Political Advertising Economics
The billion-dollar industry of political advertising, from television to digital micro-targeting, and what the research says about whether it actually works.
A Multi-Billion Dollar Industry
In the 2020 US election cycle, total spending on political advertising exceeded $14 billion, nearly double the 2016 figure. Television still commands the largest share, but digital advertising has exploded: from roughly $1.4 billion in 2016 to over $4 billion in 2020. Facebook and Google are the dominant digital platforms, though Google banned political ads in the week before the 2020 election and Facebook has periodically restricted targeting options.
The economics are simple: political campaigns face a deadline (Election Day) and cannot save unused resources for next quarter. This creates a 'use it or lose it' dynamic that drives up prices. In competitive swing states during October, the cost of a 30-second TV spot can increase tenfold as campaigns outbid each other for limited airtime. Local television stations in battleground states like Pennsylvania and Georgia earn windfall profits every two years.