Political ad dollars drive brands and candidates to CTV

With Election Day around the corner, political advertising is approaching its peak. Traditional television ad spots have become scarcer, forcing candidates and brands to consider digital venues that have more abundant inventory. With more platforms than ever offering advertising this election cycle, streaming and connected TV (CTV) are natural destinations.

“We have the growth of the streaming marketplace in general, says Michael Leszega, vice president of global market intelligence at Magna. “Then above that, we have put this surge in political spending across all media channels. The rising tide is lifting all boats.”

This election cycle, political CTV ad impressions have increased 489% month over month, per Madhive. EMarketer projects that about 13% of political ad budgets are earmarked for CTV in 2024, compared to just 2.7% in 2020.

The deluge of political ad spend — especially in battleground states — is driving nonpolitical ad dollars to CTV. In fact, for some agencies, it’s a strategic necessity at a time when linear inventory is in short supply across those markets.

“If a client is live with media in swing states, we’re basically recommending putting more money to digital platforms like connected TV,” Ellyn Savage, the vice president of media at MindgruveMacarta, tells The Current.

“Our spots can get bumped and it’s kind of risky even if you plan upfront. So for a lot of our budget, we do more with private deals programmatically on connected TV instead during that time frame than we did earlier in the year,” she says.

It helps that over two-thirds of Americans are watching CTV, according to Emarketer. With every major streamer except Apple TV+ allowing for advertising, Magna estimates around 20% to 70% of their audiences can now be served ads. The current shift to streaming mirrors a larger change in the advertising industry that is happening at a faster rate than ever. 

“Humans are no longer connecting via traditional means,” says Kelly Metz, OMD chief investment officer. “They have more options. A lot of it — particularly entertainment — is going to be video on demand. It’s going to be delivered in a fully addressable, dynamic advertising environment.”

Why politicians and brands are shifting toward CTV

Political ad spending is projected to reach $12.32 billion in 2024, according to Emarketer. Part of that is because election fundraising is at an all-time high, leading to a 125% political ad spending growth rate between 2020 and 2024, per Magna. 

“Political strategists are simply trying to reach people where they are, plus most of streaming is consumed on connected TVs,” says Vincent Letang, executive vice president of global market intelligence at Magna. “It’s addressable, so you can target specific states on the screens.”

Even as linear TV inventory in battleground states gets snapped up quicky by advertisers, many campaigns are now seeing the virtues of running on connected TV. Traditionally, political campaigns have relied on linear ad spots to reach older Americans, but it’s no longer an either/or proposition for campaigns because older voters are also cutting the cord.

Keynes Digital has observed an 8% increase in CTV CPMs among swing states.
CEO Dan Larkman attributes the increase to the fact that even older audiences are becoming streamers, making CTV a viable way to reach them.

“What we’ve seen is an adoption of older generations of FAST [free ad-supported television],” Larkman says. “The over-55 [demographic] is the biggest segment of cord-cutters this year. We know that when it comes to the election cycle, for better or worse, it tends to be more targeted to slightly older demographics who are more likely to go out and vote, especially in the swing states. So I think that we’re seeing that nice shift toward connectivity.” 

However, there is room for everyone. The streaming ad marketplace has grown about 90% from 2020 to 2024, according to Magna. This can give brands looking to serve nonpolitical advertising more spaces to do so, at a lower cost than previous years. Keynes has also seen a 2.5% decrease in CPMs in non-swing states this year, giving marketers some cost-effective opportunities.

In addition, many platforms have blocked or placed restrictions on political advertising in 2024. For example, Meta has barred political ads from Oct. 29 through Nov. 5, while TikTok has banned all political advertising.

“Social media platforms, specifically Meta, are taking a stance against really having a lot of political spending on their platforms, especially close to the election cycle,” Magna’s Leszega adds. “I don’t think they want to be front and center again as they were four years ago around the political discussion. So those dollars that we saw in 2020 on Facebook, they’re really being shifted elsewhere.” 

What this means post-election 

While the political dollars will fade away in November, the benefits of streaming and CTV advertising will stay. Big-budget brands that want to see sales results could be more likely to take up the mantle of buying these ads, especially as prices further normalize after the election ends and shopping season begins. 

“On my connected TV buys, oftentimes my platforms could show me order numbers with order amounts for every order associated with an IP address that saw a spot prior to a purchase,” says Mike McHale, head of activation at Noble People. “It’s definitely a more, sort of, accountable medium.” 

Still, some believe the industry might need a little more time before that major shift of budgets to streaming and CTV becomes permanent. While some brands are moving in the direction of streaming and CTV because of trackability, reporting and data, Keynes’ Larkman doesn’t expect the majority of dollars to shift away from linear TV until 2028, partly because there are not yet enough audiences in the streaming space. Such a change, when it comes, could usher in a further consolidation of networks, which may encourage more people to pay for streaming services due to lower prices relative to cable.

“Adoption of viewers is always going to be ahead of adoption of advertisers,” says Larkman.

Linear TV’s hold on major sports events keeps advertisers on traditional channels, Magna’s Letang adds. The company is also predicting 2028 as the year that streaming and CTV budgets outpace linear TV.

“There’s no doubt about [the shift of majority budgets to streaming and CTV] in the long term, but it won’t happen in the short term,” he says.

What has stopped brands in the past has been the cost of CTV advertising. While social used to provide the most cost-effective reach, since 2020, CTV CPMs have dropped about 30%, according to OMD. Streaming and CTV are also offering more big-ticket advertising opportunities than ever, with companies like Amazon, Netflix and Warner Bros. Discovery streaming live sports.

“If you look at the media opportunities that are on the table in Q4, this is obviously peak retail season,” says OMD’s Metz. “This is also peak consideration season for many advertisers because of the impact of the NFL and the number of eyes on TV screens. The NFL brings everyone back, and so does the weather. So this is a ripe opportunity to reach these consumers where they are most engaged.”

Metz points out that some brands didn’t need political marketing successes on CTV to convince them to make the switch. For her clients, the major shift in dollars from linear TV to streaming actually came in 2023.

“There’s no going back, because this is just the reality of the modern world,” Metz says. “If you look at how consumers connect, how we have to reach them, and how you want to engage them, they’re connecting via digital streams, and so you’ve got to embrace those advertising opportunities and manage that on behalf of your clients.”