By CASEY NITSCH
Observer Contributor
April 22, 2008

Although experts predict online political advertising will be bigger than ever this year, the Internet still lags far behind other media in most candidates’ promotional budgets.

Politicians will spend $73 million on Internet ads in 2008, according to a report released by research firm PQ Media in Stamford, Conn. However, this represents less than 2 percent of their total advertising spending, which is expected to reach an all-time high of $4.5 billion in 2008.

Although the rise in overall campaign spending is driving the growth of online advertising, politicians still use the Internet far less than other advertisers do.

“Whereas commercial advertisers spend about 5 percent to 10 percent of their advertising budgets online, political and advocacy groups spend about one-tenth of a percent of their budgets,” said Michael Bassik, a vice president for the advertising firm MSHC Partners, in an e-mail.

Because of the presidential election, political online spending will jump to about 1.6 percent in 2008, which represents a 60 percent increase from the $29 million spent in 2004.

Spending grew during the hotly contested 2006 congressional elections as well, when candidates spent $40 million online. The PQ Media report said that the acrimonious political environment, as well as the lack of an incumbent or clear frontrunner, could contribute to the growth of spending in 2008.

The report also predicted Internet would grow the fastest out of the nine media segments analyzed. However, this increase will move it from last place to second-to-last– ahead of magazines.

“The folks running these campaigns are not used to it. They’re not really using it as an advertising medium,” said Kip Cassino, vice president of research at competing media firm Borrell Associates. “These folks are clever, but they’re not forward-thinking.”

Broadcast television will outstrip the other eight segments as usual, commanding 51 percent of this year’s spending.

Some experts attribute television’s continued dominance to its ability to communicate emotions better than other media.

“The Internet is not as good as TV when it comes to branding,” said Gordon Borrell, CEO at Borrell Associates. “It’s good at giving people information to act on immediately: click here to make a donation.”

Fundraising is the only significant way candidates have used the Internet so far.

“The number one reason people advertise online is because they think they can generate contributions. Most think the Internet is best used as a cash register,” Bassik said.

Another strategy is to use the Internet to target small audiences, by placing ads on the Web sites of community organizations and local political groups.

“They use it not to increase the reach of a message, but to increase penetration in a certain demographic, to achieve 100 percent coverage in that one area,” Borrell said.

According to the report, other chunks of the online advertising budget go to e-mail campaigns, which are seen as a less effective but cheaper form of direct mail campaigns, and paid placement on search engines the report.

As these areas of spending increase, Internet-based companies are beginning to reward candidates who use them for advertising. The top three donors in the communications industry, according to opensecrets.com, an online campaign finance tracker, are Microsoft, Cisco Systems and Google. All of the companies gave between 60 and 80 percent of this year’s donations to Democrats.

Almost two-thirds of donations by communications companies in 2008 went to Democrats as well, but the Internet is the only subsection of the industry where Barack Obama leads Hillary Clinton in donations received.

Obama has received 43 percent of donations from Internet companies, and Clinton has received 36 percent.

“I think Obama is the stand-out candidate who really gets it. From advertising to social media, he is the true image of the Internet candidate,” said Bassik.

Borrell and Kate Kaye, news editor at interactive marketing firm ClickZ, also put Obama ahead of Clinton.

“The McCain and Obama campaigns have been the predominant online advertisers of the three. Clinton is doing some stuff, but it tends to be a little less innovative in its approach. She tends to focus on fundraising specifically,” Kaye said.

Clinton’s Web site, unlike those of other candidates, suggests specific amounts for visitors to donate.

“McCain and Obama are a little more receptive to the idea that online can be valuable in more ways than just gaining donations. They’d probably love to have people register to volunteer or make donations, but there’s a goal there beyond that too,” Kaye said.

Borrell said any idea that Internet advertising would come to the forefront in the near future is unrealistic. Instead, the medium will continue to experience slow, steady growth as it proves its worth to advertisers.

“Take a look at political spending in the 1950s: Not much of it was spent on television, even though it was this great new medium,” he said. “They look at the data and they see that online has tremendous reach, equivalent to that of television. But they’re very afraid to change their spending habits.”

Borrell said that fear is ubiquitous in advertising but carries extra weight in politics, where it is compounded by the finality of failure.

“They have a very short window,” he said. “If they make a mistake, the candidate loses.”