Can Political Advertising Weather a Recession?

You may have seen the advertising already: politicians in state primaries jockeying for a spot on the November ballot. While not quite recession-proof, political advertising is more insulated from the adverse impacts of an economic downturn than other sectors, according to five insiders who spoke with Adweek. Politicians, parties and causes see a near-continuous flow of dollars from the country’s wealthiest donors. Individuals like Mike Bloomberg, Tom Steyer and Peter Thiel along with corporations like Alphabet, Comcast and Chevron. But, says Erik Brydges, head of political at ad-tech firm Xandr, "A potential recession could impact smaller, individual donors making it more difficult for them to give as much." Today’s hot-button issues, like abortion rights, inflation and gun violence, influence how voters engage and contribute, said Grace Briscoe, svp of client development at advertising software company Basis Technologies. Briscoe does not anticipate a slowdown in spend. With a possible recession on the horizon, industry executives are seeing pullback while assessing ad spend. However, according to five sources, political advertisers are somewhat cushioned against this ebb and flow in ad spend, but can expect some slowdown as consumer spending weakens due to rising inflation. Meta Shortens Edit Window on Political Ads A polarized electorate and easily accessible online fundraising Last week, AdImpact’s revised estimates saw political ad spend reaching north of $9.7 billion, surpassing 2020 spending by nearly $700 million. “An increasingly polarized electorate and easily accessible online fundraising tools have been major factors propelling this surge in spending,” the report reads. “It no longer takes a presidential ticket at the top of the ballot to push a cycle near the $10 billion threshold.” Between 29% and 32% of total ad spending is represented by digital, per Kantar and AdImpact. Briscoe anticipates 70% of digital spend this year to go into programmatic channels, representing nearly 20% of the campaign’s total media spend. Unlike retailer brands with an annual budget, political advertisers rely on fundraising campaigns on platforms like Facebook to pay for ads. But Facebook—where more than $3 billion was spent on the platform since 2018 on "social issues, elections or politics"—is losing favor with political ad buyers. Partly, that's due to the platform deprecating several targeting segments and adding a more stringent verification process. “This is a very cumbersome process for small campaigns that don’t have the resources to hire an agency to navigate the process," said Reid Vineis, vp of digital at Majority Strategies, a Republican political ad firm. Connected TV advertising as a channel for political advertising is seeing rapid growth and represents about 13% of the overall political spending, per AdImpact. The report estimates total spending on CTV will grow to $1.4 billion by November. Vineis is among those who find CTV ad placement more financially efficient than social media or traditional broadcast TV, where voter groups in specific geographic areas are more easily targeted. The fundraising cash flow, at least on the Democratic side, has been strong, according to Jake Sticka, vp of client strategy at the Democratic firm Rising Tide Interactive Sticka. However, inflation has led to people donating fewer dollar amounts to political campaigns, according to Vineis. Donations on WinRed, a Republican Party fundraising platform, have slightly decreased: the total small-dollar donations raised in January totaled $29.5 million compared with $26.6 million in June, per the Federal Election Commission. By contrast, Democrats saw nearly $3 million in small-dollar donations in January to $4 million in June, via the Democratic fundraising platform, ActBlue. The fundraising total including large-dollar amounts is higher for both parties. Political advertisers allocate only a small amount of the media budget several weeks ahead of the campaign, meaning there are reserves of cash if they need to make more real-time changes in spend, giving them some flexibility to respond to fundraising slowdown, low voter turnout or to an attack by an opponent.