A “perfect storm” of early presidential primaries, increased spending on local and state races and a fertile environment for issue advertising combines to spur record off-year outlays, according to TNS Media Intelligence.
Political candidates and issue advertisers could spend as much as $750 million on advertising this year, perhaps even robbing some of the money that would have been spent in 2008, according to a report by TNS Media Intelligence’s Campaign Media Analysis Group. Powering the spending, the vast majority of which should flow to TV stations, are an unusually early presidential primary season, increased TV spending by state and local candidates and a highly fertile environment for issue advertising.
“We expect record odd-numbered year spending in 2007 due to a perfect storm of circumstances,” explained Victor Miller, media analyst at Bear Stearns, which hosted a conference call today with Evan Tracey, who heads the Campaign Media Analysis Group.
Contributing to the perfect storm is the first truly open presidential race—in which an incumbent vice president isn’t a candidate—since 1952, Tracey said. Along with that is the fact that many states have pushed their primaries earlier in order to boost their impact. California, Florida, New Jersey, North Carolina, California, Illinois and Texas have all moved their primaries up to Feb. 5, Tracey said. This means that by then, 80% of Democratic party delegates and more than two-thirds of Republican delegates will have been chosen. “It effectively ends the primary process a month and a half earlier than past elections, and this will affect the timing and the media outlets that candidates will choose.
Spending to get ready for these early primaries has already begun, he said. “We’ve seen a quarter of a million dollars spent already on presidential advertising,” he said. “Duncan Hunter was on the air seven months before Howard Dean was on the air in 2003.”
With so many primaries moving earlier in the year, New Hampshire could even choose to move its primary into December 2007, Tracey said. “Don’t be surprised if they move earlier.”
Significant presidential primary buys “will start in the spring,” Tracey said, as candidates vie for name recognition and relevance before big guns like Senators Hillary Clinton, Barak Obama and John McCain “suck all the oxygen out of the process.”
The Feb. 5 “super duper” primary could also spur candidates to buy advertising in the 2008 Super Bowl, he said, noting that, with so many delegates at stake, candidates may need a vehicle that reaches much of the country all at once.
Issue groups will play a big role in the 2008 presidential race, Tracey added. “Groups inside and outside the Beltway have Swift Boating on their mind. These groups have become businesses inside of politics and taken on structures, like those of the parties.”
Tracey predicted the final presidential race will come down to 15 or 20 battleground states, as it did in 2004. He also suspects that if the presidential race is unexciting, and looks like a shoo-in, that money will flow to House and Senate races, because issue groups will want to prevent too much power ending up in the hands of Democrats.
Along with presidential spending, increased outlays from state and local candidates will enlarge total political media revenues this year.
There are 1,000 state and local races this year, and more of these are using TV than ever before, Tracey said.
State and local political races spent a total of $560 million on advertising in 2005, the last “off-year” year, Tracey said, and predicted this sector will surpass all previous records this year. Mayors races are getting bigger and spending more, and local judicial races are also starting to use TV advertising. “There’s been growth in the threshold for races to use TV,” Tracey said. “We’ve seen significant upticks in spending on races for attorneys general and judges.”
Three states have gubernatorial races this year: Kentucky, Mississippi and Louisiana, and spending has already begun in the first two of those states, he said. Because these are the first gubernatorial races in Mississippi and Louisiana since Hurricane Katrina, Tracey expects issue advertisers to be out in force this year. Even so, gubernatorial spending this year isn’t expected to surpass that of 2005, when New Jersey and Virginia were home to hugely expensive gubernatorial races.
Ballot issues aren’t likely to exceed those of 2005, when California Governor Arnold Schwartzenegger placed a whole series of initiatives on the ballot, Tracey said, but issue advertising in general is clearly on the rise. Telecommunications issues, in particular, are spurring advertising, as state governments take up regulating this industry in the wake of a reluctance at the federal level to do so, he said.
Other issues will be vying for air time. “The American Petroleum Institute has set aside $100 million for issue advertising this year,” he said, and the pharmaceutical industry is expected to spend $50 million on issue ads.
Bottom line: 20% of presidential campaign money typically gets spent in the first year of the two-year cycle, Tracey said. There’s likely to be a little shift in that scenario this time around, with more money being spent in ’07, but the lion’s share still being earmarked for 2008.