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The super PACs are giving Madison Avenue mega headaches.
With the battle for the White House entering the final round, the two presidential campaigns — along with powerful political action committees willing to pay top dollar — are clamoring for air time.
The demand for TV spots on local stations, especially in a smaller-than-usual number of swing states, is tightening ad inventory, driving up ad rates and crowding out other marketers.
Ad buyers seeking to line up TV spots for clients including retailers, car companies and movie studios are expecting prices to soar between 25 percent and 50 percent before election day.
Every four years, TV stations get a huge injection of election dollars as candidates and political parties unleash a barrage of attack ads. This year the ad war has grown more heated with the entry of super PACs that can accept unlimited donations.
Come today, the campaigns for Republican candidate Mitt Romney and President Barack Obama are entitled to buy ad time from local stations at the “lowest unit rate” in the 60 days leading up to the Nov. 6 election. The rate guarantee doesn’t apply to super PACs or other third-party groups, however.
What’s more, marketers’ campaigns can be bumped at any time in favor of political spots.
“As inventory tightens, prices go up and the PAC money people will pay the highest unit rates,” said Bill Applegate, general manager of two Cleveland stations, WOIO-TV and WUAB-TV.
Wells Fargo analyst Marci Ryvicker predicts the flow of ad dollars outside of politics will slow as the airwaves get crowded.
“We anticipate a slowdown in core [advertisers] during the last two weeks of September given the typical inventory squeeze caused by election spending,” she wrote in a note to clients.
Ryvicker estimates TV-station groups will rake in $2.8 billion in ad dollars this election cycle, up from $2.1 billion in 2008.
Even advertisers who manage to get their ads on the air are worried that the incessant political din will cause viewers to tune out altogether — a situation that could drag down consumer spending.
“There is no question that political spending will have a negative effect on retailers trying to get their weekly message out,” said Britt Beemer, chairman of America’s Research Group.
In swing states such as Florida, where the airwaves are saturated with political ads, he sees the election depressing consumer spending in stores, adding, “Foot traffic in those states will be off around 10 to 13 percent.”
Beemer says in some markets advertisers are already blocked out, and he knows of one retailer that has canceled October ad buys in favor of customer-appreciation days.
Meanwhile, Macy’s is doing two direct-mail offers in September instead of one, while Walmart moved up its holiday layaway TV promotions from October to August to get ahead of the election.
Ellen Drury, president of local broadcast at GroupM, said some advertisers seek alternative media as prices soar, adding: “Digital, radio and local cable, they’ll get a percentage.”