TVN Focus On Advertising | Surging Political Revenues Are TV’s Gain
Already historic, 2020 has turned into an election year on steroids for television stations. The lack of in-person political rallies, early mail-in ballots and an unusually large number of states where candidates are fighting tooth-and-nail are all factors that have instigated the surge. As a result, some prognosticators have increased their political revenue projections, with TV stations a major beneficiary.
“It’ll probably be a record-breaking year,” says Frank Comerford, chief revenue officer and president of commercial operations for the NBCUniversal Owned Television Stations, in speaking of the political revenue. “We budgeted very aggressively, and we’re going to hit our budget [for political].”
“The COVID situation is changing the way the game is being played. The number of rallies and whistle-stop tours are going to be much lower than in years past, so TV becomes that much more important at a fundamental level,” says Pat LaPlatney, president and co-CEO of Gray Television.
LaPlatney notes that in some markets where Gray has stations, like those in North Carolina, political ads will “more than make up for a soft core market,” but in others it probably won’t.
Steve Lanzano, president and CEO of the TVB, says that because a large percentage of the voting public is expected to opt for mail-in ballots, many Americans will cast their votes in the weeks prior to election day. “It’s extending the advertising period from six weeks [before election day] to eight to 10 weeks out, because you want to make sure that you’re advertising when people get the ballots. Many people will fill them out right away,” he says.
The expanded period of heavy spending “is sort of interesting because political candidates get the lowest unit rates on stations 60 days prior to the [general] election. So [ads tied to] the mail-in voting may come in before then,” says Mark Fratrik, SVP and chief economist at BIA Advisory Services. While federal candidates get that lowest-unit-rate benefit, many stations offer it to state and local officials as well, he adds.
There’s another unusual factor: “You have a much larger, expanded field in terms of competitive states. With the presidential election, we used to [typically] have nine or 10. We’ve probably got 15 states that are now competitive,” Lanzano says.
Steven Passwaiter, VP and GM of Kantar’s Campaign Media Analysis Group (CMAG), says that there had been some concern about how well candidates would be able to fundraise, given the high levels of unemployment. But that hasn’t been an issue. Because of that and the expanded battlefield, CMAG increased its overall political ad-spend forecast from $6.5 billion earlier this year to $7 billion, with $3.5 billion now expected for spot TV.
BIA upped its projection of local media political ad spend from $7.1 billion forecast earlier this year to $7.3 billion. It added $138 million more to its projections for local broadcast TV, which is now $3.339 billion.
Meanwhile, S&P Global Market Intelligence’s Kagan unit is holding steady, with a local TV projection of $3.05 billion. Peter Leitzinger, a research analyst at Kagan, notes that Democrats need to reverse a voter-turnout record. “In 2016, there’s evidence that a lot of the voting numbers were down, and the Democratic party doesn’t want that to happen this year,” Leitzinger says.
In the last presidential cycle, President Trump relied on a lot of earned media, making his ad spend disappointing for broadcast sellers. “In 2020, Trump already has spent $271 million. That’s a 180% increase over what he spent year-to-date in 2016,” says John Link, VP of sales and marketing at Advertising Analytics. In the upcoming period from Sept. 3 to the election, “Trump has already pre-booked 11 states with just under $149 million.”
Press reports put Biden’s advertising war chest for the coming months at $280 million and he’s expected to target 15 states. Link says that so far, he’s placed $54 million for the Sept. 1 to Nov. 3 period. Of that, about $45 million is for broadcast TV placements and the rest is on cable.
“It looks like Biden is going to go after five states that Trump won in 2016: Florida, North Carolina, Arizona, Ohio and Iowa. They’re vulnerable from a polling perspective this year,” Link says.
Observers say that highest levels of spending are taking place in ultra-important states in the presidential contest — Florida, Michigan, Pennsylvania, Ohio, Arizona and Wisconsin.
But they’re just the tip of the political spear. “If you look at the senate races, for instance: we knew that North Carolina, Arizona and Maine would be competitive, along with a few others,” LaPlatney says. “But as we sit here today, we see real spending in South Carolina and Alaska and Kansas. Candidly, we did not expect to see the type of activity we’re seeing. And PAC [political action committee] spending for both parties is way up.”
“Even in a state like Kansas, which is probably as big a Republican state as you can find, the senate race was a dogfight on the Republican side,” Passwaiter says. “The primary got loud and rather nasty between the three Republicans running. And there’s a very, very solid Democratic candidate.
“You look at places like Arizona, which is getting expensive, and the amount of money that’s being dumped into Maine is unbelievable, for a state that has less than 850,000 registered voters,” Passwaiter says. “I think people in Maine are going to have a hard time turning their TV sets on [because of all the political ads].”
And campaigners are certainly messing around in Texas. “Democrats are viewing Texas as a state that has shifted and definitely gone more purple,” said one TV station executive requesting anonymity. “They’re trying to see if they can swing some of the congressional and down-ballot races. Biden is placing money in Texas now, which ordinarily no one would have expected.”
Some states in the campaign crosshairs have large Latinx populations, needless to say. “Right now, the Telemundo stations are pacing better toward their targets than the NBC [owned] stations,” Comerford says, noting the NBC stations are certainly grossing more. Regardless, both Democrats and Republicans “are recognizing the power of the Hispanic vote in 2020.”
Another beneficiary are over-the-top platforms. They don’t have a lot of ad inventory — and most observers say they aren’t stealing share from linear TV. But political advertisers love them. “They’re doing very well because of their ability to target specific demo groups with specific messages, and they have high-quality programming,” Fratrik says.