Virginia's final-month election ad flood hurts regular advertisers

With three weeks to Election Day, and with Virginia being a known battleground state, election dollars pouring into the state’s broadcast media are proving to be a mixed blessing for the television and radio stations themselves – and a curse for local advertisers.

A flood of dollars

With a largely polarized electorate, election advertising spending has become more geographically concentrated, with fewer states getting the benefit, if that’s what you want to call it, of more ad dollars. And that’s just counting the official campaigns, not the SuperPACs, who are upping the ante as well.

“The final [three-and-a-half] weeks of ad spending is likely to be the most concentrated in U.S. political history, in part because the field of battle is narrowly focused on nine key swing states,” the Washington Post reports. “[Kantar Media/]CMAG, the ad tracking firm, estimated Friday that about half as many television markets feature presidential campaign ads this year compared with 2008, even though the volume has skyrocketed.”

It’s no surprise that the state where it’s skyrocketed most is Florida, the state with the fourth-largest population and the most voters and electoral votes among swing states. The presidential campaigns have spent more than $100 million on advertising there.

But what is surprising is that Virginia’s a close second, with $96 million spent on political ads here as of last Friday. That’s more than other battleground states with more electoral votes – including Ohio ($93 million) and North Carolina (a mere $70 million) – according to Kantar Media/CMAG estimates. It’s also something that shouldn’t be surprising to you, since we reported on Virginia’s unexpected political prominence back in June.

At best, a mixed blessing

But even to Virginia broadcasters, this dollar cascade is less than a total bonanza.

That’s because, unlike newspaper, magazine and online space, air time is a fixed and inelastic commodity. It’s also because federal law mandates that political campaigns get first crack at it (and at the lowest market rates, to boot) – even if that means bumping regular advertisers with prepurchased, year-long schedules. So while the election dollar deluge may be swamping stations with cash, it’s washing away the clientele they depend on in off-years, as we also predicted back in June.

“The state already has seen almost twice the presidential TV-ad spending that it saw for the entire 2008 general election, and we’ve still got a few weeks left to go,” says Kantar Media CMAG’s Elizabeth Wilner.

Echoing our words from this past May, Brian Ahladas, general sales manager of WWBT-TV, Channel 12 in Richmond, calls this cascade of cash “a perfect storm” – one which “definitely creates a set of conditions where our inventory is strained,” noting “the added stress this may put on those local advertisers who still need to advertise their products and services” when political ads are preempting commercial schedules left and right.

A rising tide lifts all ad rates

Supply-and-demand negotiation makes broadcast rate cards works of fiction to begin with, but election demands are severely squeezing the supply side.

As a result, even those lowest market rates – the operative word being “market” – that political advertisers are entitled to by law are getting higher. As as the lowest rates go up, so do the higher rates that regular advertisers pay.

This is a particular problem during local newscasts, which, as you might expect, are political advertising magnets. “We submit the rates that would be required to clear, depending on when [the advertiser] is going to get on, and it’s up to the client at that point to decide [whether] to pay those rates or not,” Ahladas explained.

But that’s not the worst part.

Opportunity cost

The worst part is that advertisers can find themselves unable to get on air at any cost.

“The problem [for local advertisers] isn’t that rates go up, as much as it is getting pushed off by the politician demanding availability,” Jack Poor, VP-strategic planning at broadcasting trade organization TVB, explains. Even if an advertiser thinks, “‘I’m good because I locked in; I’m not preemptable,'” Poor says, “OK, but I’m sorry to tell you the law says I have to put this guy in, and not you. That’s the quandary.”

Stations like Channel 12 are doing what they can to clear air time for loyal local advertisers – cutting back on local promos and buying back air time from their networks to have more ad time, offering online video inventory on the station’s website and offering air time on their less watched, digital cable channels.

But those are far from the best substitutes, and the danger is that advertisers will find better ones.

Life after November 6

Some local advertisers are just going dark until November 7. Others, according to Linda Davis, associate media director at Richmond advertising agency Barber Martin, are moving to other media – radio, local cable, print. “They’re probably not really happy about it overall, but they don’t want to spend four times the rate either,” she says.

Of course, the risk to broadcasters is that those expedients may work just fine, in which event local television advertisers could decide to not return to local television.

If you’re an advertiser (or a television station), that’s definitely something worth thinking about.

And if you’re a television viewer, hang in there. It’s only three more weeks until the political attack ads go away and the good ol’ car dealers, title lenders and ambulance-chasing personal-injury lawyers return to the airwaves again.