(Reuters) - Media buyers expect record political ad spending driven by the U.S. presidential race will create a tight market for advertisers and drive up rates.
Super PACs, which rose to prominence after a landmark U.S. Supreme Court campaign finance decision in 2010, are preparing to buy national ads and to spend more once the nominees for each party are chosen at the political conventions in July, media buyers who work with these groups told Reuters.
“The campaigns are more sophisticated and are raising more money than ever before,” said Kyle Roberts, president and chief executive of Smart Media Group, an Alexandria, VA-based media buyer that works with Republican candidates. “It is much easier today for outside groups to raise money to influence national elections.”
The bulk of political ad spending typically is in local markets. But networks are already seeing more national ad buys by the Super PACs, a shift that could benefit television networks.
The election also has brought a ratings boon to television, which had been losing audience to Internet streaming. Fox News Channel said Wednesday it was No. 1 among basic cable networks last quarter for the first time.. CNN had the best quarter in seven years.
"We have seen a little bit of the Super PAC money come in," said Katrina Cukaj executive vice president of portfolio sales and client partnerships at Turner ad sales, part of Time Warner Inc TWX.N, which owns CNN. "We haven't seen the full force of it yet. That will come when we know who the candidates are."
The frenzy in political ad spending is expected to reshape advertiser behavior. Media buyers predict the presidential election will result in an increase in spending at this year’s so-called upfronts, where the networks present their fall line-ups and woo big advertisers with swanky parties and celebrity appearances. Upfronts run through May.
“The Super PACs are not afraid to spend hundreds of millions of dollars in just a few local stations, so it wouldn’t surprise me if the national election is going to have a real impact on the upfronts,” said Barry Lowenthal, president of The Media Kitchen, a New York-based media buyer.
Lowenthal expects pricing for advertising to go up as a result of the Super PAC spending.
More advertisers are expected to lock in ad spots for the fourth quarter, rather than face price increases later or risk getting shut out of the market. Media buyers say they expect up to a 5 percent increase in spending for this year’s upfronts – the first increase in two years.
That could mean a jump in spending of up to $8.9 billion for prime time spots alone, based on data from Media Dynamics.
Presidential ad spending for cable and broadcast television and radio in 2016 has already surpassed the $300 million mark, up more than 200 percent from the same period in the 2012 election cycle, according to data from Smart Media Group.
“This is going to be a very good year for us,” said CBS Chair and CEO Les Moonves at an investment conference in February.
“It’s a terrible thing to say, but bring it on Donald. Keep going,” Moonves said, referring to the Republican GOP frontrunner, Donald Trump.
Reporting By Jessica Toonkel; editing by Anna Driver and Lisa Girion
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