Faced with diminished forecasts for advertising expenditures in 2007, media professionals are looking for better times in 2008 thanks to an infusion of political money for national and state elections.

In recent weeks several national ad forecasters have curbed their short-term optimism after the Nielsen Monitor Plus tracking service announced spending for all forms of advertising shrank 0.6 percent in the first quarter. TNS Media Intelligence adjusted its estimate for 2007 expenditures to an annual gain of 1.7 percent, down from its original prediction of 2.6 percent.

“The advertising market has moved onto a slower track than we thought possible just six months ago,” said Steven Fredericks, TNS president. “It still appears that total measured expenditures will post their smallest annual gain since the 2001 advertising recession.”

Likewise, Robert Coen of McCann Universal lowered his estimate for national spending in 2007 to $290 billion rather than the $303 billion he originally figured. However, he expects 2008 spending to total $305 billion because of two factors political campaigns and the Summer Olympics.

“For local TV stations, it’s a two-year cycle,” said Gary Belis, vice-president of communications at the Television Bureau of Advertising, a trade group based in New York. “In the even years, the forecast numbers are always up because of political dollars.” For that reason, the bureau predicts local TV spot spending will decrease 1 percent to 3 percent this year but rebound 8 to 10 percent in 2008.

“During political years, stations tend to have an upswing in terms of revenues. We would expect that to follow in 2008,” confirmed Sue Johenning, director of local broadcast at the L.A. office of ad agency Initiative Worldwide.

With the presidential primary in California moved up to Feb. 5, Johenning anticipates political buying will start early as October.

“Once again, we’ll have an extra election in California, with the presidential primary in February, the legislative primaries in June and the regular general in November,” said Bill Carrick of the L.A.-based political consultancy Morris & Carrick. “That’s got to stimulate some increased spending.”

According to Carrick, ballots for the presidential primary should arrive in mailboxes the first week in January. Campaigns would start their direct mail drops about the same time, and Carrick believes “some California printers could get business from that.”

For 2008, Belis predicts that “California certainly is going to get more dollars than in the past” because of the new political calendar. However, other states have switched to Feb. 5, creating what he calls “Super Duper Tuesday.” Belis speculates that with so much of the country voting on the same day, candidates might buy national network TV ads, a strategy not employed since Ross Perot’s campaign in 1996.

Super Duper Tuesday falls two days after the Super Bowl, which means the game may broadcast its first election commercial. “It’s an example of how the calendar is turning conventional wisdom on its head,” said Belis.

Carrick thinks the presidential election will only bring marginal extra dollars to California broadcasters. “I know sales people like to talk about the big increases from political, but I think it will be much more modest than they anticipate,” he cautioned.

Instead, Carrick thinks initiatives which could appear on any of the three ballots in 2008 will generate major spending. In particular, he points to one proposition for term limits and another about redistricting, both sensitive topics for politicians.

By law, federal candidates only pay the “lowest unit price,” or the minimum price for ads, while initiative groups must pay market rates. As a result, both radio and TV broadcasters want initiative spots more than candidate promos.

However, Belis said that in practice, the lowest unit price doesn’t allow the advertiser to specify the time when the ad will run, so many campaigns forego the lowest unit price and pay the prevailing price in order to target the audience better.

According to Johenning, most campaigns want time during local newscasts because they attract an older, community-minded audience who are more likely to vote.

While election years benefit media outlets, they can cause headaches for non-political advertisers, Johenning cautioned. “When candidates buy inventory, it raises demand for the time that’s left over,” she said, “so it can have the effect of raising prices in the market.”

She advises her clients on a case-by-case basis, but strategies for dealing with the logjam include using less TV and more radio, or postponing the launch of a campaign until after the election.

Presidential possibilities

The electoral college system presents a unique challenge for political marketers, Belis explained. A regular brand advertiser who buys time usually sees some return on the investment in terms of increased sales. But unless a presidential candidate can win more than 50 percent of the vote in a particular state, any money spent there is a waste.

Hence campaigns concentrate their media buys in 15 swing states, a list that doesn’t include Democratic-leaning California, Belis added.

The natural reluctance to spend in California escalates when campaign managers see the rate card for local spots. “California is just so expensive,” said Carrick. “With the sticker shock these campaigns will have when they start their media planning, they’ll say ‘How can we do this?'”

Both Carrick and Belis cite one candidate who could put California in play: Michael Bloomberg. If he entered the race as an independent, “conventional wisdom goes out the window,” said Belis. “California becomes winnable for a number of candidates, and suddenly it becomes a swing state.”

Besides broadcast TV, Carrick believes cable, radio and direct mail will benefit from the 2008 political cycle. However, Belis believes that actor-senator Fred Thompson, who has yet to officially announce his candidacy, could pose a new wrinkle for the TV programmers in Hollywood. Under federal law, TV outlets must give equal airtime to competing candidates, regardless of context. Thompson appears regularly on “Law & Order,” a mainstay drama for broadcasters as well as cable channels TNT and USA.

“They have a real predicament,” Belis said. “It would be pretty hard to snip out Fred Thompson without ruining the storyline.”