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NJ Daily / ON THE TRAIL

Ad Rates Spiking as Candidates, Groups Scurry to Get On Air

The cost of running a single television ad has jumped in key markets.

photo of Reid Wilson
July 26, 2012

Pity the poor car dealer in Norfolk, Va. Advertising his business has become a lot more expensive in recent months, thanks to presidential campaigns and outside political groups that have poured millions into television advertising there -- and in dozens of other ad markets around the country.

The cost of running a single television advertisement has jumped in key markets across the country as candidates, party committees, and independent groups race to get their advertisements on the airwaves. Because the television market is finite and supply does not increase along with demand, prices spike as inventory shrinks.

And that's starting to happen: In Norfolk earlier this year, a single gross ratings point -- the measure of how much of the population sees an advertisement -- cost $95; now, it's spiked to $250, according to some estimates. That's because presidential contenders and outside groups have spent more than $7.2 million in that market alone -- a market that reaches just 21 percent of the state's voters. Prices in Richmond, Va., have more than doubled; costs in Tampa, Las Vegas, Cleveland, and elsewhere have jumped 30 percent or more.

 

At the height of a campaign's advertising blitz, running 1,000 to 2,000 points is considered sufficient to reach everyone in a district enough to allow a message to sink in. President Obama, Mitt Romney and, in some cases, even Senate campaigns are already hitting those marks.

Campaigns and outside groups have planned for higher prices. It helps that a candidate pays a lower rate than an outside group, as Federal Communications Commission rules require, but even the lowest unit rates for which campaigns are eligible are spiking.

"If you're doing your job right, you always factor in some level of rate increases. But the campaigns are going to feel it too," said Carl Forti, a Republican strategist who helps make advertising decisions for Restore Our Future and American Crossroads. "It just reinforces how expensive some of these media markets are. You've got to be careful how you're spending your money."

States such as Virginia, Florida, Nevada, and Ohio are likely to be the most expensive by year's end. That's because, along with a competitive presidential race, they also feature top Senate contests and battles for key House seats.

"When you look at Florida, the Orlando market has a host of independent voters and swing voters. You also have the presidential race and the Senate race, and we expect there will be competitive House races in the Orlando market," said Guy Cecil, executive director of the Democratic Senatorial Campaign Committee. The prices, he predicted, "will get increasingly worse."

Both Democrats and Republicans fighting for control of the Senate have moved to lock down their share of advertising time. That means campaigns are spending money much earlier on advertising that won't run until September or October. It's no longer practical to use just two metrics -- the amount a candidate has raised and how much they have on hand -- to judge its health. Now, observers must include the amount of television time the campaign has already purchased.

Consider Tim Kaine, the former Virginia governor and Democratic National Committee chair running to replace Democratic Sen. Jim Webb. Kaine's campaign spent $4.7 million between April 1 and June 30, according to reports filed with the Federal Election Commission, while bringing in just $2.8 million in the same period. That's a monumentally high rate of spending so early in an election race -- but for the fact that Kaine's team bought $3.5 million in advertising for the fall. So while outside groups scramble to snatch up every available second on television, Kaine has already locked in those rates -- at a cheaper rate than would be available at the last minute.

In Montana, Democratic Sen. Jon Tester, GOP Rep. Denny Rehberg, and both parties have bought so much airtime that they could effectively shut out any outside groups that want to influence the Senate race. Between Labor Day and Election Day, the two campaigns and two party committees have bought a combined 211,108 gross ratings points across eight media markets, according to estimates from two sources tracking the state's ad market. Together, that's likely more than three-quarters of the available advertising in the entire state during that period. (The state also demonstrates the advantage a candidate's money has over an outside group: Tester and Rehberg are paying an estimated $38 per point in the Missoula market, while the National Republican Senatorial Committee and DSCC are paying about $70 per point.)

"If you look across the board on our side, not only has the DSCC purchased time early, the majority of our candidates and campaigns have reserved, and in some cases paid for time much earlier than they have before," the DSCC's Cecil said. "Within the next two or three weeks, practically every one of our campaigns will be on the air through the end."

Buying early is a bipartisan phenomenon. The NRSC was the first committee to reserve late advertising time in key states. The Democratic Congressional Campaign Committee, the National Republican Congressional Committee, and outside groups like the Congressional Leadership Fund -- an organization with close ties to House Speaker John Boehner -- have made their buys, too.

"The potential scarcity of inventory and the cost of rates in swing states absolutely played a role" in the Fund's decision to buy advertising early, said Dan Conston, the group's spokesman. "This is as much a cost-saving exercise as it is a strategic decision. There is value in laying down early, partly because inventory may be gone later and partly because it's instructional to folks in D.C."

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