Before and After. Before the terrorist attacks on the World Trade Center and the Pentagon, television stations were clinging to a secret hope. The year 2002 loomed as perhaps the greatest bonanza in political advertising, with issues and candidates portending a bigger political spending year than 2000. Surveying the landscape prior to Sept. 11, Howard Nass, the veteran analyst at Initiative Media, had said, "Campaign ads may be the salvation of television stations next year." He was not alone in his optimism.
Now, in this post-apocalyptic political world, many issues that seemed settled regarding the potential flow of political ad dollars and their impact on stations' revenue are up in the air. Next year will still be a very big year for political and issue ads, say the pros. But two major factors may impact that: the recession, and the tenor and kind of ads that candidates and advocacy groups will feel comfortable running. In short, political ads could generate as much as $1.5 billion or more, but they could just as easily peter out at $800 million.
Prior to the attacks, TV ad-spending analysts and broadcasters believed they could make up some of this year's losses and even bank some revenue for 2003, based on initial predictions of political spending in 2002. Campaign consultants told their clients that next year's necessities would include food, water, electricity and political ads. They'd have to pay to play.
"Next year stands to repeat 2000 as the tsunami of political ads," said Lee Westerfield, a broadcast TV analyst with UBS Warburg, a month ago. Everything was up for grabs: 36 governor races, including major-market states like New York, California, Texas, Illinois, Michigan and Florida. The Senate majority hung by one vote, and GOP mainstays were retiring. Only nine seats in the House separated the GOP from the Democrats (not counting two independents), and the Dems stood to gain seats in an "off-year" election. Finally, the post-census redistricting moved 12 congressional seats from Northeastern states like New York and Pennsylvania to California, Texas, Georgia and elsewhere, leaving incumbents to play "musical chairs," making for a huge primary season in addition to the fall free-for-all.
That much has not changed, says Westerfield today. Next year, he says, "will be huge, no doubt. The need to buy political ads during this critical off year is the same. But the paradigm in which those ads will run has changed."
"It's crass to consider this right now," says GOP consultant Greg Stevens, of Stevens, Reed & Curcio, "The main issues that had the Democrats licking their chops are temporarily off the table. Health care, prescription drugs, social security and the environment have been swept aside." In terms of the impact on media buying, if those issues disappear, they could take away millions of dollars in related TV and print ads.
That said, political analysts are also cautioning, "Don't write off 2002 yet as a boom year." They cite what transpired in America only months after the assassination of a popular young president in November, 1963. The country was devastated, and leaders worried that the Soviets or Cubans were plotting war. But that didn't stop 1964 from being one of the first big years for political ads. And the calls for unity in the wake of John F. Kennedy's murder didn't keep Republicans or Barry Goldwater from attacking incumbent President Lyndon Johnson. He returned the favor with the infamous "Daisy" ad. Kennedy was barely in his grave when everybody went back to the business of bare-fisted politics.
"It's a truth that political campaigns and elections go on regardless of what happens," says Ron Faucheux, editor in chief of Campaigns & Elections magazine. There has been an appropriate pall in politicking in the aftermath of the terrorist attacks -- the governor's races in Virginia and New Jersey have fallen off. Any ad right now is unseemly, no matter how tasteful. But six months from now, the country may see a resurgence of business as usual.
"I think that's the case," says Chris Rohrs, president of the Television Bureau of Advertising. He originally anticipated that spending could exceed the $1 billion-plus spent on all the races in 2000. Amid reports that TV ad spending would fall 4 percent next year, many Wall Street analysts, spot buyers, consultants and those who track fundraising estimated that 2002's political ad sales could keep stations' bottom lines level or even raise it a bit.
Greg Schaefer, vp/station manager at WCBS in New York, had said in August, "I've heard that 2002 is going to be as big, if not bigger, than 2000," pointing to New York's impending governor's race and another Senate race in New Jersey. And Bob Leider, vp of Sunbeam TV, which owns Miami's Fox affiliate WSVN and Boston's NBC affiliate WHDH, explained, "Any campaigns for House and Senate seats are going to be larger than life because of what it means for the balance of power in the Congress?A lot of outside money starts coming in. That's what is going to turn this business around. It's really going to help the fourth quarter of next year."
Now Rohrs says, "We'll still have a very active year with a high spending level. That's the system?The world could look different in eight months," he adds. "We're competitive. We have different plans, programs and messages to convey. That won't change."
But the environment has. The tenor and dialogue of campaigns may be entirely different, says Democratic consultant Tom King of Fenn & King. "I think there won't be as many harsh attack ads," he says. Partisan politics will be downplayed. "Many ads will be value-oriented, family-oriented."
Patriotism will have to be part of any ad opposing an incumbent, in order not to appear out of step with the calls for unity. Flags will abound. Democratic strategist Mark Mellman, who is advising Mark Green in his bid to become mayor of New York, says, "Candidates will be emphasizing their military experience and records." And endorsements from firemen and police officers will carry more clout.
The status of the war on terrorism is paramount. If President Bush's policy appears to stumble, there will be plenty of room for Democrats to challenge. Ironically, if there's a quick resolution to the conflict, the economy and the "soft" issues that favor Democrats will have more bearing, says King. As Bush's father learned, a quick military win is soon eclipsed by "the economy, stupid." Energy policy (particularly in light of concern about dependence on Arab oil) may move to front-burner status, and that's where money from interest groups on all sides may come into play, says Mellman.
One crucial state that may lose its anticipated windfall for next year is Florida. Sunshine state station managers were salivating about their prospects for 2002 before the attacks. "Oh, hell, everyone's gonna be coming down to Florida to refight the last war," GOP strategist Alex Castellanos had said about the "hangover effect" from 2000. Indeed, former Attorney General Janet Reno's challenge to Gov. Jeb Bush, the man whom Democrats hold responsible for Bush becoming president, looked to make Florida the biggest battleground.
Some station groups were estimating a $60 million governor's race. "Just astronomical," said Bill Bauman, vp at WESH, Hearst-Argyle's Orlando NBC affiliate. Because of the "2000" effect, Bauman explained, "all our indicators say this 2002 is going to be a very targeted race by both national parties, and Orlando is the eye of the hurricane." About 30-40 percent of that potential $60 million was destined for the I-4 corridor from Orlando to Tampa. And Florida gets two new House seats, with no sitting incumbents. Bauman thought Florida was such a magnet that political spending could start in the fourth quarter this year.
But now that Bush has finally grown into the role of president, argues Greg Stevens, it makes any dispute about the legitimacy of his presidency "irrelevant." That would help Jeb Bush enormously and make Florida less enticing as a place for advocacy groups and the Democrats to throw money. But again, if Bush suddenly falters badly, Florida is back in play.
Texas and California still hope to generate spending. Mellman anticipates that despite the recession, "It's possible that you'll see $30-$40 million alone in the California race," where the GOP would love to unseat Gov. Gray Davis. In Texas, veteran GOP Senator Phil Gramm is stepping down, while the governor's race there is wide open. Stevens says, "Bush will view [both races] as a vote on his popularity in his home state and credibility nationally. He's got to go in there with money, and the Democrats will counter it because of its huge symbolism."
How much can a surge in political spending help overall TV advertising? Castellanos believes "there's room for political advertising to grow," both absolutely and as a share of total ad revenue. From Castellanos' viewpoint, Americans "only spent about $250 million last year [from the conventions on] electing the leader of the free world -- Revlon blew $311 million selling lipstick, and Procter & Gamble spent ten times more: $2.6 billion."
And despite the recession, Mellman says that the fractured TV ad market and cable cannibalization mean politicians must spend more money anyway these days. "You're up against more clutter, and fewer people are watching TV in a concentrated fashion. I have to put my candidates on TV at three times the level I did eight years ago," he adds. Democratic spot buyer John Hutchins of Media Strategies and Research, adds: "Several years ago, you could get away with buying 500 gross rating points. Now, to get your message out, you need to buy 1,500 points."
Nevertheless, political dollars are still chump change to stations. Eric Land, vp/gm of NBC affiliate WFLA in Tampa, notes, "Olympics and elections dollars represent incremental funds to the market. Political dollars at their height in a presidential year might represent 4 to 5 percent of a market's total revenue."
In New York, for example, one broadcaster noted that the six top stations there bring in about $1.6 billion annually. But political advertising only accounts for roughly $45 million of that -- unless another wealthy candidate such as Jon Corzine drops in. Last year, the Democrat spent $60 million in New York markets, $10 million alone at WNBC, to become a senator from New Jersey. "There are no Corzines this year," sighs another New York station exec. But there's always Steve Forbes....
Wealthy dark horses aside, the recession will color next year's market. Prior to the attacks, fundraising was up. In August, Common Cause released a tracking report showing soft money soaring, despite the economy. In the first six months of this year, Democratic and GOP party committees took in $98.8 million in "soft money," almost triple the amount raised in the same period in the last off-year, 1997-'98. It was almost double the $54.4 million raised in the first six months of the 1999-'00 presidential cycle. Of the $98 million, the GOP got $65.6 million.
Now, however, fundraising is stalled. Apart from the recession, many fundraisers say they are putting their efforts into charities for the victims of the terrorist attacks. It's uncertain whether that trend will continue into 2002 and whether it will affect Democrats' resources more than Republicans'. Faucheux expects both parties will focus more money on fewer races. Those could include races involving Democrats who recently assumed committee chairmanships when the Senate shifted power this summer, such as Tom Harkin of Iowa (who heads Agriculture) and Montana's Max Baucus (Finance). But that approach could impact the overall spending effect on stations."
It's a different environment now," says Stevens. It doesn't mean there won't be a lot of money tossed around, he adds. But there's a dozen working scenarios involving Bush's popularity, the war, the economy, and Democrats' ability to find their voice and strong candidates. In such a maelstrom, no one's going to spend or raise money early on, or without a specific goal in sight.
-- with Katy Bachman and Jeremy Murphy
By Alicia Mundy, Mediaweek.com October 10, 2001
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