DC Ad Budgets: A Tempting Carrot But A Harsh Stick

DC imageIn 2012, Barack Obama's and Mitt Romney’s campaigns spent almost $80 million combined on online advertisements leading up to the election. And that total was in turn dwarfed by the amount that was channeled through digital by super PACs, whose expenditures are more difficult to track with precision.

While those fundraising totals may have bowled people over at the time (it was a 250% increase over the roughly $22 million spent online in 2008), the advertising community is preparing for a 2016 election cycle that could make that figure look downright quaint. With hundreds of millions of dollars potentially coming down the pipeline, the DC advertising and outreach community is discovering that one of its major threats isn’t the rival political tribe, but the nonpartisan advertising technology community.

Fluent, an ad tech platform based in New York City, is among the many nonpolitical companies who are eyeing those political budgets.

“We’ve been pretty active for the past few years, and in the last six months have started working directly with the campaigns,” said Matt Conlin, president of Fluent. “The more we get into this space and see what the opportunity is like, the more we’re in ramp-up mode.”

A problem for Fluent and other ad tech companies without a political background is breaking the hermetic seal of DC spenders. Zac Moffatt, Mitt Romney’s digital director in 2012 and the co-founder of Targeted Victory, an agency which handles digital advertising and fundraising on the Republican side, said that, “inevitably, [DC insiders] are the people we go to for answers, because they know the market. It does a disservice to the market to think someone can just come in and not know politics and think they have the solutions.

Eli Kaplan, co-founder of the progressive advocacy agency Rising Tide Interactive, may disagree with Moffatt about most things, but on this occasion they share the same position.

“It’s been very rare for this nonpartisan thing to really succeed," Kaplan said. "I think Democrats really trust people who work with other Democrats, and it’s difficult to break into that space.”

Jordan Lieberman, president of Campaign Grid, a digital advertising platform that works on conservative and liberal campaigns, said “working with both sides was definitely a concern when I joined the firm in 2010, and industrywide.” Lieberman, a former publisher of the explicitly political, but still nonpartisan, Campaigns & Elections Magazine, believes the problem isn’t insiders helping both sides, but outsiders thinking they can compete without hands-on political experience.

“The easiest way to fail at capturing political or public affairs revenue is to appear for two months out of every two or four years at a trade show or conference and claim that you have the solutions.” In terms of the technology itself, “I think companies like Google, Facebook and Twitter have carried a lot of water for us … in terms of depoliticizing the technology field.”

Google, Facebook and Twitter have forced politicians and campaigns to open up to technology platforms that service both sides of the aisle. This benefits Campaign Grid, which is already plugged into the DC system, but can be just another barrier to entry for a startup or nonpolitical company.

Facebook, Google and Twitter are in a similar position to the major telecom companies: irreplaceable to political campaigns and regulated by Congress. All three powerhouses have made hires to cater their business and services to both sides.

Facebook COO Sheryl Sandberg had worked as chief of staff to former Treasury Secretary Larry Summers. Facebook’s VP of public policy, Joel Kaplan, was the deputy chief of staff for policy under George W. Bush. At Twitter, the head of global public policy, Colin Crowell, was legislative aide to Democratic representative Ed Markay, and the director of public policy, William Carty, was a longtime Republican staffer in the House and Senate.

Google employs Susan Molinari, a three-term Republican congresswoman, as VP of public policy, and the company’s director of US public policy is Adam Kovacevich, former communications director and press secretary for Democrats in both houses of Congress.

That the big three have executives from high posts in each party is apparently satisfactory for campaigns, at least according to Conlin, who said political ad spenders push their nonpartisan partners to adopt the same system. “They tell us, ‘We’re working with Facebook and Google, and this is how they set up their teams,’" he said. "So if we want this opportunity, we have to follow suit."

Conlin said Fluent is building parallel teams within the organization to address this, “from a sales perspective all the way through to client services and ad ops.” Google, Facebook and Twitter have massive political resources, and can build pipelines by absorbing prominent leaders in DC, but that’s a prohibitively expensive strategy for most ad tech companies.

People often lump New York and DC into the same category, what media folks might call “the Acela corridor,” after the train connecting the regions. But for ad tech companies looking to get into DC, the easy train ride belies the difficult terrain.

The most telling evidence might be the reluctance of neutral technology companies to speak publicly about the difficulties they encounter and clients they work with, out of a concern that announcing business on one side of the fence might damage business with the other side.

As Lieberman puts it, “It’s not always a meritocracy. Partisan technology is always inferior to nonpartisan technology, just by the sake of the number of people who can add to its quality … but even though it’s a gold rush, it’s still an industry driven by personal relationships.”

 

 

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