The Fall of DR’s Discontent

by Eddie Wilders on Oct 17, 2016 12:00:00 AM DRTV

The_Fall_of_DRs_Discontent-921243-edited.jpgGrowing up, the end of summer always gave me the blues. Days of lazing in the sun, playing in the street, and cooking out would soon be gone; then, school would begin, and cold weather would follow. As an adult, summer’s end is still bittersweet, except now it means less beach time with my daughter.

The end of the summer is also tough on direct response marketers. Back-to-school ads, political buys, and the beginning of the holiday rush makes the season difficult for DR. Many of the worries the industry faces at the end of summer this year have to do with political spending and what may or may not ultimately happen in the election.

Earlier this year, the fear was that political dollars would soak up all available inventory. That fear didn’t materialize, however, at least through the beginning of summer. In fact, political spend was down in the first half of 2016 compared to the previous presidential cycle. The second half of the year might not be so kind.

The two remaining candidates are definitely going to be putting their ad dollars to work through the November election, and media outlets will be bombarded through September and October. It won’t just be in the swing states, either—more dollars will filter into the top 20 markets and the national landscape.

The tried-and-true advertising vehicle for political candidates in states where there is a higher percentage of undecided voters has always been local broadcast. The idea is to focus dollars and messages in these areas to get the message heard without the waste that comes from a national play.

For this year’s candidates, local broadcast is still going to be “yuge,” but the play will change a bit. The major-party candidates will hit the top 20 markets hard over the next two months, breaking from the norm. The GOP has promised to advertise heavily in New York and California—traditionally “blue” states that the Democratic nominee has carried in almost every election year for decades.

The national landscape also promises to garner larger levels of ad spending compared to 2012. With the candidates’ parties driving donations north of $200 million, ad dollars will spill over into the national landscape. News and entertainment networks are most likely to see a significant impact. Due to cord-cutting, most dollars geared toward the younger demographic will be spent in the digital space, making this election the first to be advertised heavily in digital video.

How can DR marketers compete? Since we can’t outbid political dollars, the next-best thing is to be where the candidates aren’t. Traditionally, political dollars impact clearance in a specific selection of dayparts—early morning, early news, and primetime. The rest of us will need to take advantage of daytime and weekend hours, but there will be a number of brands competing for this space that normally don’t advertise there. As a result, CPMs are likely to rise through the middle of the fourth quarter. The digital world will also tighten, since money will shift there to expose consumers to brands.

If political dollars aren’t enough of a headache in the scatter market, September and October also bring the beginning of the upfronts. With the addition of political spend, guaranteed dollars will become the norm over the next two months, and if brands put more money up against upfront volume, the scatter market will be more depleted, creating a huge auction for the remaining inventory.

The retail industry’s holiday advertising will create another roadblock for the direct marketer. All categories and industries will drive pricing upward, because the more advertisers get into a limited space, the fewer opportunities there will be.

As the stress levels rise and the warm weather recedes, only the knowledge that this situation will wind down at the beginning of November can avert a total meltdown. If the weather permits, I’ll barbecue on the beach with my daughter as the election-night results roll in, and celebrate the end of the cycle with something and someone I love.

Eddie Wilders is Senior Vice President of research and analytics at Lockard & Wechsler Direct.

The above originally appeared in the September-October 2016 issue of ER magazine.
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