PRESIDENTIAL ELECTIONS 2024
Mexico will go to the polls next summer to elect a new president, as well as to elect more than 20,000 officials, including senators, deputies, governors and local congressional seats. This is the highest-volume ballot to date.
Faced with this situation, the question that every marketing, purchasing director or anyone in charge of the advertising budget at a company is asking themselves is: :
how does this affect the negotiations with tv stations?
At Media Auditors we want to support you with our insight and expertise regarding negotiations. The objective is to identify competitive advantages when negotiating rates taking into account that political parties will set the standard in the demand for advertising space, generating a higher competition.
The first thing to consider is that the presidential elections will be held on Sunday, June 2 of 2024, meaning that the advertising saturation will affect the 1st and 2nd quarters. Further down the line, the 4th quarter will be where most of the advertising budget is concentrated: the 3rd and 4th quarters account for close to 60% of the investment made by advertisers in TV stations.
So first of all: keep calm, it is not too alarming and the year is very long.
It is true that, unlike in previous years, television companies have accelerated the communication processes of commercial policies and intend to advance the negotiation schedule. Everything indicates that we are going to have a year with a significant number of companies that will close early, then there will be a period of calm followed by a late closing in the negotiation process by a large number of firms. This is mainly due to the fact that election years are periods of economic uncertainty, but the latest report (October’23) from the IMF has just published very positive data of a 3.2% growth of the Mexican economy for 2023 and 2.1% for 2024.
There is no evidence that makes us think that businesses increase their investment in TV during election years. In previous election years, such as in 2012 (Enrique Peña Nieto) and in 2018 (Andrés Manuel López Obrador) the behavior of investment increase was reversed, in 2012 there was an average increase in investment by companies in TV stations of 6.9%, while in 2018 investment decreased by 1.3%. Being an election year does not affect TV advertising investment, it affects the economic outlook, which in turn is influenced by the political climate.
So, the fact that it’s an election year should not lead us to believe that there will be a greater investment, nor the opposite..
What should make us consider is that the investment in television networks increased by 3.9% in 2023 compared to the previous year. As we have mentioned before, Mexico’s economic prospects for 2024 are not bleak; the inflation rate in August was 4.64%, and the trend over the last 12 months has been downward.
THIRD CONSIDERATION: DOES THE LAW OF SUPPLY AND DEMAND AFFECT PRICE?
We would like to break with the urban myth claiming that TV stations will have extra income during an electoral year which will generate a strong position when negotiating with the companies.
Nevertheless, it must be considered that television stations have divided their projected revenue between commercial income from corporate advertising budgets and public income from public administrations and agencies such as the Republic’s Presidency, Secretaries, Senators, Governorships and Local Congresses.
In other words: presidential elections do not influence the commercial and negotiation efforts of those involved in negotiations with television stations. There is no budget transfer between the political and business sectors.
Although the law of supply and demand is enforced, there is no shift produced by the additional income gained from the presidential election.
FOURTH CONSIDERATION: In an election year is there an increase in prices due to advertising saturation?
Once again: NO.
If we consider the election of President Enrique Peña Nieto (2012) and that of Andrés Manuel López Obrador (2018), in the first case there was a 2.2% increase in rates by the television companies, while in the second there was a 1.7% decrease in rates.
Tariffs (tariff increase in 2023 of 0.9%) and inflation (2023 will probably close around 3.5%) will have a higher influence in prices than the effect caused by election year (we must remember than presidential elections are on June 2 and there is still a long year ahead of us).
FIFTH CONSIDERATION: INFORMATION IS POWER
Regular and constant information on the evolution of negotiation closings, investment increases and negotiation conditions is important to close negotiations adequatly and manage a company’s budget efficiently.
Much will be said and commented depending on the source of information, but the reality may be quite different.
One thing that does occur in election years is a greater dispersion of results, in other words, average data is not usually very accurate, since we find totally disparate closings between companies: one advertiser’s investment situation versus another’s can generate substantial differences in rate increases/decreases
Political actors are aware that they have limitations and guidelines applicable to their advertising on television and radio.
Political parties and Electoral Authorities shall have the following daily minutes on each radio station and television channel combined. This will apply to the different campaign stages.