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Exclusive PQ Media Report: Political Spending on Advertising and Marketing Communications Doubles in 2004

First Ever Analysis Finds Political Spending on Media Extends Well Beyond Broadcast Television

Stamford, Conn. August 19, 2004—Not only will political spending on communications reach an all-time high in 2004, the number of media outlets used by political organizations will be more diverse than ever, according a new report by PQ Media, a custom media research firm here. The exclusive report, titled Political Media Buying 2004, found that total political spending on all advertising and marketing communications will set a record at $2.68 billion by the end of 2004. This represents a 122.8% increase from the $1.2 billion spent in the 2000 presidential election and a 65.8% jump from $1.62 billion in the 2002 mid-term cycle.

While most studies and surveys released by other sources in 2004 have been confined to mainly political advertising on broadcast television, Political Media Buying 2004 for the first time examines spending in all nine categories of advertising and marketing communications. The advertising segment includes spending on broadcast television, cable television, radio, newspapers, the Internet, outdoor and magazines/ITV. PQ Media expects total political advertising spending to reach $1.87 billion in 2004, a 62.2% increase over $1.16 billion in 2002 and a 116.4% jump from $865 million in 2000. The advertising segment will account for the lion's share of all political spending in 2004, commanding 69.9% of total media budgets.

Meanwhile, spending on marketing communications, including direct mail and public relations/promotions, is estimated to hit $808 million in 2004, up 74.7% from $463 million in 2002 and an increase of 138.2% over $339 million in 2000. The marketing segment will account for the remaining 30.1% share of all political media spending in 2004, but this represents an increase of almost two percentage points from 28.2% in 2000, according to Political Media Buying 2004.

Although broadcast television will command the largest share of political media spending in 2004 at 56.1%, this represents a decline from the 2002 level and is flat with the 2000 results. The largest gains in share from 2000 to 2004 have come from cable television, direct mail and the Internet, all of which still only hold single-digit shares of total political spending. Internet advertising is expected to see the fastest growth from 2000 to 2004, with spending up 853.8%, followed by cable television, up 331.2%, and public relations/promotions climbing 151.4%. Though banner ads and rich media are being used more often in 2004, the major use of the Internet continues to be for campaign fundraising and voter registration. Candidates, however, are increasingly using e-mail to supplement direct mail campaigns.

"While broadcast television spending will increase by more than $800 million in 2004, compared with the 2000 election cycle, candidates are using more media outlets to target their messages to niche audiences in the so-called battleground states," said Patrick Quinn, president of PQ Media. "Declining broadcast television ratings have given sales representatives from alternative media vehicles, like cable, direct mail and promotions, a compelling story to use in their pitches to political candidates."

Radio advertising's share of overall political spending is projected to fall in 2004 when compared with the 2002 and 2000 election cycles, despite a double-digit increase in spending on this medium for the full year. Radio remains the number two choice for candidates, particularly on the local level, but competition from other media has begun to take share from this medium, according to PQ Media. Most political spending tends to take place in September and October, and radio usually does better in these final two months of the campaign, especially the all-talk and ethnic stations.

By the mid-year point on June 30, President Bush had spent considerably more campaign funds on advertising and marketing than Senator Kerry, but including spending by Democratic-leaning political organizations, such as the Media Fund and Moveon.org, the field was essentially level.

Huge Increase in Donations Is Key Driver

The major trend pushing overall growth in 2004 is the dramatic increase in campaign donations at both the national and local levels, especially by the Democratic Party candidates and the Democratic leaning 527 groups that have combined to nearly equal the vaunted Republican fundraising machine. Other trends pushing growth include early spending by both parties, niche advertising and marketing that have been aimed mainly at the 21 battleground states in the Presidentia eelection, and more than 20 "hotly-contested" races for the Senate, House, and Governor seats, according to Political Media Buying 2004.

Better fundraising has also expanded media buying opportunities and options for focusing on niche markets, such as the emerging importance of the Hispanic market, where candidates increased their investment by a whopping 1,150% in 200 vversus 2000. Direct mail spending is up because candidates are mining sophisticated databases, such as zip code targeting, in an attempt to reach targeted audiences at lower price points compared with the mass mailings of the past.

In addition to categorizing the spending data by medium and comparing 2004, 2002 and 2000 results, PQ Media's comprehensive analysis provides exclusive information and trends related to the races for President, Senate, House, Governor, Local/Other and Issues/Referendums. The report tracks data on a state-by-state basis as well.

An executive summary of the report "Political Media Buying 2004" is available by contacting PQ Media, which provide clients with custom market research and analysis through print and digital reports, newsletters, white papers an ppresentations. Subjects covered include market spending, corporate market share, media usage and media multitasking, whic ooften require detailed examination and interpretation of proprietary and third-party data. PQ Media is located at 370 Hope Street, P.O. Box 2815, Stamford, CT 06906. Phone is 203-569-9449; fax 203- 921-0367; e-mail info@pqmedia.com.