Winners and Losers in the Impending Ad Blitz
By Justin Miller | Jan 08, 2016
The presidential candidates and the outside groups backing them are opening up their wallets in a very big way leading up to the Iowa caucuses on February 1. The ad blitz means a windfall for some businesses and a financial loss for others.
The big winners are local TV stations in the early primary states. As The Guardian reported, Republican candidates are dumping money into expensive ad buys during the upcoming Super Bowl game as they try to take advantage of the massive captive audience.
“In New Hampshire and South Carolina, where the following primary will take place on 20 February, contenders have dumped more than $1m (sic) into the Sunday evening event, according to a Guardian review of FCC filings, possibly with more cash to come,” Sam Thielman writes. “Local TV ads in those two states—which customarily range in the four and five figures—have stretched into the hundreds of thousands.”
And TV stations stand to make even more money off super PACs that are trying to buy Super Bowl ads. That’s because while TV stations are required by law to give political candidates the lowest ad rate, no such requirement exists for outside groups.
But for car dealers, the political ad onslaught is turning into a pain in the wallet. As Bloomberg’s Tim Higgins reports, car dealers are the single biggest purchasers of local TV ads in the country. And as political ads begin to take up as much of one-third of local ad spots, car dealers who rely on TV to get the word out are being priced out.
In the hardest fought political battlegrounds—contentious counties in swing states—the impact is so profound that auto sales could slow as much as 3 percent. National groups representing auto dealers are now putting pressure on broadcasters to remember who their best customers are in election years and otherwise, according to Higgins.
The one group that stands to make money no matter what is political consultants. As well-funded campaigns like that of Jeb Bush pour tens of millions of dollars into TV ads, they use consultants to handle the logistics of ad buys. In an industry with a standard ad placement commission of 10 percent to 15 percent, that translates into big bucks. Jeb Bush has already funneled the vast majority of his ad buys—about $40 million worth—through the consulting firm Oath Strategies. For more on how political consultants are cashing in, read my interview with Adam Sheingate, whose new book on the multibillion-dollar political-consulting racket is out this week.
As the market for political messages targeted to crucial audiences soars, one thing is certain: There’s a lot of money to be made, and apparently, a lot of money to be lost.