The tide of increasing political spending raises all boats and, indeed, local and spot cable are awash in fresh campaign dollars. Some MSOs are reporting 70% increases over 2004, while National Cable Communications [NCC], the spot cable leader, notes “triple increases” over 2002, the last midterm election year. For many MSOs, political will be a welcomed boost to end-of-the-year ad sales budgets.
Local broadcast also is seeing huge political increases, however, and a continuing huge share of TV dollars. Truth be told, the usual 85%-15% broadcast/cable split traditionally seen over the past six to eight years, according to TNS Media Intelligence, has been a tough metric for cable to move. But cable is making a real attempt to push the needle a bit.
Having read some of its own bad press, operators have worked over the past few years to clean up technical and cost factors that have held it back. MSOs are offering more inventory, greater insertion and cost flexibility and lots of new bells and whistles, including VOD and other hyper-specific voter targeting.
There are 30 to 50 House seats still competitive, along with 10 to 15 Senate races, says Evan Tracey, COO, TNS Media Intelligence. “I see NCC plus the total of local cable political spending at or above that 15% metric in some markets,” Tracey says. “There will be a huge inventory crunch [among broadcast] that will give a further push to local cable. I see plenty more going their way.”
Tracey predicts record political spending in the $1.4 to $1.6 billion range. NCC has estimated cable’s share at around $200 million-plus. “I see $200 million as the floor for cable, not the ceiling,” says Tracey. However, while he expects local cable to “overperform” its traditional 15% split in larger markets, that won’t be the case below the top 20 markets.
“Politics is very regionally driven,” Tracey says, “and in many of the smaller markets, all political spending often goes directly to local broadcast.”
Andrew Capone, SVP, marketing and business development, at NCC, concurs that the broadcast/cable split varies a great deal when comparing large to small markets. Years ago, he adds, cable’s overall share was in the single digits.
According to a number of local cable ad sales executives, three issues have kept cable from surpassing the overall 15% mark in local political spending:
- Inconsistent procedures among cable MSOs. Every system has had its own set of rules and regulations.
- High cost. Cable is often a lot more expensive to buy then broadcast.
- Poor fulfillment and lack of flexibility.
“Fulfillment is where we got the black eye we had, even more so then cost,” explains Pam Baratta, VP, national sales, Cox Media. “We made it very difficult to buy our product. Now, we’ve become more competitive in pricing. Buyers want our programming, and we’re able to reach their cost-per-point goals.”
Baratta notes that Cox cable affiliates now have a consistent practices manual that sets the standards for all its systems, noting dayparts available, traffic deadlines, inventory management and more.
“Political is a very different category than retail,” she notes. “In the past, it was pretty new to some of us who weren’t familiar with how very last-minute some political buys are. Now, we have to be very nimble.”
Cox has added software that allows for political spots to get on the air “within hours,” according to Baratta. “Remember,” she says, “a local broadcast buy involves one network. With cable, some systems are inserting on 40, even 60 networks.”
COX AND COMCAST SEE POLITICAL GREEN
Billy Farina, SVP, Cox Media, says, “We are experiencing record political spending as a company [with] nearly all markets. However, San Diego, Las Vegas, Phoenix and New Mexico are particularly active.” He says political campaigns have spent $28 million so far on broadcast and cable in San Diego alone.
“Due to timing, volatility and volume of candidate and issue ads, we concentrated on improving our business practices in order to accept and clear political ads while continuing to serve our core business advertisers,” Farina says. “We developed and rolled out consistent practices across our markets, and identified personnel to provide hands-on assistance when issues developed.”
In addition to developing a standard political presentation for all markets, Cox hired someone to scan political information sources and provide markets with information regarding races, polling, fund-raising information and issue updates. “This has had a tremendous impact on our ability to accept and clear this business,” Farina notes.
Kevin Cuddihy, VP and divisional managing director for Comcast Spotlight, says his pacing numbers continue to increase in the 11 state primaries in the Comcast footprint. While noting a recent Wall Street Journal front-page story on a 40% surge in political spending on cable, Cuddihy says Comcast is “running 70% ahead of 2004 levels.” Key races for Comcast include hot gubernatorial races in California, Illinois, Michigan, Florida and Maryland.
Cuddihy ticked off the reasons for Comcast Spotlight’s success during this political cycle:
• Throughout 2002-2003, Comcast built out interconnects across its footprint. These were relatively new in the 2002/2004 election process. Today they are standard and make cable as easy to buy as broadcast.
• Adcopy [Comcast’s dynamic advertising technology] allowed political advertisers to tailor their messages. A candidate can purchase one spot throughout an entire market, but air copy appropriate to each zone within a market.
• Cable ratings have continued to increase.
• Local People Meters have more accurately captured viewing in Comcast markets.
• Comcast offers candidates the ability to “heavy up” their schedules in geographic areas that index high among their voter files.
• This is the first year that Comcast Spotlight has made VOD advertising available for political candidates to purchase.
Time Warner Cable’s new president of media sales Joan Gillman also reports that political advertising is being taken more seriously as a source of revenue.
“We have recently increased our commitment to taking advantage of political advertising opportunities,” Gillman says. “In the past year, we have opened an office in Washington, D.C., installed a dedicated political ad specialist in each of our regions and guided NCC to expand political expertise and focus.”
While Gillman wouldn’t offer specific numbers on Time Warner’s political ad sales this season, she adds, “We are now better focused on the political side of the business.”
IMPRESSING POLITICAL BUYERS
Kyle Roberts, president of SmartMedia, and Kyle Osterhout, partner, Media Strategies and Research, are both Virginia-based political consultants with lots of Democratic and Republican insider data. In the past they have knocked cable as inconsistent and unreliable. When they addressed the Television Bureau of Advertising Conference in April, their speeches dripped with derision about local cable.
Osterhout, a largely Democratic consultant, still feels cable has work to do. “While cable has made strides,” he says, “they still have miles to go before they close the gap on broadcast.”
Kyle Roberts (“the R is for Republican,” he says) agrees with Osterhout, but insists, “Cable is getting better.” Roberts says that in most cases, cable systems have been very helpful with regard to political advertising this election cycle. “In general, local cable systems have accommodated us in two ways. First, they have dropped or not enforced inventory limits. Believe it or not some cable systems would limit us to four times per day per network. You cannot spend a lot of money or build a lot of frequency with those limits.
“Two, we are buying cable soft [by individual head-end] and not through the interconnects, so we have a lot of inventory available to us. NCC has been very helpful in sending us [electronically] all of the soft systems so we do not have to input all this information, reducing turnaround time.”
Roberts also cited higher cable ratings and targetability as other key factors in why he’s buying more local cable.
“We are using [cable] geographically and by network,” he adds. “Our research shows voters get news and information about politics more from cable than broadcast.”
NCC’s Capone also notes the traction cable’s ratings are finally getting. “Two things happened. The success of cable ratings [is] proving that cable audiences [are] receptive to political advertising, and we put an extraordinary amount of work into political action committees and [are] offering research, qualitative data, reach and frequency statistics,” says Capone.
NCC’s political wing, headed in Washington, D.C., by VP, political strategy, Chuck Cowdrey, has grown from a staff of two to about 15 people, along with “dozens of people in the field,” according to Capone.
“We are working to help the political industry find voters in a very fragmented media market,” Cowdrey explains. “With over half the voters watching cable networks each day, the blunt instrument of broadcast TV is no longer as effective an approach as it used to be.”
Cowdrey gets high marks from TNS’ Tracey. “Chuck has really put in the legwork and gotten cable’s message known,” he says. In fact, he suggests NCC and local cable should go after the local political dollars still going to print, which accounts for 30% of all political ad expenditures.
“A lot of money is wasted on direct mail,” he adds as an example. “Cable could target much more effectively.”
Tracey sees better execution ahead. “Cable is going to play a huge role in the next presidential elections,” he predicts. “The future is very bright.”