Spot TV Outlook: Sex, Drugs And Gambling

A blissed-out woman soaks in a bath, the picture of serenity. Suddenly, up splashes a man in a snorkel mask from the other end of the tub covered in bubbles. “You’re a genius,” they tell each other breathlessly before a hot-pink super comes over the screen: “Waterproof Toys and Lingerie. Do it. Every Day!”

The comedic spot from the sex paraphernalia retailer Lion’s Den has gotten a limited run on broadcast TV in the Columbus, Ohio, market, where the 48-store chain is headquartered.

But don’t expect to see a lot of such ads on the air elsewhere.

They remain on the periphery of the broadcasting business along with other so-called vice products and services like medical marijuana including CBD (cannabidiol), e-cigarettes, hard liquor and sports betting.

And with one notable exception they are expected to stay there. That exception is sports betting. Broadcasters are hopeful that with further deregulation and time it will become the next great ad category.

Sex toys and such are not a big business, and ads for them are a problem for broadcasters. “There are indecency laws and regulations that TV and radio stations have to follow” says Mark Fratrik, SVP and chief economist for BIA Advisory Services. “They need to tread very carefully,”

In the Lion’s Den commercials, “we couldn’t show anything or say anything about what was actually available at the store,” says Katie Keating, a creative director of Fancy, the company’s agency.

“We usually go with CBS [WBNS] and NBC [WCMH] affiliates in Columbus. We’re not doing WBNS this time around,” says Pete Potenzini, Lion’s Den director of marketing. “We even ran a Super Bowl ad with the local NBC station here last year.”

Lion’s Den is much more reliant on cable; it’s booked ads through cable systems on over a dozen networks. “We obviously find it easier to target on cable networks and since viewership is so fragmented, we can be more efficient with our buy via cable,” Potenzini says.

Hard liquor on broadcast has generated little opposition. “But it’s been a very difficult category for stations to break,” says one executive. “They’re all national advertisers with national distribution. They just spend nationally, and a lot of it is with events.”

On a separate “vice” track, a positive development came late last year when the Farm Bill was signed into law, making it legal for farmers to grow hemp in the U.S. The hemp-derived compound cannabidiol, better known as CBD, is now legal — along with other forms of medical marijuana — in 34 states, according to an analysis by DISA Global Solutions.

Some CBD products, available widely in cities like New York, contain next to no THC and can’t get people stoned. Matt Karnes, managing director of GreenWave Advisors, estimates the CBD market alone could reach $12 billion in the next five years.

It is still early days for the advertising of medical marijuana and CBD-based products.

Retailer MedMen, which sells a variety of cannabis products, including CBD, released a two-minute advocacy ad by the film director Spike Jonz which noted, among other things, that George Washington grew hemp.

“Every day, good people are using it to calm their pain, their stress and anxieties,” the promo’s voiceover states.

So, far, TV stations are missing out on that revenue action. Instead, MedMen is reportedly placing ads on Dish, Bravo, EW and Food Network.

Medical marijuana advertisers are attracted to broadcast TV, but the love is not a two-way street. CBS rejected a Super Bowl spot this year from Acreage, a purveyor of medical marijuana.

Another advocacy ad about medical marijuana ran during the Super Bowl on the CBS affiliate in the U.S. Virgin Islands, and again on ABC affiliates located in both the USVI and Puerto Rico during the Oscars, according to Kerri Accardi, CEO of the marketing agency 420Media, which was one of its cosponsors. The spot also ran in California on Bravo, Discovery and History in October.

“The rationale behind medicinal cannabis is real. The economics behind it is real. The health behind it is real,” says Positive T.A. Nelson, a senator from the WSVI, in the spot.

Stateside broadcasters weren’t always so wary of marijuana. Accardi says that in 2015, she had a deal with CBS for medical marijuana spot that would run in multiple markets during NFL games, news shows and talk shows.

“Verbally I was told they were threatened by the FCC with a million-dollar fine and license revocation,” Accardi relates. “Something happened. I don’t know if it was the election [in 2016] itself, because prior to that CBS was courting me, essentially.”

Accardi is guessing right, according to one broadcasting exec: “The Obama Administration didn’t enforce federal laws over state laws, but it’s the exact opposite during the Trump Administration.”

“I’ve approached many [broadcast] networks and affiliates throughout the country, and they’ve told me that it’s still a Schedule 1 narcotic. And as long as it’s federally against the law, they’re not going to touch it,” says John Graziano, media director of 420Media. “I think we need an FCC decision that says this is allowable [in states where cannabis is legal].”

David Oxenford, a partner in the Washington law firm Wilkinson Barker Knauer, says that any ads related to CBD products might possibly squeak through existing rules given the Farm Bill — with a lot of caveats.

Although Federal Drug Administration rules are not his area of expertise, Oxenford shares a general understanding: “If a state adapts a proposal to legalize hemp products in the state, and that’s approved by the Department of Agriculture, then the sale of hemp products are OK.”

But there are restrictions. He advises stations to consult FDA legal experts to make sure any ads they would like to run are acceptable.

The marketing of e-cigarettes and other forms of vaping have been slowed by mounting governmental concerns about their impact on health, particularly of young people.

Indeed, vaping kingpin Juul Labs responded late last year to an FDA commissioner’s concerns that it was exposing its products to young people by closing down its Facebook and Instagram accounts.

However, this year it launched a $20 million ad campaign, half of which is reportedly being spent on cable channels in slots after 10 p.m., aimed at an adult audience, and the rest on radio and print.

Ads for vaping are certainly legal on TV stations, Oxenford says. “Generally speaking, you should keep them out of programs directed to children. You need a tagline on the ads that mention that nicotine is an addictive substance and that it’s contained in the vaping product. And they shouldn’t make any health claims.”

Oxenford adds that stations should be very careful about running ads for flavored e-cigarettes, because the FDA has started to crack down on those products and the marketing of them.

When it comes to vice, sports betting holds the greatest promise for broadcasters.

Last May, the Supreme Court’s decision unleashed states to make their own decisions about whether to allow sports gambling and a growing number is deciding in the affirmative.

According to TheLines, sports betting is now legal in seven states: Nevada, Delaware, New Jersey, Mississippi, West Virginia, Pennsylvania and Rhode Island. The site believes that another 17 states could make it legal in the next six to 12 months.

Yet so far, sports betting ads have come in slowly, according to broadcasters contacted for this story.

“It’s not a huge category for us, but we do expect [it] to start to grow meaningfully,” said Christopher Ripley, Sinclair Broadcasting Group’s president-CEO, during the company’s fourth-quarter earnings call. “The estimates for the industry is this is going to be an additional $1.5 billion to $2 billion category [for the industry], which is a huge category for us in addition to what we already get from casinos.”

To encourage ad spending on sports betting, Sinclair’s stations in Las Vegas and Reno, Nev., have become the test bed for a show that provides advice to sports gamblers: Point Spread Weekly: Powered by Vegas Stats and Information Network. It debuted Feb. 15.

“It’s absolutely our intention to have this program distributed more widely through Sinclair. But I want to be careful not to speak for Sinclair,” says Brian Musburger, founder-CEO of Sinclair’s producing partner, Vegas Stats and Information Network (VSiN).

“We’re starting to scratch the surface of sports betting on TV,” says Larry Strumwasser, who oversees Sinclair’s Vegas stations. “I’ve been here about a year, and we’ve been talking about doing something like this since I got here. Even before I got here, folks were talking about it.”