better. But also some of these ballots are just enormous and they're driving as California ballot. It's gonna drive almost a huge amount of the spending out in that state. And remember, those are all issue rates that are not candidate rates. It drives up the cost for advertising, even for campaigns. There's just lots of factors that happen that just continue to drive the increase in dollars and the increase in spend.

Eric Wilson:

Right. It really does start to add up.

Kyle Roberts:

<Laugh>. Yeah.

Eric Wilson:

You're listening to the Business of Politics Show. I'm speaking with Kyle Roberts of Add Impact, Kyle, your company. Ad Impact is all about measuring and tracking advertising. Explain for us how this helps political organizations and and what is that value proposition that you bring to them?

Kyle Roberts:

We have a number of different value propositions, but the one thing, the main driver is one campaign always wants to know what the other campaign is up to that media, what we call media intelligence, is really the driver. It's the fundamental driver for a lot of the tools that we build in the, in the political space. And figuring that out is complicated, truthfully. So there's, because of how advertising is now working today, as you know, Eric, I mean there's certainly, you reference broadcast will get 50% of the money. That's the linear piece. But then you have a large non-linear piece, you know, I mean, you have ctv, you have digital you know, you have the cable portion of it too. And then you have, and you have satellite. So it's complicated how, how campaigns are deploying. They're advertising campaigns. It's very fragmented.

It's very complicated. So the value proposition that we bring is like, we're gonna try to simplify that for you. You, here's what your campaign is engaging in right now in terms of its advertising strategy, and here's what the opponents are doing, Here are the differences. And you think about that, right? Just in, in static, in the present. But okay, over the past six months, what did that look like over the past five months? What did that look like, future facing? What does that look like? So that campaigns can be well informed on how to adjust their targeting really. And it's and they're messaging. So you're, you're trying to break down these pieces in real time. Cuz as you know, campaigns are constantly polling, constantly looking at the ballot, looking at name id, looking at fave un fave. And they wanna adjust almost instantly. And so the data that you provide them has to be as close as possible to real time. And the insights really have to look at different pieces of time, right? Past, present, future, and then messaging around all that, trying to bring all those elements together and deliver something simple to a customer. It's not, it's not easy to do.

Eric Wilson:

Easier said than done, for sure. So one of the most frequent pieces of advice that we give to our entrepreneurs in Startup Caucus is to make their product a pain killer rather than a vitamin. You know, this sort of competitive intelligence that you're talking about could easily fall into the nice to have category, but I wanna hear from you how you position it as a must use in the form of advice for some of our entrepreneurs who might be thinking about how they do the same for their, their product. Yeah,

Kyle Roberts:

I mean, for the media intelligence piece, if, if you're not gonna purchase, you know, any media intelligence tools, you're pretty much flying blind, right? Look at the Pennsylvania Senate campaign, right? Just multiple campaigns across the country right now. It's no longer where it's candidate A and candidate B, and they have an advertising campaign, they go at each other. It's no longer that you have Senate Majority Pack, you have Senate Leadership Fund, you have one nation, you have future forward, you have majority forward. A senate campaign could have easily 15 to 16 different advertisers on the air at the same time attempting to influence the outcome of a vote. So if you're not gonna buy media intelligence, I mean, you're just, you're not gonna be aware of any of that activity. You move into a state where you know, you're multi-market, again, like Pennsylvania, Well, how much are outside groups putting into the Philadelphia DNA versus Pittsburgh?

How much are candidates spending in the different rural areas versus the metropolitan areas? You wanna know all that information, right? Just so you can, you know, just, just, just the geographic piece alone. The next piece is, we're gonna help you with the media mix. What are you up, what, what are the various groups doing on media mix? That's another nice piece of intelligence. And then the third thing is, what are these people saying? How many positive, you know, Yeah, how many positive messages are on the air? How many negative messages on the air? How many negative GRPs have you accrued over the past six weeks, past eight weeks? How many positive have you? So there's lots of different data points and factors, KPIs, that we can deliver to campaigns that we think will help inform them, make better decisions. So I'm hoping it's more of a pain killer than a vi.

Eric Wilson:

And with respect to the messaging and the creative, the content of those ads, that is what's going to drive the narrative, Whether that's through earned media or on social media, there are those questions that voters are gonna come up and ask your candidate. And to your point, if, if you don't have visibility into that, you can't develop responses, you can't get the research, you can't prepare your digital assets to respond to that. So I think that it is a really important part where so much of campaigning is now happening in, in the paid media environment. It's, it's not unified. It's very fragmented, and you need to know what's going on. I guess probably the best analog would be most campaigns follow the newspapers in every location or jurisdiction that they're running in. As local media starts to decline, you know, that more of that campaign activity is going to be on paid channels, whether it's CTV or broadcast tv. And I guess this is just like monitoring your clips.

Kyle Roberts:

Yes, it is. It is that, that's a good way to put it. And, you know, local media declining is so true. I mean, in terms of print, media, re presence, reporters being present in these races, it's just, there's so few anymore. So paid media really does drive the narrative in these campaigns. Plus with the weight of paid media, you know, I mean, again, outside groups, campaigns are raising and spending more money than ever. That means more weight on tv, more weight on addressable media that pushes a lot of messages into the environment. And while people don't like political ads, it's true. But the other piece that's true is that these ads do have an impact and they do shape opinions, and that's something you wanna track. That's something you wanna know.

Eric Wilson:

I think CTVs Rise is going to be the big headline from the 2022 election cycle. It just got huge adoption over the course of 2021 and now 2022 with, with people upgrading their TVs, new streaming services coming online and just the cord cutting trend. So what are you tracking, Kyle, on the horizon for 2024 that we might get some glimpses of this cycle?

Kyle Roberts:

So we track so many, you know, Eric, these things happen, right? Where, okay, let's start now tracking linear TV and oh, you know, why don't we go mine out all the FEC data. Why don't we go get all of the Facebook data and the Google data? Let's all incorporate that stuff. You know, we have so many, I mean, I think right now, as we stand here, I've got eight different data sources coming in. We have products for each of those, but I think as we move into 2024, we're gonna move toward integrating those into a single SAS platform. I think we have to. So as a business, we're gonna start working on that, and then linear will continue to change. And I think the challenges in measurement will continue to increase. And right now how it works is agencies measure content and they place ads based upon right?

How well that content is performing, what programs you get the highest ratings. I think we're gonna see that model inverted, and we're gonna be less concerned about content, more concerned about impression based buying. And what's going to happen is you're going to have to flip now this measurement system from a content measurement system to an ad measurement system. Here's my ad and here's how many people were exposed to it. Right now it's, here's my ad and then here's the content I'm gonna run it in, and then that's gonna gimme some ideas. How many people watched it? We're gonna move away from that system. Did I get that through there? You see, I'm, that's gonna flip now that's gonna flip. And we're, we're, we're, we're, we're gonna go through that process, I think here over the next 18 months.

Eric Wilson:

And I think you're already starting to see that with addressable TV and some of these CTV audiences.

Kyle Roberts:

Correct.

Eric Wilson:

And that's just a direct result of our ability to measure things getting better and better. That's

Kyle Roberts:

Right. And that, that's gonna have to get integrated into linear and it's gonna have to get integrated into just digital in general. All those are gonna have to merge and it will be less, again, about the content and more about ad performance.

Eric Wilson:

Yeah, I think that's what I tell people all the time when they're looking at the data, and we're starting to get to the point where we can in the political industry, but I think technology wri large, we can measure just about everything to the extent that it is overwhelming, right? The real power is going to be drawing insights from all that data

Kyle Roberts:

At the device level. Correct. And it's a lot of data that's gonna have to get ingested in order to get us there, but that's another thing that's been improving over time. You know years ago it was, it was aws, now it's Snowflake and, and you know, these, these underlying platforms can process now so much more data so quickly that that helps us now deliver better results to customers.

Eric Wilson:

The image I go back to all the time is, is you think about the information we have as kind of like a box of Legos all jumbled up, and so there's software and you have products that separate them into their different colors or sizes or other attributes. So we can look at them, but the next level is figuring out what do we build, how do we turn that into a Lego house and and develop narratives out of the data. So I think you're, you're spot on. That's where things are headed and our ability to do that technology wise is just getting more sophisticated and more robust by the day.

Kyle Roberts:

Yes, that's exactly right. You know, you know, again, any new technology, you go purchase any new data set, you go purchase you, you need to spend a lot of time with it and really work through it and figure out, okay, you know, it depends on, you know, Right. The entrepreneurial perspective. Like, am I gonna like build something that no one knows that they need? It's much riskier proposition than going out and having hundreds of conversations and saying, Yeah, this was the one thing I know I can build and I know I can sell because everyone asks for it, Right? That's so like, but you, you know, no matter what it is, you can find things, you just have to spend enough time with whatever data set it is to look for that. And it, it just takes a lot of patience and a lot of research. And so, but you know, it's like that helps yield out new things and that can generate enough demand, It can then be another source of revenue,

Eric Wilson:

Right. Kyle, we ask all of our guests this question. So what's another problem or challenge in the industry that you'd like to see a startup tackle?

Kyle Roberts:

That's good question. So like, look, you know, my, my background is, is agency and it's, it's all media. So yeah, I, I think, I think the measurement, the, the, the single measurement platform is the biggest challenge right now facing the industry because campaigns really don't have a good sense of, i, I believe what they're actually delivering to the voters. They don't have a good sense of how much their ads are penetrating versus not. And I think that, that, that's, that's gonna take a lot of different pieces of data in order to come up with a solution, right? I'm just talking about, well, I can measure exposure, but the other piece you could like, well, how many of those people that were exposed to those ads were actually called by a pollster? Could that data be connected together somehow to evaluate ad performance in real time? You know, so there are companies right now, I'm sure you know Eric, that'll take your ad and then they'll, they'll send it to a, a control group and then they'll say, Oh yeah, it's good. A or a bad, you know, they rate the ads well, that's in a controlled environment. How about actually in the overall public, is there some way to connect all that? I think that would be a wonderful thing if the, if those data sets could be merged together between exposure and and polling.

Eric Wilson:

I think you're exactly right. That's a really exciting space for startups to be in, is just bundling, synthesizing, and curating all of these insights that we are gathering across multiple different channels. Well, I wanna say thank you to Kyle Roberts for joining us on this great conversation. There is a link to that report that we referenced in the show notes. You can learn more about what Ad Impact is working on as well. As always, if this episode made you just a little bit smarter or gave you something to think about, please share it with a friend or a colleague. You'll look smarter in the process and will reach some new listeners. You can also subscribe to the Business of Politics Show wherever you listen to podcasts, so you never miss an episode. You can also sign up for email updates if you prefer that on our new website, which is business of politics podcast.com. With that, I'll say thank you for listening and we'll see you next time.

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