Not Politics as Usual for Traditional Advertisers

NEW YORK With political ad spending in New Hampshire starting earlier than ever, traditional advertisers have already been bumped off the air on the state’s dominant TV channel, WMUR-TV Manchester, the station’s general manager, Jeff Bartlett, confirmed.

Other markets have been feeling the heat as well, making this the first time, according to ad buyers and sellers, that general-market advertisers have been preempted by political advertising demand this early in a presidential campaign. They are causing huge headaches for local and national advertisers who use local TV to sell goods during sales events, launch new products and amplify image campaigns.

And now, with the recent U.S. Supreme Court’s decision to loosen so-called “soft money” restrictions (part of the McCain-Feingold law) on political advertising, ad buyers, TV station execs and political spending analysts agree that there’s likely to be significantly more spending than had been anticipated, meaning traditional advertisers will likely have to deal with record preemption levels.

“It’s going to be more disruptive and every advertiser is vulnerable,” said Maribeth Papuga, svp, director of local broadcasting, Publicis Groupe’s MediaVest.

While it’s hard to predict how much more spending there will be at this point, Evan Tracey, COO of the Arlington, Va.-based Campaign Media Analysis Group said that it’s possible expenditures could surpass the $3 billion forecast by some analysts earlier this year—more than 30 percent above the record $2.3 billion that was spent in 2006.

Tracey said that the Supreme Court decision may “reopen the door to impulse buying at the end of the election. It could be corporate money or union money. We don’t know yet what will be used to try to flip the House or Senate so you don’t have one-party control.”

The spending has already started in earnest with candidates including Bill Richardson, Christopher Dodd and Barack Obama having aired more than 8,500 spots in eight states and Washington, D.C., according to Nielsen Monitor-Plus.

“It’s an unusual year,” said WMUR’s Bartlett, adding that the spending was triggered by the large number of candidates and the front-loading of additional primaries on Feb. 5, 2008, as more states vie to influence the general election.

Sue Johenning, evp, director of local broadcast, Interpublic Group’s Initiative, said the Supreme Court’s decision is one of several factors that would make the local TV market more chaotic than usual during the election campaign. When the early primaries and the huge number of candidates are factored into the mix, the result will be “a lot more demand on inventory. Advertisers have a different set of land mines city to city,” she said, depending on where the candidates choose to spend money and when, what referendums make it to the ballots and how special interest groups approach different markets.

Kathy Crawford, president of local broadcast at WPP’s MindShare, also noted that the Supreme Court decision makes the local TV environment for general-market advertisers tougher than usual. The increased flow of political money “could engender a massive amount of preemptions” for regular advertisers, she noted.

That said, part of the agency’s job is to fight on behalf of clients to ensure that their schedules air with as little disruption as possible. “That becomes part of the negotiation,” explained Johenning.

What stations try to do is make sure no regular customer gets shut out entirely, said Rob Halpern, general sales manager, WESH-TV, Orlando, Fla. “We try to be fair across the board. [And] forward-thinking advertisers spend earlier.” Some, he added, will even buy 20 percent more time than usual in anticipation of the political season.

Another factor for local advertisers to ponder: The pressure on inventory will cause prices to soar. “People are willing to pay rates that the station will never see again,” said Papuga. “They have one shot on Election Day and they will come in and spend $2,500 for a spot that would cost $500 on a normal basis.”

And according to another veteran buyer of local TV, when some stations see those kinds of opportunities, “loyalty [to regular customers] goes out the window.”

Bartlett acknowledged that rates go up, but not anywhere close to the level Papuga suggests. “We have to come back and work with our regular customers after the political money is gone,” he said.

But some station executives in other markets predict that rates will go up five times or more. They argue that those rate hikes have to do with managing inventory levels. “If the market is really hot, it could go 10 times [higher],” said the general sales manager at a top-10 market station. “You have to put a rate out there that stops people and basically slows down what’s coming in. The pressure on supply can be difficult.”

Clients may have to spend more to reach their target consumers and may have to shift dollars to other media like radio, said Crawford, noting “expectations have to be established.”

Political spending creates chaos in local markets because in many instances the spending is reactive to events as they occur. “A lot of it gets booked on a weekly basis, as it comes in,” said Johenning. “So the market is fast paced and highly volatile.”

That throws planning by regular advertisers into crisis mode because they normally plan quarter by quarter. “You really have to know what’s going on and keep your fingers on the pulse, so to speak,” Crawford said.

MediaVest’s Papuga said that non-political advertisers need to adjust their spending patterns during the campaign. Political dollars gravitate to the higher-rated local news and prime-time programming, she said. Regular advertisers, she added, have to consider spending across dayparts and stations they normally wouldn’t consider: “We’re telling clients to plan and book early, and be more disperse.”