• by Joe Mandese  @mp_joemandese, April 3, 2006

Madison Avenue is bracing for a political ad spending blitz that is expected to put pressure on non-political advertisers, tightening the supply of ad inventory and driving media prices up in key states and markets, the American Association of Advertising Agencies is warning its members. "A media-buying frenzy related to the 2006 mid-term elections could create significant shortages -- and increase the cost -- of broadcast and other ad space in many cities and states during the next six months," The AAAA's Media Division cautioned in a bulletin sent late Friday to media agency executives, media directors and officials on all of its media related committees.

The alert comes nearly two months after Magna Global issued a similar warning to its clients to "be flexible" and begin locking up inventory in key markets in preparation for high demand from political advertisers. It also comes as ad spending tracker TNS Media Intelligence releases a political ad spending forecast predicting "perfect storm" conditions in many key markets.

"In fact, the first four weeks of 2006 have generated advertising totals nearly equal to the advertising witnessed during the same period in 2004 - all without a presidential primary," the report issued by TNS and the Campaign Media Analysis Group noted. Despite being a so-called "off-year" election - a non-Presidential campaign year - TNS cited the "sheer number of open and competitive federal, state, and local races in 2006, as well as increasing contribution limits," noting that "individuals can donate an extra $100 per federal candidate per election."

TNS coined the term "perfect storm markets" during the 2000 election when many key markets were inundated with a combination of political television advertising by federal, state, and local candidates, as well as myriad state ballot initiatives. The report predicts that such markets in 2006 will contribute to, "significant, if not historical, levels of advertising throughout much of the country. Our current projection places year-end spending over $1 billion dollars - a truly historic milestone in midterm elections."

The AAAA's bulletin, meanwhile, cites predictions that total political year spending including efforts by supporters and advocacy groups would reach more than $1.6 billion on television and other media, making it the tightest mid-term election ever.

The memo anticipates that a growing number of issue-related advocacy groups is also "likely to affect media cost and availability" of advertising inventory. Most disconcerting of all, the AAAA advisory points out that unlike 2004 when the most competitive races were in states such as South Dakota "where media is relatively inexpensive," the big races in 2006 are located in major media markets, including New York and Pennsylvania.

"Media buyers and clients will want to factor this uneven ad demand prior to November into their budget plans," the AAAA advised. The advisory, which was released on the eve of this week's AAAA management conference in Scottsdale, AZ, could come as a mixed blessing for Madison Avenue, during ad spending to record levels, but also creating tough market conditions for many clients who are currently reevaluating their commitments to traditional media.

In February, Magna Global's Director of Industry Analysis Brian Wieser issued a similar warning and advised clients to begin securing advertising inventory in the most hotly contested political markets where there might be acute pressure on supply and ad prices.

The AAAA bulleting identified the following markets as being especially prone to tight conditions:
New York, especially Central and Upstate.
Pennsylvania, especially Philadelphia and Harrisburg area.
Missouri.
Florida, especially South Florida.
Tennessee, especially Memphis and Nashville.
Washington State.
Michigan, especially Detroit.
Massachusetts
Arizona
Ohio
California
Maryland
Washington, DC, suburbs
Minnesota: Minneapolis/St. Paul.