Campaigns looking for video ad buys better act quickly

By Steve Friess and Emily Schultheis, Politico

Friday, Aug. 3, 2012 | 2 a.m.

The Internet seems endless — like an infinite universe of gigabytes for tweets, Facebook photos and kitten videos.

But for one key commodity — political advertising — the Web is about to run out of room, at least on the popular video sites that campaigns in swing states, including Nevada, care about most.

And that has ad buyers for campaigns fretting the way they used to about TV and radio space: Whoever snaps up those last few prime-time spots in the final weeks of the campaign shuts the other guy out.

Search ads and display ads are more plentiful and still are available to campaigns. The ads in question are those 15- and 30-second spots that automatically play before videos on YouTube, Yahoo, AOL and other sites — and they’re either sold out in some markets or will be auctioned off at record prices, insiders tell Politico.

“There has been incredibly strong demand for online video advertising inventory in targeted states, so there is virtually no 30-second inventory left for the fall,” said Rob Saliterman, head of Republican advertising outreach for Google, which owns YouTube. Campaigns are “buying it up for September and October and the first week of November.”

Kari Chisholm of Mandate Media feels the pain in Nevada, where the firm is handling online strategy for Democrat John Oceguera’s bid to unseat Republican Rep. Joe Heck. Oceguera’s campaign has not reserved any of these prime-time online ads, known as “pre-roll,” because it didn’t know about the shortage, Chisholm said.

“It’s a fairly narrow audience, and we’re all trying to run through the same door at the same time,” said Chisholm, who was unaware that Google allowed reserved buys.

Las Vegas is a key market in Nevada, where a close U.S. Senate race and two competitive House races are competing for Internet ad time with the presidential campaigns. Super PACs, along with the campaigns of President Barack Obama and GOP hopeful Mitt Romney, long ago snapped up most of the available fall online pre-roll.

Space is limited because YouTube and other Web video providers, including Yahoo and AOL, enable advertisers to place spots to target potential voters either by category — news or politics, for example — or by ZIP code, meaning that the most desirable categories or geographic locations go quickly.

The sites estimate how many plays — or “impressions” in ad speak — they expect for videos viewed by the desirable demographics.

Advertisers, then, can buy those spaces ahead of time. Whatever’s left is sold as it becomes available in real time and, thus, becomes exponentially more expensive.

By late October, consultants predict, available space could cost more than $50 per 1,000 impressions, three times the norm, in battleground states such as Florida, Nevada, Ohio and Virginia.

Whatever wasn’t bought by the super PACs and the national campaigns in Nevada was reserved by the Senate campaigns. Ron Steslow, digital strategist for Republican Sen. Dean Heller, who faces Rep. Shelley Berkley, D-Nev., started buying pre-roll for the fall in March.

“Even then, a lot of the inventory was eaten up, but we got what we wanted,” said Steslow, whose firm Soapbox Strategic encountered similar issues buying pre-roll for Republican candidates targeted in Wisconsin recall elections. “There wasn’t a whole lot left in Nevada after we were done, though, and especially not in the demographics everyone wants.”

Indeed, other early warning signs abounded. Texas Gov. Rick Perry, the last major candidate to enter the race for the GOP presidential nod, ran into an inventory problem last winter.

“Even six weeks out from the Iowa caucus, we weren’t able to do mass buys on YouTube because the Romney campaign and the (Ron) Paul super PAC had bought all the inventory,” said consultant Vincent Harris, Perry’s online strategist. “So campaigns and super PACs that are waiting on large-scale Internet digital buys are really waiting at their own peril because they’re going to wake up in the middle of September and realize everything is already sold.”

Chisholm, too, saw the increased demand coming even if he didn’t realize he could jump ahead of it via reserved buys. In 2010, he recalled, pre-roll costs on YouTube spiked from $2 per 1,000 impressions to past $15 per 1,000 impressions in the final weeks before Election Day as he managed the re-election effort for Sen. Ron Wyden, D-Ore.

This year’s dearth is the outcome of a domino effect that begins with an unprecedented amount of money being poured into the few states expected to decide the presidency.

“The TV ad inventory has been bought up and there’s only so much direct mail you can send, so the campaigns have to put their money somewhere and the only thing left to purchase is the online space,” said Jim Walsh, CEO of DSPolitical, a firm that places targeted Web ads for candidates both as pre-roll as well as embedded in banner ads.

Soapbox has reserved millions of impressions in key markets and plans to sell them to campaigns at markups that will become more expensive as demand grows and supply dwindles. “We advise candidates to purchase their inventory no later than mid-to-late August if they want to play at all in the rest of the election cycle,” Steslow said.

The problem will be even more challenging for candidates in states in which primaries have yet to take place, such as Virginia and Missouri. In Missouri, for instance, Democratic Sen. Claire McCaskill must defend her seat against one of three well-funded GOP challengers still locked in a tough primary battle that won’t be settled until Aug. 7.

“There’s almost no way for any of us to plan our media buys into the fall until the primary is over, and that really does favor the incumbent,” said Ryan Hite, communications director for Republican candidate Todd Akin. “All three of us are stuck in the same boat. We’re going to have to see what’s left the morning of Aug. 8. We’re aware of the problem, but there’s no way around it.”

This year’s inventory crunch also may reflect the fact that the online video business still is maturing. That is, the more users watch online, the more impressions are available for sale. By the 2016 cycle, YouTube and others expect to have far more impressions to offer.

But the cost of impressions also will rise because online video enables advertisers to speak directly to the targeted audience, whereas television ads cost dramatically more but end up viewed by a far broader and less demographically efficient audience. That is, if TV watchers bother to watch the ads at all.

“Online video is a lean-forward versus a lean-back medium,” Saliterman said. “People lean forward to watch and they know there’s only going to be one ad before the thing they sought out starts as opposed to the way they lean back when they watch television.”