NEW YORK: US health insurers are predicted to spend $1bn on television ads over the next two years as the industry targets individual consumers to a greater extent than before.
TVB, the trade association of America's commercial broadcast television industry, arrived at this figure by estimating that insurers would invest around 1% of the incremental revenue generated from signing up new customers.
The main factor behind the extra spend is the Affordable Health Care Act, which comes into effect in 2014 and requires all individuals in the US to carry health insurance.
Local stations were expected to be the main beneficiary of this advertising windfall, taking 70% of the total, with the rest going to national broadcast and cable networks.
"Fundamentally it's going to be a competition for consumers that will be fought locally, not nationally," Dave Lougee, president of the broadcasting division of Gannett, the media holding company, told the Wall Street Journal.
Some ads are already airing, with the aim of educating uninsured consumers about the online exchanges being launched in each state and about their responsibilities to take out insurance.
In Arkansas, for example, one agency explained that three quarters of those uninsured were not aware the exchange was launching.
TVB anticipated that future ads would encourage people to shop on those exchanges. Scott Roskowski, TVB's senior vice president of marketing, said that health-care ads would become a top money-making category for stations alongside autos, fast food and furniture stores. "This category could be a killer," he declared.
Others were less sure. "It's all uncharted territory," said Perry Sook, chief executive Nexstar Broadcasting Group. "We don't know how the category will develop."
Analysts pointed out that health insurance ads would help to offset the drop in political advertising in the non-election year of 2014. And Elizabeth Wilner of Kantar Media also noted "a steady stream of political and advocacy ads that are critical of the law".
Some $500m has been spent on political ads around the law since 2010 and that figure could double by 2015.
Data sourced from Wall Street Journal; additional content by Warc staff