Political TV Ads Uneven, Back-Loaded

Stations Await $3B Windfall from Pols, But When?

By Robert Marich -- Broadcasting & Cable, 4/19/2008 11:29:00 AM

All ships are not rising with the tide of political TV advertising.

The reason: Election-cycle spending is uneven so far. The entire TV medium is still in line to be awash with $3 billion in 2008 political advertising, up from $2.4 billion in 2006 and $1.7 billion in 2004, according to political-ad-spend researcher TNS CMAG (the latter acronym is for Campaign Media Analysis Group).

But behind that happy 2008 total are two unsettling wrinkles for TV stations: Geographic distribution is uneven and the big spending may arrive weeks later than the traditional midsummer.

This election season’s quirks stem from the unprecedented lengthy race between Sens. Barack Obama (Ill.) and Hillary Clinton (N.Y.) for the Democratic Party presidential nomination. In past presidential races, the two main party nominees emerged weeks earlier.

The uncertainty obviously holds back ad spending in the presidential race because even the Republicans that have a presumptive nominee aren’t sure which Democrat to target. More significant, there’s other political spending for Congress, state, local and advocacy groups, which take their cues from the two party standard bears. “We’re seeing a lot of political advertising just sitting on the sidelines that we would have expected to start being deployed around this time,” one TV-station sales executive said.

Any late arrival of political ads -- meaning a back-loading phenomenon -- looks to hurt TV stations because the real economic bon is tightening up commercial inventory, which indirectly drives up TV ad prices for other classes of advertisers. Federal Election Commission rules guarantee candidates the lowest unit price for airtime, so candidate ads alone aren’t gushers. If the political ads are late in arriving, the general tightening of TV-commercial inventory will be limited.

What’s happened so far on a geographic basis is that certain battleground states get heavy ad spending, but others simply get a fleeting burst. All 24 states in the Feb. 5 Super Tuesday primaries -- including New York, California, Illinois and Massachusetts -- got “only a dusting of advertising,” said Evan Tracey, chief operating officer of TNS-CMAG. “Yes, there was political spending, but just for a couple of weeks.”

Reflecting the feast-or-famine climate, upcoming primarily states Pennsylvania, Indiana and North Carolina are enjoying heavy ad spend, according to TNS-CMAG. Also doing well were earlier primary states Iowa, New Hampshire, South Carolina, Texas and Ohio.

Tracey cautioned that political ad spend is never evenly spread and is always difficult to predict, but so far this election season, geographic imbalance is significant and a back-loading phenomenon seems likely.

“The advertising will come, but there is the possibility of inventory issues in some places,” Tracey added. “There could be some states where there is more money available than time to buy” if political TV spending arrives late in the election season.

Tracey said one conspicuous bright spot is the Obama campaign’s ability to raise vast amounts of money. In yet another wrinkle in political-ad deployment, the Obama campaign is funneling an unusually large 40% portion of its ad spend into primetime -- compared with a more traditional 18% by rival Clinton -- buying less TV news that is usually the mainstay of political spending.

For the overall TV-station economic outlook, media analysts are predicting healthy TV-ad-spending gains in 2008 on the order of 8%-10% due to the anticipated political injection, but the play out so far puts that rosy forecast at risk. If the tsunami of political advertising arrives late, then the second quarter ending June 30 might be a dud for many TV stations and TV-station industry revenue forecasts for this year could be scaled back.

Indications are that the first quarter ended March 31 proved disappointing for TV-station revenue. NBC-owned TV stations suffered an 11% drop in first quarter local advertising, which parent General Electric attributed to poor conditions in the overall economy. Media General reported Thursday that its network-affiliated TV stations experienced a 1.2% revenue decline in the first quarter, which even sharply increased political ads could not push into positive territory.

To date, TNS-CMAG counted $388 million in 2008 political TV advertising so far. That’s $150 million spent by candidates themselves, $114 million for ballot initiatives and $124 million in issue and policy-advocacy ads.