Where does political ad money go?

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Jorpho
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Where does political ad money go?

Postby Jorpho » Wed Aug 22, 2012 12:13 am UTC

Constantly stories are told of the millions upon millions of dollars in advertising that candidates throw around.

So, a query: once said money is tossed, where exactly does it end up? Are there people making vast fortunes off this sort of spending, whose best interests lie in further propagating the culture that leads to such spending?

I suppose broadcasters and billboard owners and such forth have set rates such that they might make the same amount of money regardless of who buys the ad space/time – or do they jack up their prices in election season due to increased demand?

(Between Adblock and not watching TV anymore, I find I for one am not easily reached by advertisers, or so I'd like to think.)

webzter_again
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Re: Where does political ad money go?

Postby webzter_again » Wed Aug 22, 2012 12:35 am UTC

Jorpho wrote:(Between Adblock and not watching TV anymore, I find I for one am not easily reached by advertisers, or so I'd like to think.)


We don't have cable TV (and the only over-the-air we get is PBS and CBS), but we do subscribe to Hulu. There are, I'm guessing, about 6-8 15 second advertising spots in a given 30 minute show we might watch. It's not possible to skip the ads (at least not on our Roku settop box). Between 4-6 of the ads we're seeing are either pro-Romney ads or anti-Obama ads.

Anyway, that complaint out of the way...

http://www.columbia.edu/~brg2114/files/AdEffects.pdf

Similarly, reports in the popular press indicate that candidates' demand
for political advertisements, whether in presidential or mid-term elections, cause advertising
rates to increase, with the eff ects being more pronounced in competitive markets (Associated
Press 2010; Cincinnati Enquirer, 2004; San Francisco Chronicle, 2012)


I'd imagine, the money ends up going into creating the ads and then most of the money is funneled to media outlets in the form of ad buys.

As for why, to again quote the above article (specifically, the second half of the abstract)

The results indicate signi cant positive
eff ects of advertising exposures. Both instrumental variables and fixed e ffects
alter the ad coecient. Advertising elasticities are smaller than are typical for
branded goods, yet signi cant enough to shift election outcomes. For example,
if advertising were set to zero and all other factors held constant, three states'
electoral votes would have changed parties in 2000. Given the narrow margin of
victory in 2000, this shift would have resulted in a di erent president.


So, it seems we have spending on political ads because political ads work. Extending that, we have massive spending on political ads because it's an arms race.

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Jorpho
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Re: Where does political ad money go?

Postby Jorpho » Wed Aug 22, 2012 1:12 am UTC

But the question is not why are they buying, but who is benefiting? And is there some reason networks (or ad agencies or graphic artists or whatnot) can't just quietly sell advertisement space/time to people who they like at a discount?

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Azrael
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Re: Where does political ad money go?

Postby Azrael » Wed Aug 22, 2012 2:24 am UTC

Jorpho wrote:But the question is not why are they buying, but who is benefiting? And is there some reason networks (or ad agencies or graphic artists or whatnot) can't just quietly sell advertisement space/time to people who they like at a discount?

Even the first bit is two separate questions, and I really hope you could piece together the answers: The money goes to various media companies (print, television, internet, radio) that ad space/time is purchased from. The benefit, arguably, goes to the person trying to get elected.


As for the second bit: Probably not. Equal time has an effect as well.

Tyndmyr
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Re: Where does political ad money go?

Postby Tyndmyr » Wed Aug 22, 2012 3:44 pm UTC

In the US, sellers of advertising are, for political purposes, required to give all comers the lowest rate. This is to prevent obvious partisan crowding out via spiking prices...but it also tends to mean that political advertising is somewhat less costly on average. Probably contributes to the glut.

But really, the money gets splashed around to basically anywhere they think will get views. TV. Internet. Sign makers. Wherever, really.

pedroj012
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Re: Where does political ad money go?

Postby pedroj012 » Sun Aug 26, 2012 1:57 pm UTC

Are there people making vast fortunes off this sort of spending, whose best interests lie in further propagating the culture that leads to such spending?


I'd say the people making the vast fortunes aren't the ones receiving the ad money, but the ones giving it to the politicians in the first place. Your Goldman Sachs and whatnot who then squeeze out of tons of bullshit later when their guys get elected.

And a few years ago when democrats still had the house there was the fair elections act that was supposedly going to change things, but somehow it didn't make it through. I'd imagine those corporations who have an interest in the status quo might've played a part.

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Djehutynakht
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Re: Where does political ad money go?

Postby Djehutynakht » Tue Sep 04, 2012 3:56 am UTC

Jorpho wrote:But the question is not why are they buying, but who is benefiting? And is there some reason networks (or ad agencies or graphic artists or whatnot) can't just quietly sell advertisement space/time to people who they like at a discount?



Well, regarding the United States, it's currently law (I think by legislation but maybe by court decision) that all political candidates have to be given equal advertising opportunities (I think in television/newspaper/radio, I'm not exactly sure how it works)... but yeah.. you're not allowed to be biased in selling your advertising space.

liveboy21
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Re: Where does political ad money go?

Postby liveboy21 » Tue Sep 04, 2012 12:11 pm UTC

Djehutynakht wrote:
Jorpho wrote:But the question is not why are they buying, but who is benefiting? And is there some reason networks (or ad agencies or graphic artists or whatnot) can't just quietly sell advertisement space/time to people who they like at a discount?



Well, regarding the United States, it's currently law (I think by legislation but maybe by court decision) that all political candidates have to be given equal advertising opportunities (I think in television/newspaper/radio, I'm not exactly sure how it works)... but yeah.. you're not allowed to be biased in selling your advertising space.


Wait, all political candidates have to be given equal advertising opportunities? So are there pro Obama ads on Fox News? and are there pro Romney ads on [insert pro democratic party outlet here, I can't think of one] ?

I think that it's likely that there are some laws governing this though. If you knew that Obama had raised a billion dollars (American billion) and that he was willing to spend a large chunk of that on ads, shouldn't you see the price of ad space jump up?

Tyndmyr
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Re: Where does political ad money go?

Postby Tyndmyr » Tue Sep 04, 2012 6:08 pm UTC

liveboy21 wrote:Wait, all political candidates have to be given equal advertising opportunities? So are there pro Obama ads on Fox News? and are there pro Romney ads on [insert pro democratic party outlet here, I can't think of one] ?

I think that it's likely that there are some laws governing this though. If you knew that Obama had raised a billion dollars (American billion) and that he was willing to spend a large chunk of that on ads, shouldn't you see the price of ad space jump up?


Equal opportunities does not mean equality in outcomes. Obama and company, I'm sure, realizes that reaching the people on Fox is likely to be more difficult than reaching people via another medium. Fox viewers are going to be a fairly hard sell for him.

All it means is that Fox can't tell Obama "Sorry, the price for Romney is free. The price for you? One billion dollars".

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omgryebread
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Re: Where does political ad money go?

Postby omgryebread » Wed Sep 05, 2012 2:28 am UTC

Djehutynakht wrote:
Jorpho wrote:But the question is not why are they buying, but who is benefiting? And is there some reason networks (or ad agencies or graphic artists or whatnot) can't just quietly sell advertisement space/time to people who they like at a discount?



Well, regarding the United States, it's currently law (I think by legislation but maybe by court decision) that all political candidates have to be given equal advertising opportunities (I think in television/newspaper/radio, I'm not exactly sure how it works)... but yeah.. you're not allowed to be biased in selling your advertising space.
The equal-time rule (47 USC 315) only applies to radio and television broadcast. I'm not sure, but I don't think there's an equivalent law for newspapers. It's quite possible that an equivalent law for newspapers would violate the First Amendment.

EDIT: Woo, did some research, and I'm right. Miami Herald vs. Tornillo, the US Supreme Court found that "right to reply" laws were unconstitutional because they compelled a newspaper to publish something.

418 US 241
avatar from Nononono by Lynn Okamoto.


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