The first $1B TV ad issue since SS, Medicare

Public Affairs // Politics 07.08.2013

Elizabeth Wilner

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Doctor_2

Obamacare TV ad spend politically historic, incrementally elusive

This October, Americans finally will start confronting the 2010 Affordable Care Act (ACA), or vice versa. They've heard a lot about it, both good and bad, but due to a nearly 5:1 ad spend advantage by critics of the law, they've heard mostly bad. The rallying cry among critics: that it's big government at its worst, hijacked by a liberal, spendthrift President. The so far muted response from supporters: that it's the US government at its best in the safety-net tradition of Social Security and Medicare.

The law both parties now call "Obamacare" seems due to join Social Security and Medicare in one respect: as a public policy advertising phenom, a program that is reviled and perhaps eventually revered in political advertising for billions of dollars in ad spend to come. Yet while Social Security and Medicare have been litigated on the airwaves for more than 40 years, Kantar Media CMAG expects the ACA to break the $1 billion mark at an astonishingly young age, by its fifth birthday in 2015.

That being said, it's one thing for a law to be the focus of historic levels of ad spending and another thing to drive it. The ultimate size of the incremental TV advertising gains driven by the ACA, both political and consumer, is difficult to project.

CMAG's $1 billion estimate is based on the following calculus:

We're already halfway there. CMAG tracked more than $500 million in advocacy and campaign advertising referencing the health care reforms from the very first spots to air about the prospect of a law in 2009 up through Q2 2013. Some of these ad sponsors were unique to the ACA, particularly the early advocacy advertisers, but much of this spend would have happened in the course of regular campaigning.

During this phase, critics outspent supporters on the air by more than 5:1. The issue achieved remarkable depth on the ballot. Swipes at "Obamacare" pervaded Republican election ads in 2010 and 2012 races from president and Congress, to governor and state attorney general, on down to local offices with no real role in its fate.

The impact of the onslaught to date has been uncertain. Kaiser Family Foundation polling shows that public opinion about the ACA, while consistently more unfavorable than favorable, has remained relatively static. The Kaiser June 2013 tracking poll found a fav/unfav rating of 35%/43%; in May 2012, the rating was 37%/44%. Republican pollster Jan van Lohuizen, who worked for President George W. Bush, recently wrote to clients, "Our tracking of voter attitudes towards the ACA suggests that the public has not focused on it since it was adopted in 2010."

Implementation and the midterms. That's about to change. Large segments of the US population are about to be affected by ACA implementation while at the same time, they'll be making up their minds about how to vote in 2014. The Cook Political Report considers public sentiment about the ACA as one of its five key election factors to watch. Again, some of these ad sponsors will be unique to the ACA, but much of this spend will occur in the course of regular campaigning.

Key Numbers

  • $1 billion projected political TV ad spend on Obamacare by 2015
  • $500 million tracked political TV ad spend on Obamacare by mid-2013

More races: As a midterm election, 2014 will bring more races, including races for most US governorships and other statewide offices that can claim some role in either implementing or blocking-and-tackling the ACA.

More Democratic ad spend: CMAG expects Democrats on the ballot in 2014 to embrace the individual mandate in TV advertising after basically forfeiting the airwaves to Republicans and other critics for the past three years. Even President Obama largely avoided mentioning his signature legislative accomplishment in his own campaign advertising in 2012.

Continuing Republican ad spend: The one-year delay of the employer mandate means we may not see TV ads featuring people who lost jobs or critical income because their employers tried to squeak below 50 full-timers, but the absence of direct impact for voters hasn't exactly stopped the ACA's critics from advertising before (see #1). The delay might just embolden critics. "'The ads in swing races are being written as we speak,'" one GOP strategist said in the July 4 Washington Post.

Fresh angles for advertising: Even with the postponement of the employer mandate, some premium increases for employers already have kicked in. Some tax increases also will start to kick in, including the half-point increase in Medicare withholding and the 3.8% tax on "unearned" income for higher income taxpayers.

One Democratic health care lobbyist points out that the overlap between the individual mandate and the 2014 midterm elections will make for some interesting decisions on timing. The ACA's political critics may hold off during the expected promotional push and wait for early 2014 to pounce. "That would increase the odds that when Democrats embrace ACA as pollster Stan Greenberg (D) suggests, they are also embracing the tax increases."

The coming PR push. We're about to see a swell of advocacy advertising by government, nonprofits and the state exchanges seeking to educate people about the process and the benefits of the law in advance of open enrollment starting on January 1. This advertising will be original to the ACA, i.e., driven by the law.

The promotional effort will account for the bulk of the incremental gain in ACA-related political TV advertising. The US Department of Health and Human Services already has pumped an estimated $50 million into TV since the law was enacted in 2010. Nearly all that spend has gone to national network and cable.

The US government also has given states about $3.7 billion in grants to start up and promote their respective exchanges. Any of these funds that wind up on TV will get there via local spot and/or local cable. According to Spots n Dots, Covered California, that state's exchange, will spend $86 million on an ad campaign to enroll eligible residents.

Any state-specific nonprofit TV advertising around the ACA and the exchanges-for example, the California Endowment private health foundation was a big early promoter, spending more than $6.5 million according to CMAG-also will wind up on local TV.

One X factor is how much money will be raised and spent by the new national nonprofits with roots in the Obama 2012 campaign, such as Enroll America and Organizing for Action. OFA's new TV ad campaign so far has spent a little over $100,000 on national cable.

The Hispanic opportunity. Per the June 29 New York Times, the ACA provides 10 million uninsured Hispanics with the chance to get affordable coverage-40% of the total uninsured who are expected to gain coverage under the law. The 2012 Obama campaign repeatedly promoted the law in Spanish TV ads. One of the first awareness campaigns about a state exchange captured by CMAG recently hit in Denver, in Spanish.

The ACA gives politicians a means to curry favor with a critical growing demographic and gives Spanish-language broadcasters the chance to make up some ground. CMAG found in a 2012 study that political ad spend on Spanish-language TV has lagged far behind where it should be whether compared with consumer Spanish-language ad spend, or compared with the growing Hispanic percentage of the population.

Consumer. Absent the ACA, health insurers typically would be spending $250 million in Q4 2013 and Q1 2014 to target people who aren't covered by Medicare. Kantar Media Intelligence Chief Research Officer Jon Swallen expects a short-term spike in consumer and corporate promotion TV advertising by insurers competing for the millions of new customers the ACA is expected to bring into the market. This advertising, mainly local spot, will focus on markets that are home to uninsured Americans who are especially healthy, with a possible secondary focus on markets that are home to uninsured who are unhealthy.

After the spike, Swallen expects the ad spending to shift to direct mail and other forms of follow-up media to complete the process of signing people up-similar to how advertising unfolded earlier this century during the implementation of Medicare Part D.

Other product makers and service providers that stand to profit either directly or indirectly from the ACA also will advertise. Tax prep chain H&R Block already promoted its familiarity with the tax implications of the ACA in ads this past spring.

As with political, many of these ad dollars would be spent, anyway, though some major advertisers may shift considerable portions of their national TV budgets to local.

Radio and digital. Finally, incremental gains in ad sales for highly targetable media such as terrestrial radio and digital may be even larger than for TV given their potential role in enrollment. Terrestrial radio's ability to target geographically and demographically defined populations-e.g., rural and urban areas, Hispanics and African-Americans, etc.-will make it a valued component of pro-ACA promotional ad campaigns. The same holds for digital advertising (including online radio), particularly with younger uninsured.

Source: Kantar Media

Editor's Notes

Journalists interested in political advertising focused on the Affordable Care Act should please contact us.

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