TV Ad Costs Add Up

Posted July 14, 2008 at 6:43pm

The National Republican Congressional Committee, cash-poor and with a bevy of vulnerable seats to defend, could face an additional hurdle this fall with its inability to reserve advance television advertising space for independent expenditures in quantities similar to the Democratic Congressional Campaign Committee.

On the heels of the DCCC’s $35 million advance buy in 31 key districts that could see heavy top-of-the-ticket advertising, the NRCC’s strategy by necessity of generally buying airtime later in the campaign than its Democratic counterpart could cause the GOP committee to pay exorbitant rates for airtime — even in relatively inexpensive media markets.

In some competitive districts, the NRCC could lose out on the opportunity to buy ad space altogether, as a limited inventory on broadcast television could go quickly in media markets such as Albuquerque, N.M. There, the Republicans are defending the open 1st district, but the DCCC has already reserved 5,000 gross ratings points worth $1.3 million, and the competition for Senate, the White House and the nearby 2nd district is expected to be intense.

Even Democratic strategists are cautious about waiting too long to reserve television airtime, particularly in districts where the presidential race, a Senate race — or both — might consume the bulk of broadcast inventory. Cable television inventory is sometimes more abundant than broadcast, although its reach may not be as deep

“The ad-buying business is supply and demand,” said Timothy Kay, the director of political strategy for National Cable Communications, which sells cable television ad space for the nation’s big cable providers. “The earlier you are, there’s more supply and the rates are lower. But as you get closer to the election, with a variety of independent expenditure groups going in, it takes up inventory, so costs rise.”

The NRCC does plan to reserve television advertising time in advance, sources say. But with a significantly smaller war chest than the DCCC, the NRCC is unlikely to be able to afford to reserve space in advance in as many competitive districts as the Democratic committee.

In years past, the DCCC and NRCC have engaged in a combination of advance reserving and late purchasing of television airtime. Reserving early provides for the lowest possible ad rates and ensures that an IE spot will get on the air; purchasing late offers a strategic advantage and can sometimes be more effective.

But the DCCC’s stark cash advantage over the NRCC — the Democratic committee led its GOP counterpart by $40.5 million in cash on hand as of May 31 — has forced the Republican committee into a strategy of mostly buying television ad space down the stretch of the fall campaign.

NRCC Chairman Tom Cole (Okla.) acknowledged in a mid-June interview with Roll Call that his committee doesn’t have the money to reserve millions of dollars in advance television advertising. In this position, Cole explained, the NRCC can be more effective buying advertising later in the campaign, when an ad’s effectiveness in influencing a race is better gauged.

NRCC spokeswoman Karen Hanretty declined to comment on the committee’s advertising strategy, saying only that “the DCCC’s media-buying strategy isn’t going to affect our strategy.”

The DCCC declined to comment for this story.

Although the NRCC might have no other choice, some Republican strategists with experience running House races said the GOP committee could find itself shut out of some competitive races in October.

One such strategist recalled last cycle, when the Cincinnati and Louisville, Ky., media markets, where competitive House races were being waged, stopped selling advertising anywhere from four to six week before Election Day because the inventory was all bought up. Another GOP strategist noted that in some markets, the scarce broadcast inventory available during the last few weeks of the campaign can cost exponentially more than it would have were it reserved earlier.

“The DCCC is laying down points in presidential target states. From a tactical standpoint, it’s pretty smart,” said one Republican strategist with House candidates as clients. “It’s the same thing [the NRCC] would have done” in the past.

With all of its advantages, reserving television time early can cause political headaches down the road.

If the DCCC or NRCC decides not to follow through on a reservation and instead pulls out of a race where its candidate is not perceived to be far ahead, it could be interpreted as a sign that the respective Congressional committee sees the race as a lost cause and is giving up rather than waste its money.

Occasionally, a TV station will still demand payment for the time reserved, and might even demand immediate payment for other time a committee has reserved on other stations the company owns. However, early reservations might be a way for the Congressional committees to signal to third-party groups where they might be most helpful with their independent expenditures.

With the DCCC’s initial reservation list now public, the labor unions, environmental organizations and other interest groups planning to spend money in House races have an idea of where they might not need to go. Once the NRCC makes some advanced reservations, the conservative advocacy groups planning to spend money in House races will have an idea of where their dollars might be most helpful.

“If you go out and lay out a big buy and there are obvious places where you didn’t go into, it’s all public record so the outside groups” know where to go, said a Republican strategist with Congressional candidates as clients. “You can go and be very helpful.”

Political advertising is governed partially by the Federal Communications Commission, whose regulations play a role in determining how much ad space is available for national party committee independent expenditures and third-party IE advertising.

Per the FCC, television stations must give candidates for federal office priority over party committees and third-party groups when selling ad space. These stations must also charge federal candidates a discounted rate, known in the industry as the “Lowest Unit Rate.”

In fact, because federal law mandates that federal political candidates must be sold the airtime they request, a station will often take airtime that was reserved by a party committee or third-party group to meet the demand, effectively bumping that committee or third party off the air. This can happen even if the group or party bumped from the air reserved time during the summer.

Third-party groups and national party committees such as the DCCC and NRCC, meanwhile, have to pay market rates, referred to as the “Effective Selling Rate.” Market rates tend to increase as the supply of ad space dwindles, although the logjam for airtime tends to occur in the purchase of broadcast television.

Cable, with vastly more networks and as of yet much less tapped by political campaigns than broadcast, generally remains more reasonably priced in many markets as Election Day approaches. Rates paid for broadcast when reserving time in advance tend to be the same in July and August, and rates can even be reasonable into September.

Only when inventory is severely squeezed does an exponential increase occur — and that tends to happen in October.

“It’s smart to go in early and lock up [lower] rates,” Kay said. “I think things are starting to roll.”