Advertisers Will Feel Impact of Election - Broadcasting & Cable

Advertisers Will Feel Impact of Election

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Americans tend to fixate on the presidential race, but it’s the congressional and Senate races that often make the difference in politics. In the near future, most issues relevant to advertisers will be driven by popular, congressional or regulatory pressure and less by the presidency.

For example, while John Edwards made direct-to-consumer (DTC) drug advertising a key issue while he was campaigning, concern over drug pricing is unlikely to abate even though the Kerry-Edwards ticket was defeated. DTC marketing will be the most important advertising-related topic of the next four years. Support for restrictions on these commercials has been bipartisan, and consequently Edwards’ defeat will not eliminate the issue.

Altering such a large advertising category (approximately 5%, or $1.5 billion, of all national television advertising) would affect inventory availability and prices in the short-term. At the FCC, aside from ownership regulation, commissioners’ positions do not fall neatly along party lines. Consequently, it is difficult to predict the outcomes of issues under their jurisdiction.

But as for ownership, local media would most likely be affected by changes to ownership rules.

The FCC has also been considering how much bandwidth to allocate to local TV stations for the migration from analog to digital broadcasting. The outcome remains as uncertain as ever but may result in a massive expansion of local “channels.”

Media concentration, another political buzz phrase, may cause higher pricing, but as we have seen from recent Clear Channel results, at high levels, media suppliers may become more dependent upon advertisers and be forced to constrain price increases. Even when higher prices result, more concentration may improve the efficiency of advertising transactions.

“À la carte” rules would allow consumers to choose which cable channels they receive. The FCC, at least, seems to have concluded that à la carte causes as many problems as it solves, but it’s not a dead issue.

Indecency is intimately tied to the à la carte matter. One possible outcome that may satisfy advocates of cable indecency regulation (without violating the First Amendment) is to place the power of controlling perceived indecency in consumers’ hands by allowing them to have à la carte rights. But à la carte would put the demand for ads on fewer fully distributed networks.

Finally, changes probably will be made to campaign-finance laws. Don’t expect it to be mandatory that political donations become anonymous (which would fundamentally alter how elections are financed and result in scaled-down election budgets), but Congress will likely attempt some changes to the current laws.

This is important to local advertisers, because much of the commercial inventory in swing states was consumed by political advertising. Spot pricing was likely higher for others, or, alternately, it “crowded out” advertisers from buying in affected markets.

But all of this takes a back seat to the real issue. Over the next four years, the most important political consideration for all advertisers will remain the fairly familiar: the state of the economy.

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