TV biz savors windfall from political ads

Tight race has brought big spending as stations look to even out leaner years

Hurricane Sandy may have temporarily sidelined President Obama and Mitt Romney’s campaign efforts, but in the final stretch of election 2012, TV stations in battleground states are seeing an unprecedented advertising bonanza.

Station groups expect to reap record sums for political spots, even if viewers may find themselves numbed by an endless onslaught of messaging. The volume has even resulted in a scarcity of airtime for blurbs in some dayparts.

Monday was the second largest billing day of this election cycle, said Dan Sinagoga, VP of political advertising for Comcast Spotlight, the local TV and online sales division of the cable giant, and he expected volume to remain heavy throughout the week.

According to a Wells Fargo analysis of figures from the Campaign Media Analysis Group, as of mid-October, total local TV political spending neared $1.65 billion, and the final figure is expected to approach $3 billion. CBS, News Corp., CBS, Sinclair, NBC Universal, Gray Television and LIN Media are among those that have benefited the most. Some estimates are that total ad spending across all media could reach $5 billion.

The uptick is especially apparent in the presidential race. According to the Wesleyan Media project, more than 915,000 ads aired on broadcast and national cable TV from June 1 through Oct. 21, a 44.5% jump from the 2008 cycle.

“It is unbelievable; I have never seen anything like it,” said Bob Prather, prexy and COO of Gray Television, which has 36 stations in 30 markets, including Ohio, Florida, Colorado, Michigan and North Carolina and Wisconsin.

“Obviously, Mother Nature threw a little bit of a monkeywrench at the entire political ad community,” said Comcast Spotlight’s Sinagoga of Hurricane Sandy’s immediate impact on the campaigns’ messaging. But as airtime grows scarce in key markets in the remaining days before the election, the TV biz as a whole is benefiting.

Sinagoga said sales on networks like CNN, TNT, USA Network and MSNBC are reaching “maximum density,” and that they are seeing campaigns spread their wealth across more networks reaching more niches.

“Most of the political ad buys we are seeing are anywhere from 25 to 30 networks deep,” he said. “You seeing the money get spent across a broader range of channels.”

Sinagoga said that campaigns, anxious to reach various women’s demographics, have bought spots on Lifetime, Food Network, Hallmark Channel, HGTV and even the Weather Channel. Overall, spot cable has grown from 4% of political TV ad buys in 2004 to 20% in 2010 to 22% to 25% this cycle, he said.

Overall, there is a scramble for placement in the most desirable dayparts, like local evening newscasts.

Campaigns are now reaching the point where too many dollars are chasing too little time. By law, stations generally have to provide time to candidates, selling them spots at the lowest market rate, and forcing some channels to bump traditional advertisers.

But what happens when all of the ad time is given to candidates with that priority?

“I am expanding breaks as much as I can without driving viewers completely crazy,” said Lisa Howfield, VP and general manager of KSNV, NBC’s affiliate in Las Vegas, which has added 30-second increments to some breaks.

Howfield said that ad spending this election year “is not only more than four years ago, but it is more than two years ago, which we thought would never happen again.”

A difference this cycle is that campaigns are reaching more into all parts of the day. A popular place for campaign spots at KSNV, for example, has been during “The Tonight Show With Jay Leno,” “Late Night With Jimmy Fallon” and even “Last Call With Carson Daly,” as campaigns target younger audiences.

Howfield also predicted heavy spending “right up until the polls close.”

While she’s mindful of not alienating regular advertisers, Howfield said the political windfall “is the shot that we needed. … If businesses are struggling, broadcast stations are struggling. We have had some difficult years.”

Gray Television’s Prather said the volume of advertising is indeed welcome — and has been heavier than predicted.

Sales at Gray’s Reno station are “way off the charts,” he said, while the group’s Madison affiliate is benefiting not just from being in a swing state but having a competitive Senate race as well as the gubernatorial recall vote that took place in June. The additional political coin will enable Gray “to pay down a lot more debt than we thought, faster than we planned.”

Stations have seen a crunch in local newscast inventory, Prather said, and they have been trying to entice campaigns to consider the option of digital channels at lower prices.

He also said that campaigns have gotten savvier about how they spend their money in the final week of the campaign. Where they place their money is viewed as much as a competitive strategy as it may be a way to obscure their gameplan to their opponents.

The Obama campaign, for instance, “has jumped back into Wisconsin,” with plans for a buy of $300,000 to $400,000, Prather said. Meanwhile, Prather said his station manager in Greenville, N.C. told him that the Obama campaign informed him about a week ago that it might pull ads. “I frankly haven’t heard whether they did or not,” Prather said.

And don’t expect the TV windfall to dry up entirely once the votes are cast next Tuesday. Political spending may be down after the election but it won’t be non-existent.

Kip Cassino, exec VP of Borrell Associates, which tracks local advertising, said that “some of it will not stop.”

“We have developed an industry out of political advertising,” Cassino said. “You are almost going to see a neverending campaign, a continuous flow of issue ads, PAC ads.”

Comcast’s Sinagoga has pointed out that if Romney wins, “You will see health-care ads through 2013 positioning Congress for the 2014 election with hopes to repeal ‘ObamaCare.’ ”

The result has been a marked increase in the cost of elections at all levels. While stations can only charge candidates the lowest market rate, even those rates have gone up this season, the New York Times reported this week.