The Political Video Ad Shortage by the Numbers

In the few years that in-stream video ads have become popular among political campaigns, digital political consultants have complained about a lack of video inventory. It could get worse by October. Video ad firm Mixpo projects that political advertisers will demand as much as 48 percent more in-stream video ad inventory than will actually be available in October. The dearth of video ads is expected to affect several states with big statewide races, limited access to high-speed Internet, or relatively small populations. Many of those states are also important 2012 battlegrounds, where candidate campaigns and super PACs are already vying for precious video ad impressions.

Mixpo anticipates that at least 30 percent of desired in-stream video ad inventory needs will go unmet in New Hampshire, Montana, Virginia, Missouri, Washington, and Massachusetts. All of those but Washington and Massachusetts are 2012 swing states, and the campaigns, party organizations, and super PACs can be expected to spend heavily there both on television – and by extension digital video.

In New Hampshire, Mixpo projects the largest shortage – nearly a 50 percent gap between demand and supply of in-stream video. “They’re projecting to have a very high political spend per voter” in New Hampshire, said Matt Feeney, senior product manager at Mixpo, because they have a very contested gubernatorial race and very small population.

In the Granite State, Republican and Democratic contenders are seeking their party nominations in a September primary in the hopes of replacing retiring Governor John Lynch in the November election. The state has just 1.3 million residents, according to the U.S. Census Bureau.

In Massachusetts, Mixpo predicts 30 percent of in-stream video inventory demand will go unfulfilled. There, incumbent Republican Senator Scott Brown – who rode into office during the 2010 tea party wave – and liberal financial protection folk hero Elizabeth Warren are in a neck-and-neck battle for the Senate seat. Massachusetts has about 6.5 million residents.

The Video Ad Canyons of Nevada and New Mexico

The video supply/demand disparity will be less extreme in the swing states of Indiana, Wisconsin, New Mexico, Florida, and Nevada, according to the report. In those states, demand is expected to outpace supply by between 20 percent and 28 percent. Nevada is expected to have the most available inventory among the 11 states covered in the report, but will still only fulfill 80 percent of demand.

To determine the report’s findings, Feeney built a supply and demand model using industry projections of what political ad spending will be in 2012. He incorporated data from a March Borrell Associates reportwhich predicted that online political ad spending will reach $159 million in 2012, with around $35 million of that expected to go to in-stream video. He also used various ad pricing data, video consumption numbers and Mixpo’s own internal data to determine the projections. Analysis began in March and April, said Feeney.

The impending in-stream inventory depression doesn’t necessarily spell doom for political advertisers who want to run video ads online. They’ll still be able to embed video into display ads, which will afford lots more inventory opportunities. Indeed, GOP presidential hopeful Mitt Romney is currently running in-banner video ads featuring an extended version of a television spot describing what “Day One” of a Romney presidency would be like. The ads allow people to choose a donation amount and click through to a donation page.

Mixpo does have skin in the in-stream and in-banner video ad game as a tech partner to publishers selling video ad inventory such as Yahoo, BrightRoll, NBC, and others. However, the inventory problem that the firm’s report quantifies has been documented anecdotally for years by political ad buyers. In addition to serving the political ad market, Mixpo also works with corporate brand advertisers, which will also be affected by the lack of video inventory as the November election nears.

The Video Ad Deficit: Not a New Problem

In November 2010, as campaigns were running last-minute ads to mobilize voters for the mid-term election, a digital political consultant interviewed by ClickZ Politics said he had planned to run in-stream persuasion ads to undecided voters for a congressional campaign client through YouTube. Once he realized the amount of inventory in the particular DMA he needed to target was not available, he shifted his strategy. He said at the time that he saw prices for minimum bids for YouTube in-stream CPMs rise from around $8 to between $20 and $25 because so many advertisers were seeking the same inventory.

Increased ad prices are great for publishers of video content, and sites like YouTube and video ad networks usually have some amount of inventory available to the highest bidder. Yet, once impressions in a key geographic location run out, they run out.

“If everyone’s bidding up at that time it’s great for publishers like YouTube, but does that really create new inventory?” asked Mixpo CEO Anupam Gupta.

Campaigns were already scrambling to reserve video inventory in May, according to Josh Koster, managing partner at digital media firm Chong and Koster, which works with Democratic candidates and organizations. When he spoke with ClickZ at the time, he said he was already running into situations in which 80 percent of video inventory had been reserved for October and November.

Though video ads can be useful for voter mobilization, they’re used primarily for persuasion by political campaigns, since video mimics the powerful emotive quality of television – the medium they’ve traditionally used to sway voters. Video ads are also used to extend the reach of TV campaigns and to target voters who don’t watch live TV. A September 2011 bipartisan study showed 31 percent of all likely voters didn’t watch live TV and instead viewed programs through DVRs or watched in online or mobile environments.

Online video “is usually the inventory that the political veterans understand,” said Koster in May. “TV has been the core of political persuasion for decades – and so it’s easy for them to understand how the same kind of creative will make an impact when run enough times.”

Mixpo anticipates that online video demand in the 11 aforementioned states will surpass inventory supply by 80 million impressions in October. By the time November rolls around – crunch time for getting out the vote – Mixpo projects demand will exceed supply by 40 million impressions in the 11 states studied in the first week of the month alone. That will amount to 56 percent of demand not being met between November 1 and voting day November 6.

Still, by the final week of election season, political campaigns will have shifted to get out the vote mode, meaning they may reduce the amount of persuasion-based video advertising they run in favor of other formats such as display and search that push people to the polls and help them find their voting place.