The television industry is anticipating an advertising bonanza related to the rollout of the federal health overhaul, with as much as $1 billion expected to be spent on ads by insurers alone, according to TV executives and a broadcasters' trade group.
States including California, Illinois and Colorado are already running commercial spots to promote the online exchanges they are launching on Oct. 1 to allow people to buy coverage. The Affordable Care Act mandates that most individuals carry health insurance starting in 2014, with subsidies for low-income households and fines for people who don't sign up.
Insurance companies will also try to woo new customers shopping on those exchanges, says the commercial broadcasters' trade group TVB. Making a big marketing push to individual consumers will be a shift for many insurers that mainly sell their plans through employers. Kaiser Permanente is among the insurers already running ads related to the new law.
TVB's forecast for ad spending by insurers, $1 billion over two years, is based on the assumption that the companies' ad buys will amount to 1% of the incremental revenue they can generate from signing up new customers.
The trade group expects that about $700 million of the insurers' ad spending will go to local stations rather than national broadcast or cable networks. "Fundamentally it's going to be a competition for consumers that will be fought locally, not nationally," said Dave Lougee, president of Gannett Co.'s broadcasting division.
For local TV stations, health-insurance advertising will help offset slowing growth in their biggest cash generator, automobile spots, as well as the drop-off in political advertising in nonelection years like 2013. The ad push comes as TV stations are in the midst of a flurry of mergers in which the most financially healthy companies are snapping up smaller players.
"This category could be a killer," said Scott Roskowski, TVB's senior vice president of marketing, predicting that health-care ads will quickly become a top money-making category for stations along with autos, fast food and furniture stores.
Most ads already on the airwaves are aimed at educating uninsured consumers about the online exchanges being launched in each state. In a spot for Arkansas' exchange, set against images including a waitress and cattle rancher, the narrator hints at the idea of mandatory coverage, saying users can go to the exchange to see the "responsibilities you have to take control of your health care."
The target audience is the estimated one-sixth of Arkansas' population of nearly three million that is uninsured. David Rainwater, chief executive of Mangan Holcomb Partners, which produced the spot, said his Little Rock, Ark., ad agency's research showed that 25% of the uninsured aren't aware the exchange is launching. "Our message was explanatory—to let them know it's on the horizon," he said.
An ad for Oregon's exchange features a guitar-strumming folk singer who touts the promise of giving health care to "each logger and lawyer and stay-at-home dad; every baker and banker and indie rock band."
Some industry experts say it is unclear how long the big ad dollars will keep pouring in after the initial burst of enrollment in the next several months.
"It's all uncharted territory," said Perry Sook, CEO of Nextar Broadcasting Group Inc., whose TV stations have so far booked more than $600,000 in the early going, mostly from exchange rollouts in Arkansas, Kentucky and Illinois. "We don't know how the category will develop," he added. Mr. Sook expects to see a significant ramp-up in ad buying this fall, especially as deals now in the works with insurers are finalized.
Political advocacy related to the federal health-care law is expected to remain intense. Some $500 million has already been spent on political ads about the law since it was enacted in 2010, and the total could reach $1 billion by 2015, according to WPP PLC's Kantar Media.
"We are seeing a steady stream of political and advocacy ads that are critical of the law. What we aren't seeing yet is a countering stream of ads that support the law," said Elizabeth Wilner, vice president of a Kantar unit that tracks political ad spending. Critics of the overhaul had a five-to-one advantage in ad spending as of July, Kantar says.
Broadcasters are used to posting big political ad numbers in election years. In the fourth quarter of 2012, political ads made up nearly one-third of TV station ad revenue, according to UBS analyst John Janedis. That revenue haul normally drops off significantly in nonelection years, but health-care ads may help close the gap. "To the extent you can offset some of that, it's a big deal," he said.
Write to Amol Sharma at amol.sharma@wsj.com
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