Auto and Political Drive Spot TV Gains

MediaLife July 31, 2012 First quarter spending rises 2.6 percent, first year-to-year gain since 2010. By Toni Fitzgerald With a major boost from political spending and a resurgence in the automotive category, spot television saw its first quarterly gain in a year during first quarter 2012. Total spending was up 2.6 percent, according to Kantar Media data analyzed by the TVB, which includes 662 local English-language stations and 71 Hispanic ones. Advertisers spent $3.705 on the medium from January to March, up from $3.611 billion in first quarter 2011. Buyers say pricing on those ads is rising, too, mostly due to the squeeze on inventory from a crush of political ads taking over the airwaves. "Pretty much everyone's saying there is an uptick in pricing right now, and the reason is politicals and to a lesser extent the Olympics," one West Coast local media buyer says. Automotive was the No. 1 category during first quarter, up 7.7 percent over last year, to $649 million. Much of that was driven by strong spending from dealerships associations and local dealers. They tend to spend more when manufacturers pull back, hoping to lure potential buyers into the showroom even when the money is not coming from carmakers. Honda, for example, cut spot spending by 9.5 percent during first quarter, to $60.4 million. The Honda dealer association countered by ramping up its spending by 42 percent, to $22.6 million. The Toyota Dealership Association raised spending by 7.5 percent, to $77.1 million, after Toyota itself slashed spending by 21.5 percent, to $28.7 million. It was the third straight quarterly gain for automotive advertising, after spending slowed during the first half of last year, in part because of the Japanese hurricane and tsunami that prompted manufacturers and dealers to yank their ads. The natural disasters hurt production of cars, leading to inventory shortages, and the companies did not want to advertise cars they did not have available to actually sell. Auto was not the only category to drive spot TV's first quarterly year-to-year gain since fourth quarter 2010. Political also added nearly $41 million to the marketplace that was not there last year. Total spending hit $54.1 million, which was $12 million more than the same quarter two years ago during the last major national election. That fits with what local buyers have been saying. They're already reporting sold-out conditions in key swing states during third quarter driven by huge political spending. Still, while spending was healthy in most categories during first quarter, a few continue to lag. Communications/telecom, the No. 2 spot TV spending category, was down 9.8 percent, its fifth straight quarterly decline. And prescription medication and pharmaceutical houses as well as medicines and remedies were down double-digit percentages. Philip Jay LeNoble, Ph.D. says, " Build your local-direct revenue all yar long so the lowest unit rate (LUR) from political will equal what the local client is paying year round." Also, he says history has proven don't be so quick to abandon or set aside local direct in favor of political dollars as it will cost you for the next four years.