TV ad spending to set record in presidential race

By Andy Sullivan and Paul Thomasch

WASHINGTON/NEW YORK (Reuters) - The 2008 presidential race, which has already drawn a record number of dollars and voters, is poised to shatter another record: the amount of money spent on television advertisements.

As Democrat Barack Obama and Republican John McCain barnstorm across the country before the November election, they will spend heavily on ads that will increasingly reflect the cut-and-thrust of the campaign.

Total spending on TV ads in the presidential race is expected to top $800 million (403 million pounds), said Evan Tracey, chief operating officer of the Campaign Media Analysis Group, which tracks political advertising. Such spending totalled $500 million, the previous record, in the 2004 race.

That's good news for the television business, which is suffering from a pullback in spending from automotive, real estate and financial service advertisers.

Thanks in part to the expected boost from the U.S. election, spending on network and local TV advertisements is expected to rise between 2 percent and 3 percent in 2008 while cable TV advertising is expected to rise 6 percent, according to ZenithOptimedia.

"Every month, every quarter we're setting records," CBS Corp chief financial officer Fred Reynolds said at a recent investor conference. The company, which owns the CBS network and local television stations, billed a record of nearly $30 million in political advertising in the first quarter of 2008, he said.

Other companies expected to benefit from the campaign include General Electric Co's NBC and Walt Disney Co's ABC; broadcasters like Sinclair Broadcast Group, Belo Corp and Hearst-Argyle Television; and media companies such as Gannett Co Inc and Meredith Corp.

Even in the YouTube era, TV advertising is still the best way to reach wide swaths of voters directly, experts say. TV ads also shape news coverage and are frequently replayed, at no charge, during newscasts.

BEYOND THE BATTLEGROUNDS

This year, those ads will not just run on in a few states.

Obama had raised $286 million through the end of May and is expected to raise hundreds of millions more by November.

He has already bought air time in solidly Republican states like Alaska, Montana and Indiana, in an attempt to force McCain to defend states he would otherwise take for granted.

The Democratic candidate also might advertise nationally during high-profile events like the Olympics or baseball's World Series, and seek smaller, select audiences with spots on cable channels like the youth-oriented MTV.

McCain will be limited to $85 million in public money during the campaign's last two months because he did not opt out of the public campaign-finance system, unlike Obama. So the Arizona senator will be forced to pick his advertising spots more carefully.

"McCain has the potential to stay competitive, but I think that's the best he can hope for," Tracey said.