Thursday, August 6, 2015

It's All About the Benjamins, Baby


Tonight, millions of Americans will gather around their televisions for the opening act of what promises to be a veritable pantomime in the guise of elevated political discourse. For most voters, this will be their first sampling of the 2016 presidential candidates and public opinion will begin to coagulate, as more voters take themselves out of the undecided column and declare their allegiance to their candidate of choice.

Tonight however, there are 100 televisions and 100 opinions matter most of all.




Out today from POLITICO is a report that the top 100 political donors in the country have remained largely uncommitted heading in to tonight's debate. In a field crowded with 17 Republicans, with the potential for one or two more entries, the cash advantage has never mattered more for a candidate. With a higher than usual number of candidates, their respective campaigns will need to double down on the high-value buys that generate impressions on voters.

Air time, especially in the more expensive media markets of the early primary states, such as Boston-Manchester (New Hampshire) and the respective markets for Tampa, Miami, and Orlando (Florida), will be at a premium. Mega donors will be the lifeblood of these campaigns if they hope to move bullishly into the early primaries and acquire prime air time when targeted primary voters are watching television. In particular, the larger media markets will have a higher Cost Per Point (CPP - the cost of buying a ratings point, which is equal to one percent of the target population in the market). If a campaign wants to reach 30% of a media market, it will be significantly more expensive in Tampa, FL than it will be in Des Moines, IA.

Conventional wisdom in the political world tells us that in order for a campaign ad to generate an impression, the campaign will need to purchase 100 points to be impactful in a market. However, the conventional wisdom will have to be thrown out of the window for 2016. When the airwaves become deluged with back-to-back campaign ads, candidates will need to invest significantly more resources and purchase more gross points to break through in the market. A planned ad buy that might have cost $500,000 in 2012 could easily cost $1 million or more in order to get the same results. The average political campaign devotes at least 80% of its budget to communications and advertisement, with the bulk going towards television. If this field of candidates are going to compete, then they are going to need those major donors to back them up.

As the candidates begin to establish their presence in the early primary states and plan their ad buys, I am certain that there are several campaign managers and finance directors out there who are looking at that list of the top 100 donors and asking, "What gives?' In the 2014 mid-term, this group of 100 donors were responsible for $320 million worth of political contributions. In a presidential year, this number is expected to go even higher. Despite all the money that is up for grabs, this elite group has mostly been on the sidelines, silently observing the fray. The most active of the group has been Bob Mercer, who has contributed just over $11 million this cycle and is a known backer of Senator Ted Cruz's super PAC, Keep the Promise.

In the mid-year FEC filing, former governor Jeb Bush led the pack of all 2016 candidates with $114.6 million raised, with $11 million in the campaign account, $103 million in the PAC, and a relatively low burn rate.  Bush's cash on hand is more than double the next-best financed candidate, Hillary Clinton. Compared to the rest of the 2016 candidates, Bush is currently in a comfortable position and does not need to pursue donors as aggressively as the other campaigns. In the face of Bush's overflowing war chest and two potential self-funders (Donald Trump and Carly Fiorina), those 100 donors matter more than ever to these campaigns. So tonight, when you tune in to the debates, don't pay attention to the barbs and rejoinders. Listen for the words they are using to sell their candidacy to the group of 100. The success of a campaign is entirely dependent on its ability to spread its message. The allegiance of these top donors will enable the campaigns to spread their messages and it will determine who goes into 2016 roaring like a lion or squeaking like a mouse.

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