Political Spots Now a Bargain

Weak Economy Yields Lower Ad Prices

By Ira Teinowitz

In the annals of political advertising, the unthinkable is happening: TV spots are getting cheaper as the November election approaches.

Faced with a recession as well as advertising cutbacks by automakers and financial services providers, TV stations have sliced the price of political spots, political ad buyers say. In some markets, prices are as much as 15% to 20% lower than two years ago.
Reductions aren’t hitting every station or every market, and it’s difficult to say whether prices will rebound.

“What we have found in a lot of cities is that when we go to actually buy, we can bring in the buys for less than we planned,” said David Bienstock, president of Target Enterprises, Los Angeles, a major West Coast buyer for Republican candidates. “It’s very rare for rates to go down, but we are seeing in major East Coast, Midwest and West Coast markets instances where costs per [gross ratings] point are going down.”

Television stations are looking to the election to help reverse a sharp slide in revenue last year. Thanks to political ads and Olympics advertising, TV station revenue may rise 8.8% in 2008, compared with an 8.5% decline last year, according to numbers from SNL Kagan.

Whether those predictions will prove true depends on factors including the economic downturn. Nielsen in June said local spot TV spending in the first quarter was down 0.4% in the top 100 markets and more in smaller markets.

A Democratic media buyer who didn’t want to be identified termed the lower rates “a welcome surprise,” but said she wasn’t yet sure whether they will continue into the fall.

Another buyer said that beyond local candidates and initiatives, the presidential campaigns have benefited, finding they can buy ads in battleground states for less than expected.

A media representative for a number of stations, who also declined to be identified, said some stations have cut prices to increase the number of advertising sales units they sell. In the face of spending cutbacks by other marketers, stations have offered political advertisers big discounts for buying advance packages of ads.

“We all know the economy is bad, and it’s a natural thing to cut the rate to get more units,” the station representative said.

She said NBC Universal’s Olympics package is making it more difficult for non-NBC stations because some advertisers don’t want to air commercials in other programs during the two weeks of the Beijing Olympics.

Some stations are hanging back, realizing they likely will get the political ad money—at higher prices—if they wait.

Evan Tracey, chief operating officer of TNS Media Intelligence’s Campaign Media Analysis Group, which tracks political ad spending, said he can’t yet confirm the price cuts.

Won’t Last Forever
“My feeling is they are buying more for less, and negotiating good prices now, but as they get closer to Election Day, I suspect that trend will reverse itself,” Mr. Tracey said.

Mr. Bienstock predicted that even if the trend reverses, TV stations and politicians will at best see pricing for this year equal to the level of two years ago.

Representatives of the Obama and McCain campaigns either declined to comment or didn’t return calls seeking comment.