In Battleground States, A Big Squeeze For Advertisers

washington Presidential-election years typically mean choppy waters for advertisers, but this year’s race is shaping up to be more like a perfect storm.

The candidates’ hefty war chests, the ferociousness of their attacks so early in the season, and the strategic media plans that concentrate their spending in 17 battleground states will likely combine to knock many advertisers off the air, according to a memo the American Association of Advertising Agencies plans to issue to its members today.

“The record level of political advertising and the consolidation of that spending in a relatively small number of states will almost certainly result in high levels of pre-emptions to regular advertisers,” the memo reads.

Adding to the clutter are hotly contested congressional races in states such as Florida, Georgia, North Dakota, South Dakota and Tennessee, which will make media buying in those markets even more challenging.

“Presidential campaigns literally wreak havoc with the advertisers’ schedules, because they drive up of the cost of advertising and they can pre-empt [ads],” said Dick O’Brien, evp of the 4A’s Washington office. “What we are trying to do is help our members control the havoc.”

Candidates across the political spectrum could spend some $1.3 billion on ads in this election, according to the Campaign Media Analysis Group. Local TV stations will likely be the big winners. TNS Media Intelligence/ CMR predicts spot TV will see a 10.8 percent increase this year thanks to political ads.

All of the factors above mean advertisers could face pre-emptions sooner than the eight weeks before Election Day—the time frame known as the “protected period,” when TV stations are required by law to sell political ads at the lowest unit rate. “Unlike previous campaign years, the onslaught of political ads may not be confined to the third and fourth quarters,” the 4A’s memo reads.

President Bush is expected to raise $200 million during this election. Last week, Sen. John Kerry’s campaign said it raised about $40 million in the first quarter.

In the 17 so-called “battleground states”—Arizona, Arkansas, Florida, Iowa, Maine, Michigan, Minnesota, Missouri, Nevada, New Hampshire, New Mexico, Ohio, Oregon, Pennsylvania, Washington, West Virginia and Wis- consin—Bush has spent more than $15 million on ads so far, according to a March 25 study by the Wisconsin Advertising Project. Kerry has remained competitive, spending more than $11.5 million in those states. The political-interest groups are also targeting those states.

Florida in particular is expected to be chaotic this year. Not only was it disputed so notoriously in 2000, it also features a key Senate race this year, now that Democrat Bob Graham has vacated his seat.

“We have seen some early money which we had not anticipated, mainly with Bush [ads],” said Pam Barber, director of sales at WFOR-TV, the CBS affiliate in Miami. “We have to be very careful and consider our core and consistent advertisers.”

Barber said she is telling advertisers not to wait until the last minute to buy. “Obviously, the sooner they buy, the better off they are, but this year it is more so,” she said.

Advertisers are also wary of appearing alongside attack ads. The 4A’s memo cites the 2002 Senate race in South Dakota—in which Republican John Thune narrowly lost to Democratic incumbent Tim Johnson—as having the “highest number of negative ads of any statewide race to date.” That state is a hot spot again this year, as Thune runs against Senate minority leader Tom Daschle. Daschle alone is expected to raise $10 million.

“The ads will be a little more negative than we have seen in the past, and they are probably going to increase the feel of clutter,” said John Muszynski, managing director of investment and operations at Starcom in Chicago.

Muszynski said it is not always possible to schedule around the cluttered period in September and October. That time frame is a busy retail season, for example, as children head back to school. “It is so difficult to schedule away from that period,” Muszynski said.

Bob Liodice, president and CEO of the Association of National Advertisers, said marketers are sophisticated enough to plan around that window. “I don’t think that six weeks is going to make a very big difference from a ‘television management strategy’ for marketers,” he said, adding that they can rebalance with other media vehicles.

Bruce Silverman, president of WongDoody in Los Angeles and former president of the government division of Western International Media (now Initiative), said car dealerships, fast-food restaurants and local retail stores will suffer the most. “They will be strapped, paying more and more, and once you are in the protected period, the station is obligated to give the lowest unit rate to the candidate, so it can result in pre-emption,” Silverman said. “It is very difficult for a station to shut out a candidate. The last thing they want to do right now is piss off candidates, given the scrutiny over media consolidation and fairness.”

Kathy Crawford, president of local broadcast at MindShare, said she is not yet convinced the sky is falling. “My concern is that stations are going to overestimate the amount of political money and overcharge anyone walking in the door because they are anticipating a sellout based on political money,” Crawford said. “Television advertising is just like the stock market. We could all end up spending too much for inventory that may in fact not be sold out. Right now it’s a guessing game.”

Muszynski said he sees some hope. “I believe the fact that this is starting earlier is helping the situation, because while spending is up, you will spread it out over time,” he said. “For every dollar that is being spent now, it will take away from the total volume that would be felt in the eight weeks prior to the election.

“I am not saying we are not going to have a problem here. But that is the only silver lining I can find right now.”