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Is the Internet Running Out of Political Ad Space?

BY Nick Judd | Tuesday, May 29 2012

Highly targeted ads may be in shorter supply than one might think. Photo: Shutterstock

Online politics consultants say that as a growing number of campaigns are buying television ads in advance, looking to get ahead of what is expected to be fierce competition for ad inventory closer to the general elections, something similar is happening online.

The proliferation of outside spending on political ads this year might make it tough for campaigns to buy television time in battleground states and closer to the election. To stave off the possibility of finding themselves unable to spend as much as they raised for television thanks to the new spending power of super PACs, campaigns are reserving television ads months in advance.

That consultants are doing the same with some types of online ads may seem counterintuitive at first, given that online advertising inventory is plentiful. But it seems that the online advertising inventory campaigns want most — targeted preroll ads on YouTube, geotargeted display advertising on news sites and other major traffic hubs, and even ads placed against some Google search terms — is in short enough supply to drive at least some advance purchases as well. This is a fact of life that online politics consultants say the fastest-moving organizations are just now learning, driven from experience gained the hard way during the primary campaign in this election cycle.

"Agencies have begun to reserve inventory through October," said Michael Bassik, U.S. digital practice chair and managing director at Burson-Marsteller and a former Personal Democracy Forum contributing editor, "And there's a very reasonable expectation that once television sells out, millions will flood to the Internet and the Internet will sell out."

The Romney campaign is reserving online ads ahead of time — but could withdraw their hold on those ads down the line, with cutoff dates varying by platform and network. It's unclear if the Obama campaign is doing the same. Spokeswoman Katie Hogan said the campaign does not discuss future digital strategy.

"This," Bassik said, "might be the first election where despite everyone's best intentions they are unable to spend the money they have raised. That they might actually raise more money than they can buy in media."

Bassik says three things are driving this change: Demand is growing for political ad time, but not supply; Internet advertising has its own growing market because of how easy it is to link fundraising to online ads; and a growing cadre of campaign staffers are carrying over lessons learned from prior cycles, meaning there are more senior campaign staffers who are ready to spend their advertising budgets online.

Republican online politics consultant Vincent Harris, who has served at the digital helm for Rick Perry's and Newt Gingrich's presidential bids this cycle, says he has some large organizational clients making advance purchases on Facebook.

Some inventory is also selling out in the shorter term. In an email sent last week, the Internet radio service Pandora alerted advertisers that it had sold out of audio ad space through May 31.

"There is no question inventory will be scarce as we move into political and Olympic season," Pandora senior sales manager Alan E. Silber wrote in the May 22 email. "So if you can, please place your business as far in advance as possible."

Consultants are even feeling the pinch in search advertising — ads bought against specific search terms — said Peter Pasi, the executive vice president of Republican digital politics firm Emotive LLC. Buying against some terms comes with significantly higher competition and cost per click than last cycle, he said.

"It's going to be very hard to buy YouTube in battleground states close to the election," Pasi added, meaning ads on YouTube. "It's selling very rapidly. There are some states that are close to completely sold. Not totally sold out, but almost completely."

Inventory purchased through ad networks — especially inventory touted as geotargeted to specific states — is also "much more expensive, if it's available," Pasi said.

YouTube ads are sold in two ways: Reserve inventory, which is available in advance to high-volume clients, and at auction. Google does not disclose how much inventory it sells as reserve and how much will be available at auction. So in strictest terms, what's demonstrably in short supply and available only at a premium on Google's platform is the ability to know for certain and far in advance where, when and at what cost specific ads will appear. A Google spokesman, Jake Parrillo, said Google ad sales executives were unavailable for comment thanks to the holiday week.

But Harris, the veteran of the Perry and Gingrich campaigns, says he's seen enough this election cycle to be concerned.

"On the Perry campaign, when we tried to buy inventory at auction on the marketplace a couple weeks out of the Iowa Caucus and my predecessors on the Perry campaign had not done reserve buys," Harris said, "there was no inventory left and even though we wanted to spend $3,000 to $5,000 a day, we were only able to spend hundreds a day."

He also believes that a curious bout of profligate spending on YouTube ads during the primary season by a super PAC supporting Ron Paul was enough to effectively box him out of the YouTube "InStream" advertising — ads that play before, during or after some YouTube videos — he wanted to purchase for the campaign. And he had a similar problem ahead of the Florida primary while doing work for the Gingrich campaign, he said.

Online politics consultants have long argued for a greater amount of spending on online ads using the argument that on the Internet, thanks to ever more sophisticated targeting techniques, a little advertising budget goes a long way. What they seem to be learning is that target audiences are also far smaller — and thus more dearly bought — than larger ones.

"I don't know what that means in terms of moving forward," Harris said, "because if digital folks continue to advocate for more and more spend, and we're already reaching these problems with inventory, what does that mean moving forward."

In Iowa, in order to spend that fraction of his online ad budget that he was able to spend, Harris had to shift his targeting to reach a broader group of people than he was hoping to reach — losing all the purported efficiencies of online advertising, he said.

"If it's not niche, and it's not targeted anymore, then what's the difference [between that and] than running it on TV?" he asked.