Political Ad Spending on Pace for Record in Tight Contest

(Bloomberg) -- Spending on political advertising is expected to hit a record this election cycle, creating a windfall for local TV broadcasters and marking a comeback from four years ago.

Total spending will reach $6.89 billion, according to a new estimate by EMarketer. That’s 63% higher than in the 2015-2016 season. The firm attributed the rise to a “highly partisan political environment” that’s driving more donations to candidates who pour that money into marketing themselves.

TV will remain the largest beneficiary of political advertising, reaching $4.55 billion this election cycle, EMarketer said. The ad-buying bonanza is expected to fuel the sales at local TV station owners such as Sinclair Broadcast Group Inc., Tegna Inc., Hearst Corp. and Nexstar Media Group.

On an earnings call Tuesday, Tegna Chief Executive Officer Dave Lougee said the company expects to generate more than $300 million in political advertising this year. “There is a lot of understandable exuberance within the broadcast sector due to 2020 political advertising,” he said on the call.

Billionaire Windfall

Michael Bloomberg, who has far outspent other candidates on TV advertising, “obviously has been additive to the primaries,” Lougee said. Bloomberg, a billionaire who is running as a Democratic presidential candidate, is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News.

According to Advertising Analytics, Bloomberg has spent $260 million on broadcast TV, $24 million on cable, $9 million on radio and $64 million on digital, for a total of $357 million.

Also boosting revenue is another billionaire candidate, Tom Steyer, who has spent $101 million on broadcast, $25 million on cable, $5.2 million on radio and $29 million on digital, according to Advertising Analytics.

Unlike Bloomberg, who is skipping the initial contests and plans to begin competing on Super Tuesday, March 3, Steyer has been buying ads in the same media markets as the candidates who are relying on donations to fund their campaigns. He spent $15 million in Iowa and $21 million in New Hampshire, and is the top spender by a wide margin in both Nevada and South Carolina.

The billionaires’ spending has sent ad rates higher in certain markets, but Federal Communications Commission regulations require broadcast and cable outlets to offer presidential candidates the lowest rate available when they purchase ad time within 45 days of a primary.

Delegate-Rich Texas

Tegna, which owns several TV stations in Texas, has “seen significant spending” on political advertising in that state. The delegate-rich state holds its primary on Super Tuesday. Texas has been solidly Republican but is becoming more competitive, drawing advertising spending, he said.

Digital advertising, meanwhile, is expected to triple during this election season compared with four years ago, reaching $1.34 billion, according to EMarketer. Nearly 60% of that political spending will go to Facebook, with a further 18% going to Google, the firm estimates. Facebook is attractive to political campaigns because of its ability to target voters, but has been criticized recently for not fact-checking political ads.

The boom in political advertising marks a dramatical turnaround from four years ago. In 2016, spending fell sharply compared with 2012, in part because Donald Trump’s campaign relied instead on getting his message across in media interviews and tweets. On the Democratic side, a primary race four years ago between Bernie Sanders and Hillary Clinton dragged into the summer, delaying the start of lucrative general-election advertising in battleground states.

--With assistance from Bill Allison and Mark Niquette.

To contact the reporter on this story: Gerry Smith in New York at gsmith233@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, John J. Edwards III

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