Political Ads' Perfect Storm
With Election Day looming the pace of political ad spending continues to accelerate — this is sure to be a record year. Political ad spending is on track to top $3 billion; not only is that far ahead of the $2.4 billion spent during the last mid-term elections, it even exceeds the $2.7 billion spent during the 2008 presidential campaigns.
A perfect storm of factors is creating a political ad boom, which is a financial boon for local station owners. The main driver of this year's spike in spending: more competive races than any time in the last 30 years. Over 100 House seats and a third of the Senate seats are still competitive, and this year there are 37 governors' seats up for grabs.
And many of the candidates, like former eBay CEO Meg Whitman, former HP CEO Carly Fiorina and the WWE's Linda McMahon have tens of millions of their own dollars to spend.
And the Supreme Court's ruling on the Citizen United case, which loosened rules on corporate contributions in the last 60 days before the election, has enabled a surge in last-minute spending. It's impossible to calculate exactly how much of this year's $3 billion in spending is due solely to the regulatory changes, but Kantar Media says it's responsible for well north of $100 million in incremental ad spending.
Who wins? Local TV station owners, who are grabbing the majority of those ad dollars. Companies like CBS, News Corp, Gannett and Meredith, which own dozens of stations, are cashing in. Prices for local TV spots are between 25 percent and 200 percent higher, depending on the market, according to Kantar Media's Evan Tracey. Stations are doing everything possible to maximize their inventory — in some cases, expanding commercial breaks and buying time from networks to squeeze in more political campaigns.
That kind of dramatic surge in demand isn't always good news-- it means that some consumer advertiers, who are just starting to pick up their spending, are being pushed out until after the election. Political advertisers take precedent, so some major consumer brands are having to wait on the sidelines in particularly competitive markets like Nevada and California, until Wednesday.
The fact that inventory is so tight with local ads is pushing advertisers towards national cable ads — a highly unusual move for a mid-term election. But that's good news for everyone from Comcast to Time Warner's CNN. And we'll certainly hear some of this good news about booming ad dollars in upcoming earnings calls this week.
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