Every election cycle, some corporate brand or sector becomes a punching bag for politicians of all stripes. Inevitably, it unfolds like this: A certain sector or company is seen as acting in a way that threatens hardworking people's health, livelihoods or nest eggs. These actions were enabled by some combination of too little self-policing, government regulation or enforcement. Cue campaign-trail outrage and talk of more industry oversight.
For the demonized industries, the sums spent on political attack ads may be a blip compared to their own marketing budgets. But the ads are aimed squarely at the politicians who, if elected, will decide the companies' regulatory fates and the voters to whom those politicians must answer. Most of the ads air around local news, not exactly a favorable audience for big business. (If it's a presidential year, some may even air during NBC's Summer Olympics coverage, always the highest-rated pre-election programming with a national reach.) Election cycle after cycle, the volume of such ads is rising and the naming of names becoming more commonplace.
Add in the overall marked increase in ad spending in the 2012 elections, and the financial-services sector has a new risk to evaluate -- its own continuing reputational and regulatory risk in being the target of such advertising.
Industry attacks on the rise
In 2002, it was Enron. Kantar Media's Campaign Media Analysis Group (CMAG) captured north of $3 million in political and issue ads critical of the energy company that cycle. Early in 2010, it was Lehman Brothers--to the tune of almost $6 million in ads. In both cases, by the time the ads aired, the companies were shuttered. Then the 2010 target became the relatively healthy, still-pumping BP.
After the Deepwater Horizon oil rig exploded that April, the BP sunflower bloomed in 2010 political advertising to a degree never before seen for any company: $25 million spent to air 119 unique spots, some in races as far from the Gulf as Boston and Seattle.
In 2012, it's financial services' turn. More than one of every 10 political TV ad dollars spent between mid-April and mid-September -- $91 million of $897 million -- went to ads castigating the sector. That sum covers all advertising during the first five months of the presidential general-election campaign and any other political advertising during that stretch. Congressional-race advertising typically doesn't ramp up until the fall, so the negative ads are now proliferating beyond the presidential swing states.
Within five months, Kantar Media tracked $65 million in political TV ads excoriating the sector with references to "bailouts," regulations and bonuses, corporate tax breaks, and specific financial institutions by name or logo. The green Wall Street sign is as ubiquitous in campaign spots as Starbucks is in Manhattan. Even the "Charging Bull" statue gets a cameo.
On top of that $65 million, another $26 million in presidential TV advertising focused on fewer than 10 swing states has demonized Bain Capital and the business of private equity. Private equity's challenge, of course, is being a little-understood service that produced a hugely successful alumnus who says his private-equity experience better equips him than the sitting president to manage the economy. The moment Gov. Mitt Romney became the last man standing in the GOP field, Bain and private equity were doomed to the Democratic advertising woodshed.
Attention from America's C-suite
President Obama's own campaign has been the single-biggest spender on ads critical of the financial-services sector, with a little help from his friends. A spot jointly sponsored by Obama and the Democratic National Committee, in which Obama asserts that Romney would "roll back regulations on big banks," has the most money behind it of any anti-Wall Street ad: $22 million and counting. (In a newer ad, Obama charges that Romney would "roll back regulations on the banks that cratered the economy.") Half of that $22 million went to an NBC network buy during the Olympics, ensuring national as well as swing-state exposure.
Obama's campaign and his supporting super PAC, Priorities USA Action, also account for 99% of the $26 million spent on ads slamming Bain Capital.
The top Republican sponsor of anti-financial-services ads is the Republican National Committee, which spent $6.4 million on an ad criticizing Obama's economic record. The ad shows an image of the Wall Street sign (among others) against a voice-over: "What did we get? National debt over $15 trillion and climbing." The implication: that the bank and American International Group rescues drove up the debt. The RNC is the only Republican presidential advertiser to make the list of big anti-Wall Street spenders.
Overall, prime time has been the favorite daypart for anti-financial-services advertising, followed by early morning newscasts; for Senate ads, that order is flipped. And while the presidential campaigns have focused on local news and the Olympics, talk shows also have been a popular program type for anti-Wall Street advertising in Senate and House races.
Those House and Senate "downballot" ads are a melee of candidates, parties and outside groups all accusing their opponents of supporting the Wall Street "bailout" or bonuses or of somehow being in Wall Street 's pocket.
After Romney's selection of Rep. Paul Ryan as his running mate revived the entitlement reform debate, Democrats also revived their old charge that Republicans would entrust Social Security to Wall Street by way of private accounts. Ads are airing well beyond the presidential swing states in regions as far-flung as the West Coast and New England, the Mountain West and Southwest.
Not surprisingly, Massachusetts' Democrat Elizabeth Warren, the former Troubled Asset Relief Program overseer, has been the biggest non-presidential anti-Wall Street advertiser ($2.9 million) from mid-April to mid-September. Still, her opponent, Sen. Scott Brown (R), also has broken into the top 10 ($1.25 million) with an ad promoting his work to stop insider trading by members of Congress.
After Warren, Connecticut GOP Senate nominee Linda McMahon has spent the most ($2.3 million) on ads that make the financial-services sector a victim of drive-by attacks on Democratic Rep. Chris Murphy's record in the House.
Most of the anti-financial-services sniping tracked by Kantar Media during our five-month measurement period is generic. The amounts spent on naming many familiar names are negligible: Bank of America ($1.5 million in ads), JPMorgan Chase ($1.4 million), Citi ($1.6 million) and Goldman Sachs ($1.2 million) among the banks, and AIG ($130,000), Fannie Mae and Freddie Mac ($500,000 each). A Republican House candidate in Pennsylvania has been peppered with ads accusing him of being "a millionaire attorney for a Wall Street bank," BNY Mellon. Whether the advertisers are candidates or groups, their need to raise money from executives of financial firms has spared these firms from more explicit criticism. With fundraising always the highest priority, generic ads are a safer choice and still get the message across.
Lessons from BP
But then there's the $26 million spent on ads focused on Bain. With seven weeks to go before Election Day, the previously low-profile firm has already sustained more negative political advertising than BP faced in 2010. The ads criticizing Romney's and Bain's business practices bear striking similarity to some ads that aired against BP: people talking about how their livelihoods were destroyed. While other presidential ads may have been more widely aired, the 2012 anti-Bain onslaught will represent a marked spending increase from previous negative ads against a specific company.
In the past, demonized industries typically haven't fought back against negative campaign advertising. Up until 2010, they discounted it--political posturing, the cost of doing business, chump change compared with their own ad spend. Nothing their Washington lobbyists couldn't fix during some Capitol Hill meetings and Georgetown dinner parties.
The BP oil spill changed that . To date, BP has aired $229 million in TV advertising responding directly to criticism and concerns about the spill, almost 10 times as much as has aired against it. Certainly, the company had a lot more than $25 million in campaign and issue ads to overcome--such as the hit to its stock price and its reputation inflicted by day after day of network news coverage of that leaking well.
But much of the same could be said for the financial-services sector in terms of relentless news coverage of its ups and downs. True, the ad hits are mostly sector-wide, not brand-specific, and some of the named firms may be privately held and less vulnerable to public opinion.
But even if the public doesn't catch all the ads, politicians are certainly keeping track, and financial-services companies all have to answer to Washington somehow. Overall, financial-services firms aren't just confronting $91 million -- and rising -- in negative ad spending. The financial field is confronting the aggregated damage to reputations and politicians' concern about potentially giving opponents new ammunition if they act in the industry's favor. Using BP's response as a guide, the financial services sector is looking at nearly $1 billion in advertising to assuage the public -- and that 's a dollar amount that does hit home.
Update: From mid-September to now, CMAG has captured more than 80 new, unique advertisements in U.S. Senate, House, statewide and local races across the country that contain critical mentions of the financial services sector overall or of specific brands -- a significant number that is further intensifying the impact on the sector.