How Should You Spend Your Advertising Budget During an Election Year?
As Election Day approaches, political campaigns across the United States are pulling out all the stops for the final few days of campaigning. This includes buying air time and other advertising space to woo voters. Although presidential advertising is expected to fall short of the huge sums spent by the Obama and Romney campaigns in 2012, experts estimate that total political advertising will amount to at least $3.2 billion this year, with digital advertising doubling in volume since the last presidential election.
But while media outlets bask in this huge influx of advertising dollars, other businesses around the country must deal with a natural consequence of political spending: less ad space to attract customers. Apart from purchasing ad space early on to decrease the likelihood of getting “bumped” off the air waves, businesses that rely heavily on advertising essentially have three options:
- Reduce or temporarily stop advertising and save marketing budgets for when ad rates go back to normal,
- Shift advertising dollars to alternative or narrowly targeted ad strategies in an attempt to reach customers without paying significantly more money, or
- Advertise at a normal volume and eat the additional costs.
Each option has its own advantages and disadvantages, and there isn’t one “right” strategy for businesses across the board. When evaluating its ad strategy during an election year, a business should carefully consider the implications of each option before deciding on the best course of action. What follows is a brief look at the pros and cons of each option, along with a list of best practices for evaluating such an important advertising decision.
Option 1: Reduce or temporarily stop advertising
Pros: This strategy is attractive to companies that have already identified an acceptable threshold for minimum advertising volume. They know that reducing or temporarily halting advertising for a certain time frame won’t significantly decrease consumption in the long run. In some cases, this can also benefit businesses that thrive on consumer spending during November and December, since ad dollars saved during the election cycle can be funneled to post-election holiday ad campaigns.
Cons: Going dark—at least on television—can leave businesses temporarily susceptible to competitors that opt to maintain a steady stream of advertising during election season. And, if businesses haven’t done sufficient research on the extent to which their revenue is connected to advertising, this option can result in unintended consequences.
Option 2: Shift ad budgets to alternative or narrowly targeted advertising strategies
Pros: Done right, this option can keep marketing campaigns relatively intact, depending on which audience(s) a company is targeting. Alternative strategies include targeting existing customer databases through email and growing a company’s digital footprint. And alternative strategies don’t just have to be digital; heavy television advertisers can also leverage alternative TV networks.
Cons: This option can still limit exposure in significant ways, especially for companies that rely heavily on television advertising to reach broad audiences. In addition, choosing the wrong alternative ad strategy can turn into a sizable financial loss.
Option 3: Advertise at a normal volume
Pros: The main advantage here is maintaining regular levels of exposure. This can be especially beneficial if key competitors temporarily reduce their ad space and are unable to make up that ground through alternative channels.
Cons: Of course, this strategy is by far the most expensive out of the three, particularly for companies that invest a majority of their ad dollars in television and battleground states. Plus, it assumes a company’s ads will be able to break through the constant political noise already penetrating American homes. Unless a company has strong evidence that the extra spending is financially justified, going this route poses a major risk.
Best practices for evaluating all three options
A decision as important as this requires much more than just a brainstorming session or in-depth discussion among company executives. The most successful businesses—whether confronting election year advertising or other key decisions—base their actions on data. To do this, they typically employ some combination of the following strategies:
- Industry-wide market research
- What are the key industry trends over the last 5 years?
- What have competitors done in the past, and what were the results?
- What are competitors doing right now?
- Firm-specific market research
- What are the firm’s competitive advantages and key value propositions?
- What are the firm’s weaknesses?
- Customer segmentation
- What types of customers make up the market?
- What types of customers are most profitable?
- What advertising channels and messages are most attractive to each type of customer?
- How should the firm allocate its advertising budget to achieve maximum return on investment?
- Predictive modeling
- What strategies have been successful in the past?
- What can be accurately projected for the near future?
Intelligently leveraging such data provides a solid foundation on which businesses can evaluate and make key decisions—whether those decisions involve advertising during an election year or any other strategic situation. Let us know if you’d like to talk through some of the data-driven options available to help grow your business.