Pre-campaign clutter or spin central?

War on the air waves: 6 top
bets spend P1-B on ‘pol ads’

First of Two Parts

IF the law on campaign spending and political advertising were imposed before the official campaign period began last week, one presidential candidate would have already overspent in the past three months alone, even as he joins four others who would have exceeded the broadcast limit for TV.

Data from media monitoring agency Nielsen Media also reveal that from November 1, 2009 to January 31, 2010, or three months before the campaign period officially kicked off on February 9, the total advertising values for TV, radio, and print of just six of the 10 presidential candidates have already amounted to more than P2 billion.

About half of that figure represents the ad buys of Nacionalista Party standard bearer Senator Manuel ‘Manny’ Villar Jr., even though a presidential candidate’s maximum campaign expenditure limit comes up to only P500 million, or P10 per voter. His political party may, however, spend another P5 per voter or P250 million.

Villar’s TV ads also logged a total airtime of 758.5 minutes on GMA Channel 7, and 696 minutes on ABS-CBN Channel 2, during the same three months.

Four other presidential candidates racked up formidable totals for their respective TV ads on the two stations as well, most of them posting total airtime for their placements at both GMA and ABS in the three digits.

Table 1. Ad Duration of Presidential Candidates on GMA-7 and ABS-CBN 2
(November 1, 2009 to January 31, 2010)

BENIGNO AQUINO III 218.75 136.75
GILBERTO TEODORO, JR. 293.75 257.75
MANUEL VILLAR, JR. 696 758.5

Bangon Pilipinas candidate Bro. Eduardo ‘Eddie’ Villanueva, who has equity interest in a third station, QTV 11 – a joint venture of his Zoe Broadcasting Network and GMA-7 – recorded an additional 221.5 minutes of ad buys on QTV 11.

Law: 120 mins max

Yet all these candidates are in the clear despite an express prohibition in the Omnibus Election Code on campaigning before the start of the official campaign period. Other election laws also put specific caps on a candidate’s expenditures, as well as on the amount of political advertising he or she places.

The Fair Election Practices Act (Republic Act No. 9006), for instance, allows each candidate a maximum airtime of only 120 minutes for TV ads, computed per station. But that is during the campaign period.

Politicians have managed to place as much political advertisements as they want before the campaign period because the amended Election Modernization Act also says one is considered a candidate only “at the start of the campaign period for which he filed his certificate of candidacy.”

Then just last November, the Supreme Court released a ruling that stated, “The effective date when partisan political acts become unlawful as to a candidate is when the campaign period starts. Before the start of the campaign period, the same partisan political acts are lawful.”

All these have apparently resulted in a pre-campaign period spending free-for-all among several candidates who are convinced that political ads can make or break their bid for public office.

Ad war, ground war

Indeed, ads have become such an important part of candidates’ campaign spending that these are now the biggest cost item for national candidates. Says political management expert Malou Tiquia of Publicus Asia: “A good ratio for spending on ads is 70 percent and 30 percent is ground war.”

It’s a tactic that has considerable basis. According to Dr. Ana Maria Tabunda, chief research fellow of the private research firm Pulse Asia, political ads “contributed a lot” to the results of previous elections.

Tabunda was part of a group that studied the impact of political ads in the 2004 and 2007 polls. One of the group’s findings, she says, was that the voters felt they needed the political ads. According to the young and first-time voters the group interviewed, political ads served as their source of information on candidates. The veteran voters, meanwhile, said they gauge the candidates’ sincerity through the ads.

Nielsen’s monitoring of advertising spots and values covers 19 TV channels (10 free and nine cable channels), 111 radio stations in 15 areas nationwide, and 54 national and provincial print media outfits.

“Ad values” are computed by Nielsen based on the published rate cards of the media outfits being monitored. In computing the ad values for TV, the agency also takes into account the programs where the ads are placed – i.e., whether the ads are aired during primetime (defined by Nielsen as 6:00 pm to 10:00 pm) or non-primetime – as the rates for these vary greatly as well.

Nielsen’s November 2009-January 2010 data show that 94 percent of political ad spending went to TV. Radio accounted for merely six percent and print less than one percent of the candidates’ ad buys.

Budget: P2M a day?

Veteran campaign strategist Lito Banayo says that candidates have come to rely heavily on TV advertising because 90 to 95 percent of households depend on it as their primary source information.

Nielsen data show primetime TV as the ad placement of choice for presidential candidates. Primetime programs have an audience share of anywhere between 25 to 35 percent, based on Nielsen surveys among Mega Manila households.

This means that an ad placed in any of the primetime programs of the major networks would be viewed by about two million to three million households.

Banayo and Tiquia both peg the cost of a 30-second primetime TV ad spot at P250,000, with discounts bundled in. According to Tiquia, a presidential candidate needs to have a minimum of eight ads a day in at least each of the major networks to be able to have name recall.

Banayo says four ads placed on primetime in each of the two top networks – or eight ads in all daily – would work just as well. But even then the amount of money involved is jaw-dropping. “That’s P2 million a day,” he says.

Of the 10 candidates for president, only four did not place advertisements on TV, radio, and print in the three months preceding the official campaign period: Senator Ana Consuelo ‘Jamby’ Madrigal (Independent), Nicanor ‘Nicky’ Perlas (Independent), John Carlos ‘JC’ de los Reyes (Ang Kapatiran), and Vetallano Acosta (Kilusang Bagong Lipunan).

‘Mega brand’ politicos

By contrast, top ad spender Villar even landed the 14th spot among the top 20 advertisers during the 4th quarter of 2009, based on a report by Nielsen.

The only political personality in the list, Villar was ranked alongside multinational consumer brands, telecommunications giants, and pharmaceutical companies that sell anything from toothpaste to shampoo, mobile phones to cough syrups.

ABS-CBN vice president and head of corporate communications Ramon Osorio, noting the frequency of Villar’s ads, remarks, “From ocular evaluation, that is almost equivalent to a mega brand.”

Nielsen client service director Eric Barrera says, however, that ad spending by companies typically dip by about 25 percent in the last quarter of the year. He says that Villar’s TV ad placements during the 4th quarter of 2009 could just be “minutes not sold” to commercial advertisers.

“In fact, if you look at whole year (figure), he wouldn’t really make it to the top 20,” notes Barrera.

Far ahead of pack

Still, Villar’s total ad value of more than P1 billion in the three months preceding the official campaign period is 2.5 times greater than that of LAKAS-KAMPI-CMD bet and former defense secretary Gilbert ‘Gibo’ Teodoro, who posted a comparative figure of P407 million.

Liberal Party presidential candidate Senator Benigno ‘Noynoy’ Aquino III meanwhile had a three-month ad value of P269 million, while Senator Richard ‘Dick’ Gordon of the Bagumbayan Party had P245-million worth of ad values. Trailing behind them were Villanueva, who had P90 million, and Puwersa ng Masang Pilipino standard bearer, former president Joseph ‘Erap’ Ejercito Estrada, who had P84 million.

TABLE 2. Ad Values and Indicative Ad Spending for TV by Presidential Candidates
(November 1, 2009 to January 31, 2010)

CANDIDATES FOR PRESIDENT AD VALUES (November 2009 to January 2010)
(in Philippine Peso)
(November 2009 – January 2010)
(radio, print, TV)
BENIGNO AQUINO III 268,802,493 14,220,000 440,667 P 254,141,826 P 127,070,913.00
JOSEPH ESTRADA 84,262,247 1,166,700 0 83,095,547 41,547,773.50
RICHARD GORDON 244,639,361 5,964,732 0 238,674,629 119,337,314.50
GILBERTO TEODORO, JR. 407,364,839 37,276,793 1,319,122 368,768,924 184,384,462.00
EDDIE VILLANUEVA 90,081,280 1,777,224 13,300 88,290,756 44,145,378.00
MANUEL VILLAR, JR. 1,024,176,253 73,319,407 0 950,856,846 475,428,423.00
TOTAL P2,119,326,473 P133,724,856 P1,773,089 P1,983,828,528 P991,914,264.00

* – Ad values were taken from Nielsen Media data and were computed based on published rate cards.
TV ad values were reduced by 50 percent to arrive at the indicative real ad cost.

Interestingly, Gordon, Teodoro, and Villar’s ad values for January are greater than their combined November-December numbers.

Lower than rate card

Network executives say, though, that actual advertising spending by candidates – particularly for TV — may be lower than the network’s published rate cards by as much as 40 to 50 percent. Says Osorio: “There’s such a thing as rate card and negotiated rate. If you’re a big client, you are given a negotiated rate card.”

The discounts given are determined in large part by the volume of ad placements. But Osorio says the discounting scheme is “highly flexible.” He adds, “If you liken it to commercial advertising placement, it could be anywhere from 30 to 40 percent discount.”

A 30-second ad spot on primetime costs P432,879, and P82,116 on non-primetime per ABS-CBN’s published rate card for 2009. A 40-percent discount would reduce those rates to around P260,000 for primetime and P49,000 for non-primetime.

Osorio clarifies, however, that he does not know if ABS-CBN gave the same discounting scheme to political candidates, pre-campaign period.

At rival GMA-7, regional TV sales vice president Riza Garduque says that her network does not give any volume discounts or package promotions to advocacy ads. Unlike commercial advertisers, she says, candidates have no historical volume of ad placements in the network and are thus not entitled to discounts and packages.

But while GMA’s published rate card is higher than that of ABS-CBN’s at P475,200 for a 30-second primetime ad spot (for 2009), the actual rates it charges clients are much lower.

‘Advocacy ads’

According to Butch Raquel, the network’s corporate communications vice president, GMA applies “agency rates” for advocacy ads pre-campaign period, just like for commercial ads. For primetime, agency rates go from P250,000 to P300,000 per 30 seconds, or about 47 percent and 37 percent lower than the published rate card, respectively.

Applying these discounts on candidates’ TV ad values would halve the total ad values. But the indicative real ad cost of six of the presidential candidates from November 2009 up to the end of last month would still be a hefty P1.1 billion, including P992 million for TV.

The indicative real ad cost of each of these six candidates would also be half of their total ad values. Villar’s indicative real ad cost would thus come up to just P550 million, including P475 million for TV.

This is below the estimated campaign expenditure limit of P750 million for a presidential candidate – that is, assuming that the candidate’s political party decided to spend its P5 limit per registered voter solely on him or her (and based on the Commission on Elections estimate of 50 million registered voters). Otherwise, a presidential candidate is allowed to spend only a maximum of P10 for every registered voter for the election campaign, or a total of P500 million.

GMA’s Garduque says that advocacy and political ads make up a mere five to six percent of annual network ad earnings. But she says that for the upcoming polls, judging from the pre-campaign period alone, the rise in her network’s earnings has been “substantial.”

Garduque also says that the volume of candidates’ ads is bigger in these elections than in previous ones — and that is merely for the pre-campaign period.

Impact & clutter

ABS-CBN’s Osorio likewise says there is a “wide margin of difference” from ABS-CBN’s earnings from political ads compared to non-election season.

“You could see its impact because there is clutter,” he says, referring to the high volume of political ads.

Osorio says the November to January ad frenzy put up by some candidates can be traced in large part to the fact that they were still unencumbered by expenditure and ad volume caps before the start of the campaign period.

But yet another reason is the rise in ad placement costs beginning February 9.

Representatives from both GMA and ABS-CBN say they will not be offering packages, agency rates, or discounted rates other than the Comelec-imposed discounts for political ads during official campaign period. The 30-percent discount for TV imposed by law is lower than the regular ones given by the networks.

Ad costs, however, obviously include more than media placements. Producing an ad could already run into millions of pesos.

According to Banayo, an ad shot on location with a good director would cost a candidate about P10 million.

Tiquia, for her part, says production cost could go as high as P15 million – and this excludes the fees for celebrity endorsers and the jingle. Still to be added to this figure is the ad agency fee, which is around 17 percent of the total production cost.

Above line, below line

The numbers from Nielsen, huge as they are, also merely reflect “above the line” advertisements or those that are aired during commercial breaks. Making up a significant chunk of candidates’ spending are “below the line” advertisements such as posters, billboards, and mobile ads.

Ronald Jabal, chief strategist and senior partner at the AD & R Strategic Communications, Training and Research, points out as well an emerging type of advertising among candidates: the so-called “branded content,” such as sponsored segments in noontime programs and appearances in entertainment programs and sitcoms.

Osorio says that the rate for this type of appearances is calculated based on the actual time that a candidate would like to be present in a particular program.

“It’s a negotiated amount,” he says. “It can have varying combinations. It’s an appearance in one show, together with x number of ads, regular ads. Or it can be being able to present a production number together with some ads. It doesn’t necessarily have to be just your appearance. It’s a package.”

The packages, says Osorio, are prepared and presented to the network by the candidates’ media agencies.

For GMA Network, Garduque says that a candidate’s appearance in an entertainment program would be computed based on the agency ad rate: “If it’s only for a minute, then it’s the agency rate per 30 seconds multiplied by two. If it’s for five minutes, it’s multiplied by 10.”

Osorio, however, says this mix of above-the-line and below-the-line TV ads may not be viable anymore now that the official campaign period has begun. He thus predicts a shift in the candidates’ strategy: “I think it’s going to be a straightaway spot placement. The rest are all going to be provincial sorties.” – With additional reports by Karol Ilagan and Ed Lingao, PCIJ, February 2010