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Political Ad Spend to Soar

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The economy is still shaky, but that won't stop politicians from spending a record amount this year on advertising to sway mid-term election results. And the political advertising floodgates will open right after Labor Day spewing messages -- and an inordinate amount of mud, according to analysts -- right up to Election Day on Nov. 2.
 
According to Borrell Associates, political ad spending will reach $4.2 billion this year, double the $2.1 billion the firm estimated was spent in 2008.
 
And Campaign Media Analysis Group (CMAG), a unit of WPP's Kantar, also expects a record total, with up to $2.8 billion being spent by candidates and various special interest groups, vs. the $2.6 billion it said was spent two years ago.
 
Political spending this year is eye opening given that general market advertisers aren't expected to return to pre-recession spending levels until at least 2013, according to PricewaterhouseCoopers.
 
It's also striking given that 2010 is a mid-term election, when spending usually dips below the previous presidential campaign cycle. But not this year: "It's become an endless campaign, that's really what we're seeing," said Kip Cassino, vp research at Borrell.
 
Evan Tracey, president of CMAG, notes that this mid-term cycle has an unusual amount of highly competitive races, including close to 100 congressional elections, vs. the normal 35 to 40. In addition more than half of all the gubernatorial and senate seats are up for grabs.
 
"I can't remember that much turnover before and they all feel like they're in the cross-hairs of voters," he said of the candidates. "And that competitiveness drives the spending."
 
A January 2010 U.S. Supreme Court decision (Citizens United Vs the Federal Election Commission) also eased rules for corporate campaign contributions. Borrell estimates that the decision makes way for an additional $400 million in ads.
 
The robust spending is particularly good news for local broadcasters and cable operators -- media businesses that suffered more than most during last year's recession.
 
While both sectors have seen a rebound in their core businesses this year, the political dollars will help sustain the turnaround, executives said.
 
According to Steve Lanzano, president of the TVB, a local station trade group, most of its 600 members have reported core revenue gains in the 20 to 25 percent range so far this year. Political spending is "icing on the cake," he said, although the group is not taking it for granted. "We've been very active in presenting our case," to the candidates and various political consultant groups, he said.
 
The basic pitch: "You've got one shot and you either win or lose. So go with what works," said Lanzano, referring to local TV.
 
And local TV executives haven't been shy about pointing to what they say are the deficiencies of cable competitors, which have aggressively pressed for a share of the political pie over the last several election cycles. Lanzano contends that as satellite TV continues to add subscribers at the expense of cable, the latter medium "only reaches every other household in some markets and just 60 percent of households on average."
 
But Andrew Capone, svp marketing and business development for cable sales firm NCC Media, counters that while cable may not reach every home in a given market, "that is more than off-set by the number of irrelevant homes that a broadcast signal reaches," in most local races.

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