Feb 27, 2024 - Business

New marketplace launches to shift more political ads to streaming

Illustration of a hand placing a ballot in an old fashioned television as if it were a ballot box.

Illustration: Aïda Amer/Axios

Madhive, a software platform for digital TV advertising, is teaming up with Fox Television Stations to launch a local marketplace for political advertising via (internet) connected television (CTV).

Why it matters: More streaming and digital TV companies are adjusting their policies to allow political advertising, contributing to the huge increase in political ad spend in the U.S.

  • Connected TV also offers campaigns more video inventory to target voters when local broadcasters run out of space.
  • Video inventory is critical for campaigns because it can be effective for voter persuasion. Digital ads on platforms like Facebook or Google Search are better for fundraising and list-building, which is helpful for primaries but not as critical for swaying voters during the general election.

How it works: Madhive's new marketplace will allow political and issue advertisers to buy TV ads at scale this election season across many different networks through internet-connected televisions.

  • That's notable because in the past, political advertisers were forced to mostly buy connected TV ads directly via each TV company or network individually — a cumbersome process compared to broadcast.
  • With a marketplace approach, political advertisers will be able to target niche audiences and geographies, like suburban mom voters or Latino millennials, across many connected TV platforms at once.

Between the lines: This is different from broadcast, where campaigns could traditionally only target voters across a set of a few hundred broad demographic market areas and by age.

  • With Madhive's marketplace, campaigns can hyper-target voters by congressional district or zip code. They can also import their own data to target specific types of voters.
  • Madhive's marketplace also includes targeting data from some of the biggest political data brokers across both parties, including Data Trust, TargetSmart, Experian and L2.

Zoom in: Fox Television Stations will be Madhive's first major client, leveraging Madhive's new offering at launch.

  • Madhive is currently in the process of working with individual publishers to establish guardrails around which types of ads they will or won't accept across their networks. Some publishers, for example, may be comfortable accepting ads about abortion. Others may not.
  • For Fox, the ability to sell political inventory via a marketplace like Madhive's allows it to expand its reach significantly, said Michael Page, senior vice president of digital sales for Fox Television Stations.
  • While Fox's local broadcast footprint only exists across 17 stations, the new marketplace will allow it to sell ads to clients in markets adjacent to where its stations operate. For example, Fox can now sell political ads targeted to people in Maryland for a Senate race there, even though its local D.C. broadcast network only reaches people in part of the state.

Zoom out: It's hard to build a political ad marketplace like this because it requires a lot of legwork to vet all of the ads for regulatory and legal concerns, like defamation and disclosure problems.

  • "It was a several-month process to be sure that we were complying because regulations keep changing," Madhive CEO Spencer Potts told Axios.

By the numbers: Campaigns are expected to spend at least $1.3 billion on CTV ads this cycle, up from a little over $1 billion during the 2022 midterms, per AdImpact. CTV made up roughly 12% of all political and issue video advertising in 2022.

The intrigue: While Congress has not passed any new legislation around digital political ads, the Federal Election Commission is eyeing whether and how campaigns should be allowed to use AI in ads. That's forcing publishers to be more cautious about automated political ad-buying systems.

  • "With the linear public airwaves ... if you're a campaign, you have a right to be on the airwaves, while there's obviously some vetting that goes on on the legal side. In the CTV universe, it's really up to the publisher to determine their criteria," said Page.

The big picture: More streaming companies are starting to accept political ads as the market opportunity grows bigger.

  • Hulu said it would allow political issue ads — in addition to candidate ads — on its streaming service in 2022, aligning Hulu's ad policies with those of Disney's cable networks.
  • Spotify brought back most political ads after a two-year ban in 2022 but said it would only host ads from known political entities and it wouldn't accept ads related to certain advocacy issues.
  • X, then Twitter, said it would bring back political and issue ads last year.

What to watch: Some companies, particularly tech firms, continue to ban political and issue ads, as they are wary of sparking regulatory concerns or messing with their consumer experience.

  • Netflix and Amazon don't accept political or issue ads, even though both are now heavily involved in selling CTV ads, both companies confirmed to Axios.
  • Publishers like Paramount, Warner Bros. Discovery and Disney, which all operate their own streaming services, accept political ads because they have long relied on political ad revenue for their broadcast and cable networks.
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