In 2012, President Barack Obama's re-election campaign led the pack in TV arbitrage -- buying underpriced cable spots to reach niche voter groups. Though insiders say plenty of opportunities remain for such efficient TV buying by political advertisers to perpetuate in 2016, don't expect a repeat that will match the scale of the Obama operation.
"I did huge arbitrage" for the 2012 Obama campaign, said Carol Davidsen, former director of integration and media analytics at Obama for America who now serves as VP of political technology at TV data firm Rentrak. But this time around it will be more difficult to replicate the approach she was instrumental in bringing to political TV buying through the "Optimizer" system she helped build for OFA.
"Arbitrage will never go away because sellers will never have the same appreciation of a buyer's target audience; however, in the 2016 cycle there will be more balanced information between buyers and sellers about the value of inventory through the political lens," suggested Ms. Davidsen.
Indeed, as better-funded and more sophisticated political buyers gear up for the election season by investing in voter data and analytics to build segments of targetable voters, some TV sellers have done the same in the hopes of pricing their audiences to better match today's political buyers' criteria. Since 2014, Rentrak has partnered with TV firms including Viacom, Meredith and Katz.
"Now even the stations and inventory owners are looking at that kind of data," Ms. Davidsen said.
Standard TV rate-card prices historically have been based on general adult audience viewership data. Using set-top box data, voter data and other third-party information, smarter TV buyers are able to uncover efficiencies by buying programs that reach specific audiences whom they determine to be more likely than the broader population to be persuaded to vote for a certain party or candidate.
"There are absolutely opportunities to target undervalued inventory," said Daniel Huey, deputy director for Independent Expenditures at the National Republican Senatorial Committee. Despite more audience-centric offerings from sellers, buyers still have the upper hand because networks don't know which target audiences each buyer aims to reach, he suggested.
Especially during the GOP primary race, when each candidate appeals to distinct voter niches in key districts, this could be a factor.
"The arbitrage to the extent that the Obama folks were able to exploit it in 2012, I don't think it will be there," said Deep Root Analytics CEO Brent McGoldrick, looking ahead to 2016. After initial presidential debates, Republican presidential hopefuls such as Jeb Bush and Marco Rubio will develop coalitions of supporters with their own unique demographics and characteristics, he said. That will help create pockets of undervalued inventory. "I don't think that arbitrage completely disappears this quickly," he said.
Proponents of data-driven TV audience buying still confront obstacles when it comes to actual adoption of these innovations.
"I wouldn't underestimate" bad media planning by a Super PAC, said Zac Moffatt, co-founder of Republican tech and data firm Targeted Victory, whose firm is working with Scott Walker, Rick Perry and American Crossroads in separated groups. "There's still a lot of room for inefficiency," he said, noting that some decision-makers don't think that the data is worth paying for. "They would rather base it on their historical gut as a better indicator."
And, while some predict that, as programs are re-evaluated, some broadcast prices could go down as cable prices go up, that may prove to be more theory than reality. Said Mr. Huey when asked the whether audience buying could depress broadcast rates, "Ideally yes. But so many political dollars are being spent on smaller level campaigns that can't afford those types of analytics, it will do more than enough to keep those prices inflated."