The Columbia Journalism Review provides a useful look at the economics of political TV ads here as it tries to answer an important, and deceptively complicated, question: Will much of the record $3B+ in estimated campaign spending this election cycle represent new money for TV stations? CJR grapples with a school of thought that says the impact is frequently exaggerated. The political buy, the thinking goes, just knocks out other advertisers, including ones who might have paid a higher price for the slot. Stations have to make time available to campaigns at what’s known as the “lowest unit rate” — the price offered to the station’s best customers for the time period. Still, CJR finds that “campaign ad dollars are mostly gravy.” Stations frequently increase their advertising inventory in the weeks leading up to an election. Other commercials usually aren’t bumped; most can be moved to air on days and times that are harder to sell. “That allows broadcasters a fair amount of flexibility to juggle inventory and make way for time-sensitive ads that need to air during a specific day or hour,” CJR says. And 2012 could become wildly profitable for stations following the Supreme Court’s landmark Citizens United decision, which enables independent groups to spend as much as they like to influence elections. Analysts expect independent Super PACs to flood TV with cash, and stations can charge them market rates. How big is the difference? Super PACs often pay anywhere from 150% to 5,000% more than the “lowest unit rate” offered to candidates, CJR says.
By DAVID LIEBERMAN, Financial Editor | Wednesday May 16, 2012 @ 8:18am EDTTags: Political Ads, Political Advertising
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This article was printed from http://www.deadline.com/2012/05/political-ads-really-do-provide-a-bonanza-for-tv-stations-report/