Tuesday, April 24, 2007

Presidential Campaigns and Consultants

Like most federal campaigns, the presidential candidates use a long list of consultants to help them with political strategy, fundraising, get out the vote efforts, legal services, media, communications and now technology consulting. The use of consultants is not new, nor is it going away.

Databases and microtargeted communications have, to a certain extent, replaced broad slightly paid or volunteer organizations as a means of managing campaigns. The low cost methods of mass emails and interactive websites has shifted costs away from direct mail and mass media to much smaller venues that give the appearance of personalization, and that is not necessarily a bad thing. However, these shifts do a couple of different things to presidential campaigns in particular that may not be a good thing.

First, the movement away from large scale volunteer corps as a means of message dessmination depersonalizes the campaigns a great deal. This does not mean that campaigns don't need several brigades worth of ground-pounders walking the precincts, because they do. Rather, these ground-pounders are not serving as a means of campaigning, that is getting the candidate and their positions known to neighborhoods. Additionally, there is a certain fear of lack of message control that just makes consultants who specialize get-out-the-vote and communications so jittery they simply cannot abide having a large volunteer corps, although they need them.

This juxtaposition of fear and need means that even amoung devoted volunteers, there is little "personalized contact" and personal effort that is wanted by campaigns. The Democrats in 2004 in Ohio are a perfect example. Rather than recruting neighbors to manage the door-to-door contact, the Kerry campaign and the DNC imported literally hundreds of volunteers to work in precincts in the Buckeye state. The result was that Ohio voters were not happy with some preppy kid from Yale walking around their neighborhood telling them to Vote Kerry, when their actual neighbor is walking around saying Vote Bush. The election results in many areas reflected poorly on the Democratic efforts.

The second thing that consultants do is drive up the costs of campaigning. Operationally, consultants may be a necessity, but they can be a very expensive necessity if the campaign leadership and the canddiate are not careful. The plethora of consultants, some quite specialized, demand a certain price for their expertise. Of course, I don't begrudge them their effort to make a living (I am after all a consultant for PACs), but care has to be taken not to let consultants drive the campaign in place of recruiting talented staff or volunteers, both of which are much less costly than consultants.

Which brings us to the current crop of presidential candidates. Amoung the top six candidates, the use of consultants is widespread and covers a number of areas. Of course, all the campaigns are using consultants for fundraising, and some candidates are getting more for their money than others. Also, each campaign has legal counsel to help them, almost a requirement when running for President. Overall, the six "frontrunners" have spent almost $4.6 million dollars on consultants, which amounts to just over 11 percent of their total spending (this does not included outstanding debts which may be owed to some consultants). Below is a chart that shows the consulting costs for each campaign in the first quarter. Just like the payroll statistics I posted about previously, the two candidates trailing in the top tier of candidates, John Edwards and John McCain, are spending a much higher percentage of their funds on consultants than the other four. Rudy Giuliani is also spending more than 10 percent of his expenditures on consultants.

A quick caveat is in order. These categories are largely self-reported categories by the candidates themselves. For example, John McCain has no political strategy consultant listed, although I am sure that some of thsoe costs are divided among fundraising and communications consultants. Similarly, either John Edwards is getting a bargain basement deal on political strategy or those costs are allocated in other consulting.

There are some surpising figures here. First is John McCain's $440,000 spent on get-out-the-vote efforts, when the first primary is still 8 months away! To be fair, it may be that his GOTV efforts contain other kinds of political strategy consulting. Second is the whopping $266,666 that Hillary Clinton has spent on technology consulting. This cost is largely to NGP Software and probably includes costs for compliance as well, but still that is a very large number completely out of line of the other candidates.

Third, legal/compliance costs are widely disparate. What the heck is Rudy Giuliani getting for his $227,000 spent on compliance and legal consulting? Some of this may be software costs, but for that kind of money, I would want a guarantee of no compliance problems from my vendors. Likewise, John McCain is the only other candidate to spend more than $100,000 on compliance/legal services, forking over $153,000 to such vendors. In comparison, most of the other candidates appear to be paying less than half as much on compliance/legal services. None of the candidates are in any sort of trouble with teh FEC at this point, so the costs seem strange.

The big take aways are not anything different than the payroll matters. McCain is very top heavy and not really getting what he needs from his consultants. So a serious reshuffling of the deck is not only necessary but an emergency need now. Unless McCain can arrest the bleeding of his campaign costs, he is going to flame out before Iowa and New Hampshire.

Barak Obama seems to be getting the best value for their dollar, with far less in terms of percentages spent on consultants (and second in absolute dollars spent), but he is surging well in the race. Romney, for his part, needs to be careful that his consultants don't take a bigger piece of the pie.

In the end, it is not that consultants will finanically ruin campaigns (unless the fundraising consultant fails miserably). Rather the chances are that the consultants will destroy a campaign by poor advice and decision making. Clearly, the campaigns need to keep a lid on their expenses, but over time, as fundraising operations continue, it may be possible to pay more consultants or more money, without getting in to problems.

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