Politics Could Be Affecting Your Digital Performance
Industry experts are predicting a total digital ad spend for political efforts in 2020 to come close to $1 billion, with Facebook projected to take half of that. That is three times what digital ad spend was in 2016. With those kinds of budgets, it is almost guaranteed that your digital advertising efforts will be affected in some way.
But how exactly does the political season affect your digital campaigns? Unfortunately, it’s a pretty straightforward answer: every U.S. citizen falls into some digital advertising segment, and more than likely, they are falling into 3 or 4+ advertising segments. Because of this, multiple brands are competing for impressions on a single individual, raising the CPMs (or costs) associated with serving an impression to that particular person.
Think of it like this: let’s say you’re a cookware enthusiast. At any given time, multiple cookware companies are serving you ads through Facebook, Instagram and Google Ads because you are a high-value potential customer. For the sake of simplicity, we can assume that on any given day, CPMs for these brands fluctuate between $2 to $3.
Suddenly, Presidential candidates, Super PACs and other politicians add you to their segments as well. All at once, the CPMs for those cookware brands raise to $5 to $6 through the election cycle, cutting into their margins, return on ad spend, and potentially order volume.
What can one do to combat a U.S. election cycle? Well, sadly, not a whole lot. What we can do is prepare and make sure we’re aware of the ways in which these market fluctuations can affect your brand. With that said, here are 3 ways political season may affect your digital advertising campaigns.
#1. Rising CPM Rates
As mentioned in the example above, the political season will definitely raise CPMs, which is the cost you pay per thousand impressions (one of the most common billing structures for advertising). As your valued customers fall into additional segments during the political season, their attention becomes sought after more than ever. CPMs are inflated because of this. While you may be used to paying $3 to $4 CPM normally, budgets behind political advertising can raise that price to upwards of $11 CPM at times. Be very mindful of this – rising costs of CPMs become the driving force that affects everything discussed moving forward.
#2. Lower Returns On Ad Spend (ROAS)
At Untitled, we pride ourselves on being an agency that continually provides a minimum 4X return on ad spend (ROAS) for all of our eCommerce clients. However, it takes a bit more time and optimization during the political season.
With CPMs rising, the cost-per-acquisition (CPA) on a purchase can be higher than usual. Because of this, your ROAS is also affected.
There are ways to combat this if your business operates on tight margins and uses ROAS as the benchmark for advertising budget decision making and strategy. Rather than optimizing campaigns for lowest-cost, you may want to switch and optimize your campaigns for minimum ROAS. While purchases may slow down, you can at least make sure your campaigns will stop spending when CPMs rise to levels that result in a negative return on ad spend for your business.
#3. Lower Purchase Volume
The third-way political season may affect your digital advertising was touched on in the paragraph above: decreased purchase volume. You may be able to combat your ROAS getting out-of-whack, but in turn this will likely affect the amount of purchases or leads you’re generating through the election cycle.
This is definitely something advertisers should be aware of. If your business is used to a large volume of purchases coming in directly from digital marketing campaigns, you could see some of those numbers slow through September, October and early November.
#1. Rising CPM Rates
As mentioned in the example above, the political season will definitely raise CPMs, which is the cost you pay per thousand impressions (one of the most common billing structures for advertising). As your valued customers fall into additional segments during the political season, their attention becomes sought after more than ever. CPMs are inflated because of this. While you may be used to paying $3 to $4 CPM normally, budgets behind political advertising can raise that price to upwards of $11 CPM at times. Be very mindful of this – rising costs of CPMs become the driving force that affects everything discussed moving forward.
#2. Lower Returns On Ad Spend (ROAS)
At Untitled, we pride ourselves on being an agency that continually provides a minimum 4X return on ad spend (ROAS) for all of our eCommerce clients. However, it takes a bit more time and optimization during the political season.
With CPMs rising, the cost-per-acquisition (CPA) on a purchase can be higher than usual. Because of this, your ROAS is also affected.
There are ways to combat this if your business operates on tight margins and uses ROAS as the benchmark for advertising budget decision making and strategy. Rather than optimizing campaigns for lowest-cost, you may want to switch and optimize your campaigns for minimum ROAS. While purchases may slow down, you can at least make sure your campaigns will stop spending when CPMs rise to levels that result in a negative return on ad spend for your business.
#3. Lower Purchase Volume
The third-way political season may affect your digital advertising was touched on in the paragraph above: decreased purchase volume. You may be able to combat your ROAS getting out-of-whack, but in turn this will likely affect the amount of purchases or leads you’re generating through the election cycle.
This is definitely something advertisers should be aware of. If your business is used to a large volume of purchases coming in directly from digital marketing campaigns, you could see some of those numbers slow through September, October and early November.
In Summary
There is good news: the election is over on November 3rd. The majority of political ad budgets are spent by the end of October, so the light at the end of the tunnel is near.
We hope this blog has been informative. If you would like help optimizing your campaigns through election season, don’t hesitate to reach out to Untitled. Our Account team is standing by.
