As TV spots run low, prices run up

Political-advertising costs on television, already at all-time highs, have
skyrocketed by as much as 50 percent in the last three weeks alone.

Every election, it has become almost axiomatic to say that airing political
ads is more expensive than ever before. But this year, media buyers say, the
costs are reaching unprecedented levels.

The price spike has many campaigns struggling to find the cash necessary to
buy their way onto the crowded airwaves. And those that have waited–either
out of necessity or strategy–until the last month to book ad time are paying
a hefty premium.

“This is just greed at its worst. It is not unlike the oil and airline
companies who raise the prices in the summer,” says Paul Kinney, a veteran
media buyer working for Insurance Commissioner John Garamendi’s bid for
lieutenant governor. “Why? Because the demand goes up [in October]. Whenever
there is the demand, the [TV stations] raise prices.”

Even candidates–who are supposed to be guaranteed the lowest unit price for
television spots–are feelings the squeeze. According to federal law,
stations must provide candidates the lowest rates available.

But such cheap spots are “pre-emptable,” meaning the stations can choose to
bump the ad if higher paying customers come in. The stations can offer the
campaign a refund, or the opportunity to buy an equal number of viewers at a
later date. That’s unacceptable for many candidates as Election Day
approaches and the campaigns need a steady stream of their ads to be seen.

So for the right to buy “nonpre-emptable” spots, TV stations charge
candidates a premium, anywhere from 25 percent to 50 percent of the total
cost.

“I don’t care if they say there’s a lowest-unit cost, the fact is they will
pre-empt you,” says Kinney, who says he booked time a month ago for
Garamendi in Los Angeles, the state’s biggest media market.

Wayne Johnson, a Republican consultant working for Steve Poizner, the GOP
nominee for insurance commissioner, agrees that with 13 propositions and a
half-dozen competitive statewide races, buying lowest-unit-rate ads is not a
viable option.

“If [campaigns] are buying lowest-unit rates, they are going to be shocked
at the number of spots that are going to be bumped,” says Johnson.

Poizner, Johnson’s client, has committed $11 million of his own money to the
campaign, the most of any down-ticket candidate, which allowed Johnson to
purchase ads more than four weeks ago. They are all nonpre-emptable.

“Lowest-unit rate is based on the assumption that you are treated as their
best customer,” says Johnson. “That doesn’t happen.”

Not everyone fears buying the federally mandated lowest-unit-cost ads. Bill
Carrick, 20-year media veteran and consultant for Democratic gubernatorial
challenger Phil Angelides, says, “It doesn’t maker much of a difference if
you have a good relations with the television stations.”

Carrick does see the escalating prices and says “it is making it harder and
more expensive for campaigns to communicate.”

The rising cost and shrinking ad inventory is exacerbated by two ballot
measures, Propositions 86 and 87, that have antagonized the well-heeled
tobacco and oil industries. Cigarette makers already have poured in $40
million, much of it devoted to television advertising, to beat the tobacco
tax. The oil companies have raised more than $40 million so far to beat the
oil-tax initiative. Meanwhile, Stephen Bing, a billionaire Hollywood
producer, has committed $40 million of his own money to support Proposition
87, most of which will go to television.

But even the oil industry-backed No-on-87 campaign is impacted by rising
prices. A single spot on NBC’s The Tonight Show in Sacramento cost $1,200 in
August, but nine weeks later–the day before the election–the same spot cost
more than double, $2,500. And that spot was booked two months in advance.

What’s worse: The amount of political ads on television is making it even
harder for candidates or causes to break through to the public. This
requires campaigns to spend even more money on television, further crowding
the airwaves.

That’s one reason both candidates for attorney general, Sen. Chuck
Poochigian, R-Fresno, and Oakland Mayor Jerry Brown, began airing ads in
mid-September, before the airwaves were overly cluttered.

“It is significantly cheaper now and there is not as much clutter,” says
Brown campaign manager Ace Smith. “If you are up before the serious clutter
hits, we believe the ads are far more effective.”

The Brown campaign says they will remain on the air until Election Day.

Paul Hefner, spokesman for the five-part infrastructure-bond campaign, says
the prices have risen dramatically in recent weeks, rising 45 percent in the
state’s four biggest media markets: Los Angeles, San Francisco, San Diego
and Sacramento.

“We did not see this kind of escalation either in the primary or even in
last year’s special election,” says Hefner, who added that the rising costs
mean the bond campaign will “have to work twice as hard in terms of what we
are doing on every other front.”

California could set a record for the most political spending on television
this year, with expectations of more than $300 million in advertising.

Although media buyers may lament the spiraling costs, they ultimately earn a
growing paycheck as well, with most consultants pulling in a fixed
percentage, from 4 percent to 15 percent, of the buy.

“I am not going to complain too much, because I am the beneficiary in my
business,” says Kinney.