Bringing political dollars Online.

I spent Monday and Tuesday of this week in San Diego–not hanging on the beach as I would have liked in mid-August, but attending and speaking at “All Things Political,” a training session for more than 100 political consultants put on by Campaigns & Elections Magazine and the eVoter Institute.

2006 is a critical mid-term election year and it all comes together this November, with general election races for all 435 seats in the House of Representatives, one-third of the U.S. Senate seats, a large number of state governorships and state and country row offices, and of course, a lot of early posturing by prospective candidates for the 2008 presidential race. Add to that dozens of ballot initiatives and referendums, and you’ve got a big election year unfolding. For political consultants, this time in this year, is the lull before the storm.

To give a sense of what this could mean in advertising dollars (the metric that we like to measure things by in this industry), more than $5 billion was spent on political advertising and promotion in 2004, and that number is expected to exceed $9 billion in the 2008 presidential year. Wow! That’s a lot of money. Mid-term years don’t tend to generate as much money, but they do tend to come pretty close.

As you might imagine, and as you might have read in MediaPost earlier this week, everybody is wondering what role the Internet and online advertising might play in these upcoming elections. While there are certainly some good indicators, one of the things that I learned at the conference was that we as an industry have some significant challenges if we hope to divert a significant amount of that spend into online advertising dollars. For online advertising to capture even 5 percent to 10 percent of political advertising spend by 2008, we’ve got a lot of work to do. Here are our key challenges:

Domain knowledge. Political advertising is rarely placed by traditional advertising professionals or agencies. It is placed by political media consultants, and they are a unique breed and a rather tight community. They speak their own language. To get their money, you need to get to know them and learn their business. It is a long-term process–and you have to start now if you have any hope to be ready by the time 2008 money is spent.

Focus on the Internet for tools, not media. Political campaigns are learning to love the Internet, but not for its advertising placement opportunities. Rather, they love targeted e-mail, Web sites, self-service online fundraising tools and cool viral marketing. They love the fact that the Internet has become an incredibly efficient method to find and communicate with volunteers and an extraordinary tool for cost-effective fund-raising. Historically, no major campaign has spent even one-half of one percent of its budget on online advertising. Of course, political consultants have also learned that every mistake their candidate makes in a public appearance is fodder for YouTube.

Love for television. Political consultants love TV. Why? Because it works for them. Because their candidates and their families love to see themselves on TV. Because political donors love to see their candidates and their families on TV. Because it is easy to buy and they know it well. And, most important, because the consultants can mark it up 15 percent and make a ton of money while buying. And yes, they still do make those kinds of margins, even when making $50 and $80 million dollar placements. They know GRPs and TRPs and aren’t very comfortable trying to understand what click-through rates should be on banner ads. They love targeting and frequency, but find it almost impossible to achieve online with any one online media property. They can buy local frequency on TV and cable all day, everyday.

Comfort with direct mail. They know and love direct mail. They have been using it for years, and it works. They know and understand database marketing and like what it can do with direct mail. They are beginning to love e-mail for the same reason, but typically only want to buy online banners if they are using them to drive fundraising to buy more TV–and paying for the banners on a direct marketing model.

Audience demographics. While the Internet has certainly become mainstream, it still under-represents those who are most likely to vote: older and more blue-collar–and over-represents those least likely or unable to vote: children, teens, students, and young mobile adults.

Given these rather daunting challenges, do we have a realistic shot at getting a 5 percent to 10 percent of political advertising spend online in 2008? Yes, I think so. Why? Because in the end, we know that online advertising can do things that traditional media channels cannot. In spite of the challenges, some smart consultants and candidates will start figuring that out–much like Howard Dean did with Internet tools in the 2004 primaries. These candidates will win because they learn how to harness online advertising–while fear, ego and competition will bring the others online behind them.

By Dave Morgan
Dave Morgan is Chairman of Tacoda.
Courtesy of http://www.mediapost.com