Politics: Off year, on the money

With a wide-open race for President and earlier than usual primaries next year, TV stations should start to see a bump in ad spending this fall.

By Paul R. La Monica, CNNMoney.com editor at large

NEW YORK (CNNMoney.com) -- There typically aren't a lot of political advertisements in odd years since there aren't any Congressional races and no presidential election. But this odd year is shaping up to be a bit odder than the most.

Many candidates in the race for the presidential nomination, with no clear frontrunner in either party, coupled with many states moving their primaries to Feb. 5, 2008 to create so-called "Super Duper Tuesday," means that more political advertising should hit the TV airwaves this year.

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With the 2008 presidential race wide open, this year could set a new record for political spending in an off-election cycle year.
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"Broadcasters are counting down the days until 2008, not only with the presidential race but also Senate races. But with the early primaries, some stations are already starting to see some ad spending," said Mark Fratrik, vice president of BIA Financial Network, a consulting firm for the media industry based in Chantilly, Va.

In fact, Republican Mitt Romney has already begun airing commercials in Iowa. That state's caucus will be held on January 14. Democratic nominee Bill Richardson has also run television spots in Iowa as well as New Hampshire, which hosts its primary on January 22.

Evan Tracey, chief operating officer of Campaign Media Analysis Group, an Arlington, Va.-based subsidiary of advertising research firm TNS Media Intelligence, said he expects more candidates to start running commercials in the third and fourth quarters of this year.

As such, Tracey predicts that there could be as much as $600 million in broadcast political ad spending this year. While that pales in comparison to last year's record $2.3 billion in political commercials, fueled by the bitter mid-term elections, Tracey said ad spending in 2007 could be the highest ever for an odd-numbered year.

"This is the most wide-open and uncontested presidential field that we've had in modern media times," Tracey said. "We fully suspect we will break off-year records for political ad spending." A potential boost to political ad spending this year would be good news for both the national major TV networks, CBS (Charts, Fortune 500), GE's (Charts, Fortune 500) NBC, News Corp.'s (Charts, Fortune 500) Fox and Disney (Charts, Fortune 500)-owned ABC, as well as the affiliates that own local stations, companies like LIN TV (Charts), Sinclair Broadcast Group (Charts) and Hearst-Argyle Television (Charts).

One media buyer said the national networks in particular could see a bigger bump in ad spending earlier than usual because so many key states are moving primaries to the Super Duper Tuesday date, including California, Georgia, Illinois and New York.

"Demand will be there and you will see money shift into the fourth quarter of this year," said Karen Agresti, senior vice president and director of local broadcast with Hill Holiday, an ad agency based in Boston. "One of the things that may happen is that you could see some money that had been earmarked for local shift to national advertising since so many big states are going to February 5."

Still, the lion's share of political advertising will, of course, be in 2008. And there is some debate about whether a shift in the primaries will cause spending to dip next year since a slew of candidates could drop out as early as mid-February if they don't do well on February 5.

"I don't know if more spending this year will lead to a decrease in the amount of money spent next year but secondary candidates are likely to get out a lot faster in 2008. In the past, you had primaries still taking place in March, April and May but by the middle of February, we will know who's really in the race," Agresti said.

But Tracey thinks 2008 could even top last year's record. Even though candidates could drop out more quickly than in prior years, the fact that neither the incumbent president nor vice president is running for president next year should lead to a competitive, i.e. expensive, campaign for the general election.

"We look at ad spending in 2006 as a floor, not a ceiling. Everything points to an extremely active, contentious climate next year," Tracey said.

Finally, the possibility of a wealthy independent candidate joining the race in 2008 could also fuel ad spending. To that end, New York City mayor, and billionaire, Michael Bloomberg announced last week that he was switching his political status from Republican to unaffiliated.

While Bloomberg has denied having any interest in running for president, that hasn't stopped speculation from swirling about him running as an independent next year. And if he does run, that could significantly bolster the coffers of TV stations.

According to several reports, Bloomberg spent more than $70 million of his own money overall (not just advertising) during his 2001 run for mayor and another $85 million on his reelection campaign in 2005.

"Television stations would receive a tremendous boost if Bloomberg gets into the race," BIA Financial's Fratrik said. "It could be over $100 million in additional spending." Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.