This election cycle is weird because of the Plague and all that. But in general do media outlets like radio and TV stations rake in big bucks in election years?
Broadcasters are legally required to air election ads at the cheapest price they offer to any other advertiser. So the effect is more that political campaigns crowd out other ads, rather than inflating overall earnings. Here is an article from a meduia consultancy on the effect (published in 2019, so not taking this year’s COVID slump into account).
Thank you.
Note that only the ads offered by the official campaign have to be given the cheapest rates, and be run without any editorial restrictions by the station. Political ads by other groups do not get the same exemptions.
Saw figures earlier in the year showing advertising is down and less competitive because of the economical turmoil due to Covid. In a year like this the media makes out from political advertising from the local up to the national markets. You can often gauge this by the number of Public Service Annoucements being made on TV. When there are a lot they have unsold commercial time. But it is a brief limited market, often annoying to deal with as the campaigns change their content and change schedules, not to mention frequently failing to pay their debts.
It is big bucks for the average person, not really big bucks for the media outlets compared to typical advertising, but in some years it’s a decent bump for them.
I ran some numbers on this a couple of weeks ago. I don’t have the cites handy, but I do have my notes.
TV advertising was about $70 billion in 2019. The best estimates I can find for political advertising in 2020 are about $3.5 billion for broadcast TV and maybe another $1-$1.5 billion for cable. That $5 billion would be a 5%-7% increase. However, some advertisers pull back their advertising during the campaign, because their commercials get lost in the clutter of political advertising. Let’s call it a 6% increase over an off-year.
Six percent is a nice bonus, but it’s not like television’s entire profit margin for the year.
The profit margins are probably different this year because of the COVID-related drop in advertising
Seems to me if you’re a TV station, you start inching your prices up a year or two prior to the election then.
You can try doing that, but it comes with its disadvantages. The campaigns are not the only factor in the equation, after all. If you inch up your prices just to squeeze a few extra bucks out of the campaigns, then you risk losing other advertisers; you might end up with the crowding-out effect described above, plus the risk of alienating established clients. And if you overdo it, you might not even get the campaigns, because they’re very well aware if the prices they’re charged are worth the reach they get.