Ad Agencies Forecast Growth in Post-Election Landscape
By | October 25, 2012
Everyone with a TV set knows that campaign ads are dominating these days. But how do the nonstop political impressions affect the rest of the advertising landscape?
“It affects our clients on a local basis so much. I have to watch it to make sure I can zig and zag when political comes into a market place,” says Liz Kelly, EVP/Director of Broadcast Investment for KSL Media, an independent media-buying agency in the US with over $600mln in annual billings. “It could be, let’s get in early so we’re not affected by all the political coming in. Yes, you’re still part of the political clutter, but you’re not paying the higher prices that political wants once they start taking the inventory away.”
Some of Kelly’s clients want to skip the political environment all together, which means looking at different media, including radio and cable (where Kelly says most of the ads still end up on the cable news nets).
“Without political ad spend, Magna believes that local television ad revenues would have been up 2% this year; with political effect, it will grow by an average 14%. The bonanza will be much bigger in Swing States,” said Vincent Letang, EVP, Director of Global Forecasting for Magna Global.
Magna’s most recent report found that without political and Olympic ad dollars, ad revenue growth was actually flat in 2Q and grew just 0.7% in 3Q, following 1.9% growth in 1Q. 4Q is a different story, with ad revenue growth expected to climb 1.2% excluding political and Olympics. Thank the holidays.
“At Thanksgiving, everyone starts thinking of the holidays. Retail is expected to grow this year. We’re anticipating retailers will be willing to spend more. Is it significantly more? No, but it’s still growth,” said Kelly. “As soon as Nov 7 hits, expect to see people run in there. It will always be crazy the 7 weeks before Christmas.”
Some in the ad community have wondered if the outcome of the political election could affect how likely consumers are to purchase big ticket items. The Consumer Electronics Association is optimistic. The latest CEA Index found that consumer confidence in the overall economy increased in October to the highest level since ’08. The CEA Index of Consumer Expectations, which measures consumer expectations about the broader economy, rose 5.5 points this month, reaching 177.7. That’s the highest level ever for the month of Oct since the index was introduced in ’07. One caveat for those hoping for digital cable subscription upticks after HDTV set purchases: Consumer confidence in tech spending declined in Oct, falling 4.7 to 87.7 on CEA’s Technology Expectations index. However, CEA attributes that to new product launches in September. It expects sentiment to rise over the next two months.