Political Ads Edge Out Consumer Ads

The political-ad onslaught may be welcome news for the battered local television business, but the blitz has caused major headaches for corporate America.

Madison Avenue media buyers, who help decide where marketers spend their ad dollars, say the influx of political spending has forced many consumer ads off the air. Advertisers have had to scramble to readjust their ad plans to dodge skyrocketing ad prices and find a home for their ad spending. Many advertisers buy local ads at lower rates that come with contracts that say they can be pre-empted. But even when an advertiser buys a so-callled level 1 ad, which is more expensive and has the least chance of being pre-empted, a TV station legally is bound to take the federal candidate ad first if that politician is paying the same rate.

Political ad spending is on track to be a record-breaker thanks to highly competitive races and a Supreme Court ruling that freed corporations and unions to spend unlimited amounts on independent campaign ads. Total political-ad spending is expected this year to total $3 billion to $4.2 billion, up from $2.5 billion in 2008. Research firm Borrell Associates, which predicts political outlays will top $4.2 billion, says local television will snatch 63% of those dollars. Local-TV ad prices in some markets have surged and are up between 20% and 200% depending on the market. With so many ads being bumped off the air, some TV stations are having to refund money to advertisers, a tough outcome as they recover from an ad recession.