• by Paul Gough , October 4, 2003

Political advertising leading up to the California gubernatorial election and months ahead of the 2004 presidential primaries is having an effect on the spot TV market, at least regionally.

Unlike the network TV ad market, which soared to a $9.3 billion upfront last May, spot TV is having trouble building similar demand from national and local advertisers. At its annual forecasting conference in early September, the Television Bureau of Advertising retreated slightly on its forecast of up to 3% growth in spot TV in 2003. Other indicators are showing there is softness in local TV markets as well.

Nielsen Monitor Plus data for August showed a 2.2% increase in spending yet a 1.1% drop in the supply station ad unit volume. However, underlying demand for spot TV ad inventory continued to rise. Monitor-Plus found the number of advertisers purchasing spot TV inventory rose 1.8% in August.

Media buyers who specialize in spot TV say some markets are better than others. "We continue to see in the top markets that the market is very strong," said Mary Honan, senior vice president and director of local buying in the Chicago offices of GSD&M.

California, which goes to the polls Tuesday in a recall election that will decide the future of Gov. Gray Davis, doesn't seem like a slam-dunk winner for TV stations. Cathleen Campe, senior vice president and director of local broadcast at Ruben Postaer & Associates in Santa Monica, Calif., said the Los Angeles market is tight and San Francisco and Sacramento have been moderately affected. But you can't say that about the demand in every California market.

The election is causing some advertisers to delay campaign starts or push plans back. Mary Honan, senior vice president and director of local buying at GSD&M, said that not every advertiser could wait but if they could they have delayed.

Politics is having an effect in other markets as well, ahead of next spring's big primaries in the Southeast.

"In South Carolina, the politicals are already starting to hit," said Tonya Rintye, broadcast supervisor at WestWayne in Atlanta. Rintye said that it's starting to tighten inventory in Charleston, S.C., and the agency is starting to rework some of the buys they made on news. She attributes much of the increases to more issue-oriented ads and spending from House and Senate candidates and not as much so far from the presidential candidates. South Carolina's primary, which will be key to the Democratic presidential campaign and was a prime state for President Bush four years ago, follows the New Hampshire primary in the winter of 2004.

Rintye predicts the spot TV market in Florida will again be tight, as both parties go after the state that won the election for Bush four years ago. And in some smaller markets, like the Georgia cities of Savannah, Augusta and Albany, which are on the border and have one dominant news station, inventory could be tight too.

Some stations have inventory more than others, but agencies are all going after the key spots - early morning, news and prime - and not wanting the lesser parts of the station schedules where the points are lower.

"They still have inventory, but it's not the things that everyone wants," explained one buyer.

The pace is also quickening near the end of the year, buyers say. Lisa Garofolo, senior market manager at Empower Media Marketing in Cincinnati, said that there's a little pressure building for November and December seems like it will finish up as well. But she noted that uncertainty in the economy seems to still be a factor, something noted by analysts as well.

Merrill Lynch isn't as optimistic on spot TV as TVB, which believes that spot TV will increase 10%-11% overall (including 7%-8% local and 14%-15% national) in 2004. Merrill Lynch forecasts a 6.2% increase in 2004.

"Given a sluggish economic recovery and uncertainty regarding political spending, we believe a more conservative stance is warranted," wrote Merrill Lynch analyst Lauren Rich Fine. "The campaign finance reform legislation has placed heavy restrictions on soft money, suggesting that 2004 political spending could be less than 2002, even though spending is typically heavier in a presidential election year."