But non-election spending will be flat. Categories doing well include telecom, while areas showing declines include automotive, retail, fast food and packaged goods.
National spot advertising in the fourth quarter of 2006 is a mix of euphoria and tough reality.
When the final order is written, national spot is likely to be up 25% over the same period last year due to heavy political spending, but core advertising will be as flat as a plasma TV screen, according to several rep firms, ad buyers, analysts and station group executives contacted for this story.
“Flat” is also a common refrain when the experts describe core (non-political) national spot business for all of 2006. But with political, they anticipate a healthy 15% bump up from 2005. That would be better than what the Television Bureau of Advertising had forecast for 2006: between 10.5% and 11.7%.
The big disappointment—a big part of the tough reality—in the fourth quarter is automotive. It’s expected to come in at between -2% and +2%. That’s down from the 5% year-over-year growth it delivered in the third quarter.
One factor affecting automotive and other core advertising is the huge volume of political spending, which is making inventory tight in many markets. Leo MacCourtney, president of the rep firm Blair Television, is among those who believe there could be a resurgence of automotive in December.
Broadcasters have been waiting for nearly two years for their political windfall and are relieved—and euphoric—that it finally came.
Evan Tracey, COO of TNS Media Intelligence’s Campaign Media Analysis Group, now estimates that political spending for the year will be about $1.7 billion. During the first week of October, the weekly political spending reached $120 million, Tracey said. This week, he anticipates it will clock in at $175 million to $185 million.
“It’s one of the most competitive landscapes we’ve had in this country in the last 12 years,” Tracey explained. “Rate cards are out the window in places like Ohio, Missouri, Pennsylvania and Kentucky.”
Other hot political zones include upstate New York; Wisconsin; Texas; California; Savannah, Ga.; West Virginia; Minnesota; and parts of southern Florida.
“In some markets, unit prices are double what they are normally,” reported one rep firm executive.
“We have markets that are very negotiable, and some that aren’t because of political advertising,” said Mary Barnas, executive vice president and director of local broadcast at Carat USA.
Aside from political, the shining star of national spot in the fourth quarter is telecommunications. Most predict solid 20% growth, spurred by campaigns from AT&T and Alltel, and promotions touting bundled packages of voice, high-speed Internet and video services. That comes in the wake of even higher year-over-year growth in the category in both the second and third quarters.
Movie ads also continued an upward trend that began early this year. One rep firm executive said that in 2005, the category was down 20% for his firm. But this year it’s up 11%-12%, and he expects the fourth quarter to be about the same.
“I’d like to believe one reason it bounced back is when they cut their spot spending last year, attendance went down significantly,” the rep said. “Now that they’ve started to spend more in local markets, attendance is more positive.”
Other executives reported they expect movie spending to increase as well, and their predictions ranged between +6% and +15%.
On the negative side with automotive are retail, fast food/casual dining and packaged goods.
Most expect retail will be down 10% at the minimum in the fourth quarter, and possibly by more than 15%. The high end of that range matches what occurred in the third quarter, and reflects an ongoing trend as many retailers move to national network buys. But there is one optimistic note: John Watkins, president of ABC national TV sales, says commercials for plasma TV sets by electronics retail stores are adding some sizzle.
Sources predict packaged goods advertising will drop 20% this quarter. That comes atop a 15% decline in the third quarter. And fast food and casual dining is mirroring the 10% drop experienced last quarter.
The financial services arena, including insurance, is mixed in the quarter. Some predict as much as a 15% increase versus 2005; others it could dive 5%.
“There’s been solid pockets of bank and insurance advertising, led by Geico,” noted TVB President Chris Rohrs. But companies that had enjoyed a fair amount of Citibank advertising are now feeling the pain, as that company has tightened its purse strings, he said.
Several executives say they anticipate that the political joy of 2006 will spread to 2007. Because neither the president nor vice president are running again, and there are a wide range of candidates, “it feels like the action for the presidential primaries will be early,” said Victor Miller, senior managing director of Bear Stearns.
“It’s possible that it could start before September,” said Sue Johenning, executive vice president and director of local broadcast at Initiative.
“It depends on who pulls the trigger,” added Tracey. “If one candidate goes on air early, others will follow.”