Boom in Issues Advertising Could Net Agencies $1 Billion

Groups Have Already Spent $240M This Year Trying to Influence D.C.

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A correction has been made in this story. See below for details.

NEW YORK (AdAge.com) -- There are battles brewing in Washington, and agencies might want to join the fight to stake a claim on what could be worth $1 billion in media spending.

Long thought to be the playground for PR and public-affairs shops, Washington could soon see an influx of creative agencies hungry for a piece of a large and growing advertising market.

What you need to get into D.C.

1. EXPERIENCE: A high level of government, politics and public-affairs experience, as well as relationships with legislators and members of Congress in states in which it does business.

2. CREATIVITY: A creative team that has political-campaign experience and can bring new ideas to very strategic and specific issues.

3. INTEGRATION: Managers who know how to integrate those creative services and create an environment in which all those services work in unison.

Otherwise, you just might be better off acquiring a small shop with experience in the sector.

According to TNS Media Intelligence/Campaign Media Analysis Group, $420 million has been spent on issue-advocacy ad efforts since the beginning of the year. And with a major push on health-care reform on the horizon, a recently named Supreme Court nominee and the ever-present environmental and tax issues lurking, it would come as no surprise if third-party advertising efforts supporting or battling any of these issues drove that media spend closer to $1 billion. That's not chump change for ad agencies that have watched their margins get squeezed or have had to deal with clients cutting back on spending.

Evan Tracey, president of WPP's TNS Media Intelligence/CMAG, said it has been a very aggressive 100 days in terms of issue-advocacy advertising, and it will continue to grow because of all the activity taking place around big-ticket policy initiatives. He said he expects the biggest areas of activity on the federal level to be energy, health-care and business issues such as taxes, trade and labor-related policy changes. Fights over service cutbacks and budget cuts will attract millions in ad spending at the state level.

"State and federal issue-ad spending could go as high as $800 million or even higher," Mr. Tracey said. "When it comes to advertising around these issues, the thinking is no longer 'Maybe we should do it'; it's become a must in order to promote and frame the issues and engage the public and policy makers."

Supporting legislation
Mr. Tracey says there is another element of change this year. He isn't necessarily surprised by the amount of activity he has seen, but the usual pattern of issue-based advertising is different. "What you usually have is the masses of money spent to defeat a piece of legislation, but in this case it's reversed," Mr. Tracey said. "There's a lot of advertising support in favor of the president's policies and he's getting a lot of support from his friends and that's fueling this somewhat. In essence it's a carry forward from the campaign."

That's not to say the ad world is awash in hope and harmony. A quick look at the numbers indicates competing opinions in the environmental sector.

According to TNS/CMAG's numbers, some of the biggest spenders this year include the American Petroleum Institute ($26.3 million), the Alliance for Climate Protection ($18.8 million) and the American Coalition for Clean Coal Electricity ($7.9 million).

And, Mr. Tracey added, "if the Obama administration decides to go all out with health-care reform, that could add a lot more fuel to this fire."

Leaping in
Independent firm R&R Partners, best known for "What happens in Vegas stays in Vegas," claims it recognized how big a trend issue-advocacy advertising was going to be two years ago and set up a Washington office at that time. Pete Ernaut, president of R&R government affairs and persuasion, said revenue has grown 300% to 350% for the D.C. office in the two-year period, and he expects it to be the most profitable division of the agency within the next year. "We believe it's the future of our company," Mr. Ernaut said.

The agency jumped into the space while lobbying reforms and new disclosure requirements were being introduced. "On the eve of those going into effect, we felt it was going to dynamically change the strategy of lobbying forever," Mr. Ernaut said. "And we felt this outside-in method was going to be the wave of the future and standard for years to come and tried to be out ahead of it."

The agency is working for groups including the National Mining Association, American Coalition for Clean Coal Electricity, Southern Nevada Water Authority, El Paso Energy and Colorado Interstate Gas Company. The work it does for those groups encompasses everything from creative development to media buying to PR, in Washington as well as the rest of the country.

Mr. Ernaut said judging by the number of projects the agency is seeing from an "RFP and pitch standpoint," his is just the "beginning of the explosion in this area."

But ad shops thinking D.C. is a promised land of easy cash need to think again. Not only is it tough to gain entry, even agencies who get a foot through the door may find they're not cut out for the work.

Negative prospects
"With the ad business the way it is right now and a big pile of money sitting out in the world of politics, there's no doubt traditional agencies will try to jump in," said Vinny Minchillo, chief creative officer, of Scott Howell & Co., a Republican political-media consultantcy whose clients include Sen. John Thune, Sen. Jim DeMint, Sen. Kay Bailey Hutchison and many others at the federal and state levels.

"They will fail," he said. "For starters, 95% of that $1 billion will go to negative advertising -- very negative advertising. That will cause a lot of agency people to put themselves on the sidelines."

Mr. Minchillo also said many shops might not be set up for the quick-and-dirty nature of politics. "It's not uncommon for political clients to have television production budgets of under $15,000 per spot and a need to be on the air in 48 hours."

That said, he added that some shops might stand a chance. "The hard-core retail shops probably have the best chance of being able to adapt quickly. Also the shops with employees who don't care much about sleeping."

Even by R&R's admission, it started "to hit its stride" only in the past year.

Making the transition
Mr. Tracey said there are steps other interested agencies can take to make that transition.

"Practitioners in the issues-advocacy side [tend] to come out of the [political] campaign world," he said. "Some of the more traditional shops that want to enter will have to bring in new people or partner with some of the shops doing the lion's share of this work, because you can't just draw up traditional brand-rollout strategies in this space. These efforts are much more fluid and reactionary."

Mike Hughes, president and creative director of Interpublic Group of Cos.' Martin Agency, said he doesn't think issue-advocacy work will make that much of a difference for many of the agencies dealing with budget cuts.

But money isn't the only reason agencies should get involved with such work, he added. "Maybe some agencies are a little less busy these days; they can get behind these causes in a bigger way," said Mr. Hughes, whose agency has worked with Al Gore and the Alliance for Climate Protection since 2007. "The causes will contribute something at a time when agencies need additional activity and revenue but won't make up for the general malaise."

Despite the learning curve, Mr. Minchillo said he expects to see things heat up as people vie for a piece of the $1 billion.



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CORRECTION: Due to an error by TNS Media Intelligence/CMAG, an earlier version of this story incorrectly reported that Conservation International had spent $19.8 million on issue ads. Spots that ran associated with CI were part of a PSA campaign.
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