2012: TV Political Ad Buys Predicted To Hit $3B

MediaDailyNews
by Wayne Friedman, Tuesday, June 21, 2011, 3:49 PM

TV political advertising spending could see rocketing growth next year, possibly climbing to just under $3 billion.

Moody's Investors Service says political advertising revenue for those pure-play broadcasters can expect gains of 9% to 18% over historically high political advertising levels seen in 2010, when spending on TV broadcasters got to $2.3 billion.

Previous estimates said President Barack Obama's re-election campaign could raise a record $1 billion in 2012 for all its political advertising efforts. A Republican candidate might get to those levels as well -- looking to avoid the problems that Republican candidate John McCain got into in 2008.

In 2008, Obama did not take federal funds, but McCain did. That meant a cap on the ability to spend ad money. Analysts believe the new Republican candidate will follow in Obama's footsteps --- avoiding federal funds -- all of which could escalate political advertising spending, of which the lion's share goes into television.

The ad push will be aided by recent changes in political TV advertising laws, such as loosening of corporate-backed political advertising.

Moody's says small- and mid-size TV station groups -- Barrington Broadcasting Group, Gray Television, Local TV, Nexstar Broadcasting and NVT Networks/New Vision -- could be the better gainers from political spots.

Bigger TV groups -- those in larger markets, such as Belo Corp. and Sinclair Broadcast Group -- will witness smaller ad growth. Those groups have a broader list of TV marketers and larger revenues in many advertising categories.

Big battleground states -- Florida, Pennsylvania, Ohio and Missouri -- will see a lot of political advertising money, says Moody's. Overall, the investor-rating services says the windfall advertising dollars will be used to pay down station debt.

But don't let low rates for political eat up valuable inventory you should reserve for long-term direct clients. Get those clients to buy long term at healthy rates to offset lower margins for political....Philip Jay LeNoble, Ph.D. Creator of System 21