Stations around the country last week were reporting a surprising influx of last-minute campaign advertisers, but not Columbus, Ohio’s WBNS-TV. The station ran out of airtime for any advertising-including political spots-through Election Day more than two weeks ago.
“There’s only 24 hours in the day,” said Tom Griesdorn, president and general manager of the Dispatch Broadcast Group’s CBS affiliate located in a state that is home to hotly contested congressional and gubernatorial races.
With more than 95 percent of all measured political advertising appearing on local TV, Mr. Griesdorn’s station is one of those in the right place at the right time to profit from what is expected to be a record $2 billion spent on political advertising in 2006. Ohio ranks sixth in the country on a list of states with the highest political advertising activity released by Nielsen Monitor-Plus Thursday. The state is regarded as a must-win state for control of one or both houses of Congress.
Stations count on the influx of political spending every two years as an important revenue stream. Considering the challenges to local stations’ ad revenues from cable and Internet competitors in recent years, 2006 certainly is no exception. For example, Hearst-Argyle Television disclosed recently that it expects to net $80 million, out of about $95 million gross, for political advertising this campaign season.
“It’s shy of what billed in 2004, but it’s 7 or so percent better than what we did in 2002,” Hearst-Argyle sales VP Kathleen Keefe said.
This year, a flurry of campaign spending on TV appeared to happen on the home stretch.
For the Post-Newsweek stations group, “It is a record nonpresidential election year” with a twist, President and CEO Alan Frank said. “There has been a remarkable influx at the last minute. We were just surprised by the number of people who had raised significant money and held it till the very end.”
The $2 billion that Evan Tracey, who tracks spending on national broadcast and cable networks and major broadcast stations for TNS Media Intelligence’s Campaign Media Analysis Group, estimated will be spent this year is 17.6 percent more than the $1.7 billion spent in 2004, the previous record high for political ad spending in a year.
Political advertising spending for 2006 zoomed past outside projections Oct. 27. Mr. Tracey said last week he expected at least $200 million to $300 million more to be spent by Election Day, Nov. 7.
Nationwide, the number of local TV political spots is up 31 percent from the last mid-term election in 2002, with the Democratic National Committee and the Republican National Committee ranking as the top spenders in local TV this election season, according to Nielsen Monitor-Plus.
Increases in political ad spending in this mid-term election year can be attributed to two main sources, said Brian Lane, senior VP of client strategy and product marketing for Nielsen Monitor-Plus.
“Together, the RNC and the DNC have shown a 130 percent increase in ad activity over 2002, and there has also been significant growth in advertising related to the various ballot initiatives across the country,” he said.
Mr. Tracey also said the surprisingly high numbers in a year that doesn’t have the advantage of presidential campaign ad spending reflects the number of state ballot initiatives and gubernatorial campaigns as well the tight House and Senate races around the country. He said this year’s spending also reflects changes in campaign finance laws that allow increased contributions and the lack of availability of broadcast time. Difficulty obtaining broadcast time has pushed up prices for spots, he said.
Stations can charge whatever the market bears for spots about ballot initiatives and other issues. Federal regulations dictate that stations must sell spots to federal-office candidates for the lowest unit price charged to any advertiser for the time slot over the previous 60 days, and the rate is established on a weekly basis.
“For our group, this has been a record mid-term year, and it has approached the total that was spent two years ago,” said Bill Spell, sales VP for Cox Television.
The laws of supply and demand appeared very much at play this year, confirmed David Bienstock, president of Target Enterprises, a major GOP buyer in the West. He said certain spenders “are willingly and almost gleefully happy to pay whatever rate is necessary to get them on the air.”
The national spending on broadcast and cable is in addition to local spot cable buys, which are also hitting record levels.
National Cable Communications, the media rep firm set up by Comcast, Cox and Time-Warner, reported that its sales of political ads will reach $135 million this year, up from $70 million two years ago and more than quadruple the $30 million of 2002.
Andrew Capone, senior VP of marketing and business development for the firm, said that figure underreports cable buys because some are placed directly with local systems. He estimated that as much as $250 million in political ads will appear this year on local cable.