Airtime Is money

Basing pay on ad spending could create a consulting conflict of interest

By

 Updated:

When people discuss the sometimes prohibitive costs of political campaigns, rarely is the role that consultants play in driving up costs addressed.

Consulting firms hired by presidential candidates who make it all the way to the November election earn millions of dollars. If their candidate wins, the consultants' careers are made.

For work on hot House or Senate races, consultants can make anywhere from $200,000 to $500,000 per candidate, according to Raymond Strother, lead partner in the Democratic consulting firm Strother-Duffy-Strother. The most successful firms work for several candidates at a time.

"We make an enormous amount of money here," says Strother during an interview in his new office just north of Washington, D.C. "We make the kind of money a brain surgeon would make."

At political consultant training seminars attended by Center for Public Integrity staff doing research for this study, the speakers invariably advised that more money be poured into their own medium specialties — be it television, direct mail, phone calls or specialized targeting programs — always in the name of conserving valuable campaign resources and making the biggest impact. In that vein, they warned against wasting money on items like yard signs, bumper stickers and other "tchotchkes," or on reaching out to voters who they've decided will never vote for their candidate.

The most influential advisers hired in any big campaign are the media consultants, say experts. They contribute seasoned advice on message and strategy, play crucial decision-making roles in the placement and timing of expensive commercials, and as a result, they have an enormous impact on the campaign's budget.

For every advertising dollar spent, consultants typically are paid a commission that can run as high as 15 percent. Veteran consultants and experts interviewed by the Center say the commission structure creates a conflict of interest because there's an incentive to recommend sizable television campaigns, driving up costs.

These television commercials have the power to make or break a candidacy.

Working on commission

This spring, the boyish-looking media consultant now engaged in the frantic campaign to re-elect Sen. Rick Santorum of Pennsylvania paced the width of a Washington, D.C., hotel conference room and delivered his standard message to a group of young, would-be campaign advisers.

John Brabender cuts a different figure compared to other speakers at training conferences for campaign consultants and vendors. Hair flopping down his forehead, he gets out from behind the podium, staying in motion as he shows ads, tells war stories ("Bob Torricelli got out of the race about four days after that [spot] went on the air …"), dispenses pointers ("The first 5 seconds of any ad are critical …") and admonishes the political junkies gathered to consider how unlike most voters they really are.

"It occurred to me, walking in here today, it's a Saturday afternoon in early March. It's 75 degrees out. And we're in here to listen to political direct mail, political radio, political TV, watch commercials," he tells them. "There is something very seriously wrong with every single one of us."

The voters have other things on their minds. "They're trying to figure out how to get their kids home from soccer practice," Brabender lectures. "We're a disruption, an intrusion on people's lives."

Up-and-coming consultants listen, but are not deterred. They covet his job: it's creative, high-stakes, exciting … and lucrative.

The Center for Public Integrity gathered records and analyzed payments to consultants working on federal campaigns during 2003 and 2004. Expenditures of candidates and party committees were reported to the Federal Election Commission; those of "527" political organizations were reported to the Internal Revenue Service.

The Center found that more than $1.78 billion was spent on campaign consultants, and of that, nearly $1.2 billion went to the media consultants who handle ads. The consultants or media buying specialists use most of that money to pay for commercial airtime, but buried in those reported sums are the percentage-based commissions that consultants keep.

Veteran consultants say the standard 15 percent commission can be negotiated to a lower rate. In the most expensive campaigns, such as presidential races, rates have dropped as low as 4.5 percent, according to Joe Klein's book, Politics Lost, but still net generous fees for consultants.

Some of the largest payments identified by the Center's study pass through firms such as Buying Time LLC, which specialize in buying commercial airtime, but do not create television spots. These specialists generally get smaller commissions ranging from 2.5 percent to 4 percent.

Consultants argue that commissions do not create a conflict; rather, they say, the over-arching motive behind buying more airtime is to crush the opponent.

"This sounds Pollyannish, [but] I think the most important thing to a consultant is to win," says David Axelrod, the Chicago-based consultant who advised Illinois Democrat Barack Obama's Senate campaign.

"Sometimes more media is the right answer," Axelrod says. "Part of the art of this is getting the right mix."

No doubt there are consultants who are "unprincipled," he says, but he believes they are few in number, since gouging a candidate would deprive the campaign of funds — a losing strategy.

"If you have any integrity, then you don't do that," Axelrod says.

Doug Bailey, founder of The Hotline political news service, holds the opposite view. A former consultant to Republican gubernatorial candidates and President Gerald Ford, he asserts that media commissions create a clear conflict of interest and ultimately boosts the costs of campaigns.

"TV ad makers make more money the more ads that are bought. And so the money is poured into television and," Bailey, says, mimicking consultants' advice, "'we need more, we need more, we need more.' It's just nonstop to the point way beyond what makes any sense."

With few exceptions, media commissions are not disclosed on records filed with the FEC, which requires neither uniformity in describing expenses nor itemization of commissions.

Take the Obama campaign, for example. Its reports show a grand total of $6.2 million paid to media consultant Axelrod's firm, now known as AKP Message & Media. The firm didn't keep all of the money; $5.7 million was used to buy airtime from television stations. Another $409,000 went for production costs. Only $80,500 was itemized as consultant fees to AKP. But that is just part of the picture, because an undisclosed percentage of the millions spent on airtime was returned to AKP in commissions.

Axelrod wouldn't reveal precisely how he negotiates his commissions, saying that he worries that disclosure would give candidates the edge in future negotiations.

"I don't want them competing with each other," he says.

But he does acknowledge that generally his charge for the first $1 million in billings is 15 percent, with the rate rapidly descending after that.

Like Brabender, Strother, and other sought-after consultants, Axelrod had other clients during the election cycle studied by the Center. They included Democratic Congressional Campaign Committee chairman Rahm Emanuel. His campaign committee paid $92,000 in consultant fees, mainly in $3,000 monthly installments, though he had a safe Chicago district and no significant media campaign.

Axelrod's highest-billed client was John Edwards, whose presidential campaign paid $10.3 million from July 2003 through February 2004 for "media" or "consulting/media." The portion the Axelrod firm retained as commissions is not disclosed.

Political consultants, who can be valuable sources to reporters covering political campaigns and often double as on-air political commentators, become reticent, even testy, when the subject turns to their commissions.

Joseph Napolitan, a Democratic political consultant since 1956 and founder of the American Association of Political Consultants, chafed at questions about his own compensation.

"It's a private business," Napolitan says. "Why is the public entitled to know?"

Professor James Thurber, director of the Center for Congressional and Presidential Studies at American University, firmly believes that the commission structure creates a conflict of interest and deserves public attention.

"These are public events. These are elections for public office," he says. "In a democracy, it's important to have sunlight on things so the public can make a judgment as to whether it's appropriate or not."

Republican consultant Brabender would not reveal what he is charging Santorum, but says in general he generally charges clients a commission ranging anywhere from 7 percent to 13 percent of the ad buy, sometimes adding a retainer to boost his income for work in smaller races. He notes that since he might have to do the same amount of work on a $5 million account as he would on a $1 million account, having a strict commission structure would be "kind of silly" and is "probably obsolete."

"But I will tell you, the reason it's hung on is, without it, I don't think most political campaigns understand the true cost that a media firm has, and understands how a good firm really should be compensated."

Former GOP consultant Bailey, whose work was highly regarded by both Republicans and Democrats in his field, puts it another way.

"Candidates and managers for the most part don't know what the consultants do," Bailey says. "And therefore, if they don't know what they do, they don't know what a fair charge is," he says.

There's a method to his media buy

One consultant who felt compelled to disclose his compensation was Joe Trippi, the manager of Howard Dean's 2004 presidential campaign who was replaced late in January following the Democrat's losses in Iowa and New Hampshire. Right after Trippi left, media accounts revealed that while receiving no salary as campaign manager, he had made lucrative media commissions.

Bloggers vented online that they'd been betrayed. His reputation among them and the public as an Internet revolutionary no longer lined up with the reality that he was being compensated as an old-media consultant — that is, when Dean's message was televised.

In his book, The Revolution will not be Televised: Democracy, The Internet, and the Overthrow of Everything, Trippi calculates his take — one-third of his three-man media firm's commission — as $165,000, and defends the sum as reasonable for 13 months' work. The Center has learned that he also received a third of the $328,000 consulting fee that the Dean campaign reported was charged by his firm.

During an interview this spring, Trippi told the Center that while working on Dean's campaign he was unaware exactly how much in commissions his firm was charging for each media buy because the rate had been negotiated by his partner, Steve McMahon.

"I found out after the fact, once everyone started to say 'Joe Trippi is a scum ball! He's managing the campaign and making decisions so the firm would get the money!' I only learned after the fact" that it was a 7 percent deal Trippi said.

He still resents being made out as what he calls the "poster child" of the conflicted commission-paid consultant. "It's just bull. It's not true. I'll take a polygraph or whatever. … If I was going to be a very good consultant thief," he says, "I would have spent more on television" than the $7 million in ads that he estimates were placed through the end of 2003. According to Trippi, that amount is "actually very low."

"Our view was whoever won Iowa and New Hampshire was going to go on to be the nominee. So we piled our $7 million into those two states," he said.

While in high gear, the Dean campaign was breaking records for fundraising — largely because Trippi was adept at using the Internet to attract crowds to Dean events, build excitement and bring in unprecedented sums in donations through the campaign's Web site. By the end of January 2004, the Dean campaign had raised $47 million, twice as much as had John Kerry. The other Democratic candidates trailed even further behind.

By that date, Dean's campaign also had outspent his rivals and was having trouble paying staff. Now, the decision to advertise early in the campaign and in states whose primaries were many months away looked suspect.

Trippi is particularly sensitive about criticism of one early ad buy — in summer 2003 on television stations in Austin, Texas, long before the state's March 2004 primary.

"That was my idea," he says, adding that it was a smart move because viewers in Texas were driven to the Web site and contributed $1 million.

"That's called 'waste,' or that's called 'Trippi lining his pockets'" by those who don't know the full story, he says.

Media spending decisions were hashed out during meetings with Dean, Trippi and his two media firm partners, the campaign pollster, finance director, and a handful of other close advisors, according to Trippi. Collectively, they advanced a strategy to boost Dean's name recognition, drive donors to their Internet site, and run opponents "into the ground" financially by provoking them to respond with their own expensive media campaigns.

"What we did, we put up $100,000 in ads in Austin, saying the president is wrong — on his own turf, taking on the president," he says. "The commentators are brain dead idiots."

It was never about the commissions, he insists.

"I'm telling you, I've always been 'Do what you love and do what you care about and it will be fine.' That's always been my attitude," says Trippi.

Advertising without borders
 

"Don't worry about waste."

That's the advice from Thomas "Doc" Sweitzer, a Democratic consultant and partner in The Campaign Group. At a consultant training seminar sponsored by Campaigns & Elections magazine in June 2006, Sweitzer explained that he places ads for New Jersey candidates on stations broadcasting from nearby Philadelphia. That may sound wasteful to some, he said, but it's "dollar for dollar less expensive than other forms of communication because it is so persuasive."

Then repeat the ad "over and over and over and over again. And when people say, 'Shut up! Get it off!' that's when you are starting to get through," he advised.

"You always want to dominate the dominant medium. … If you run it on television, run it to death. If you run it on radio, run it to death."

After the panel discussion, Sweitzer said he was just dispensing textbook wisdom. "I was doing Advertising 101, which is run your ad over and over and over again. … That's what works." Inquiring into the consultants' profit motive, he says, is "a faulty line of questioning."

Sweitzer's approach gets support from campaign finance expert Herbert E. Alexander, who says that because media markets do not match the boundaries of states or districts, it's common to see television time purchased and squandered on viewers who can't vote for the candidate in the ad.

"Well, what's the alternative?" says Alexander. "I mean the candidate wants to win."

However, Dennis W. Johnson, a professor of political management at George Washington University, looks at it differently.

"Sometimes I just flip on the television and turn to my wife and say, 'Somebody just got suckered,'" says Johnson. "How stupid can a candidate be and how crass can his consultant be to sucker him into this when there are so many more effective ways of spending his money?"

Johnson, who lives in Washington, D.C., cites as an example the West Virginia candidates he sees advertising on expensive Washington stations, whose signals reach a small eastern tip of the state, about 50 miles away.

Though he did not mention a specific race, Jim Humphreys was such a candidate. In 2002, the Democrat ran for Congress from West Virginia's 2nd Congressional District and aired hundreds of commercials on Washington, D.C., television stations.

Humphreys outspent Republican incumbent Congresswoman Shelley Moore Capito by a wide margin — $8.2 million to $2.5 million, according to records compiled by the Center for Responsive Politics. Humphreys, a trial lawyer, reportedly used his own funds to pay 95 percent of his campaign expenses.

Evan Tracey of TNS Media Intelligence, a political advertising tracking service, says that Humphreys aired 610 ads on Washington, D.C., television stations during the 2002 campaign. He spent $766,000 on those spots, according to GMMB, the Washington-based political advertising firm he used.

GMMB partner Jason Ralston says Humphreys decided to buy Washington-area airtime because polls showed he was in trouble, and he was "willing to spend whatever it takes" to win. Ralston advised his client it was a "cost-inefficient," strategy, he says, but that it might give him a shot and "that's what we're here to do, to win elections."

The suggestion that the firm was motivated by profits is "false and ridiculous," Ralston says. In 2000, Humphreys had come within 5,700 votes of beating Moore Capito and thought he had a real chance in 2002. But he lost again.

First-time jitters

Johnson, the professor, notes that first-time candidates are particularly vulnerable when it comes to taking bad advice.

"It certainly is possible for a really frightened and naïve candidate to pay too much attention to what a consultant is saying. I think a slick consultant can pull the wool over the eyes of a candidate," says Johnson.

Martin Frost was just such a naïve candidate in 1974 when he first ran for Congress in Texas and lost. A practicing lawyer and former journalist, he had hired a local consultant — one no longer in the business — to help him challenge the Democratic incumbent in the primary.

"The campaign consultant I hired convinced me to spend a lot of money on television," Frost recalls. "That was a mistake."

Later he learned that only 15 percent of registered voters there cast ballots in primaries, so the vast majority of people viewing his ads were not potential voters. "So spending money on television doesn't make any sense at all," he says.

Four years later when he ran for office again, Frost hired a campaign manager, but no consultant.

"I didn't spend any money on television," he says. "I spent money on direct mail and door-to-door campaigning."

That time he won.

For his 2004 race, media firm Strother-Duffy-Strother and its buyer charged Frost 15 percent of his $1.1 million media buy. Production and consultant fees added another $92,000 to the bill.

Frost says it was his decision to wage an expensive campaign, because he had been pushed into a heavily Republican district by Tom DeLay's district remapping. After 26 years in Congress, Frost lost his seat.

Big spending on safe seats

Even in lopsided races, leading candidates sometimes spend extraordinary sums on media.

"Many people have large campaign funds and they don't have serious competition. They're still running television ads. And they are still spending money on these campaigns when in many cases it's unnecessary," says Thurber, the American University professor who has extensively studied political consultants.

The 2003-2004 information compiled in the Center for Public Integrity's database for this confirms just that.

Thurber believes consultants advise media when it's unwarranted because "they are sitting there thinking, 'God, I can make another $90,000' or whatever it is, and you've got a shop of people that you have got to pay; you're going to lean towards running them."

In a panel discussion on ethics earlier this year, Illinois Sen. Obama, a prolific fundraiser, called the chase for campaign money "the original sin of everyone who has had to run for office, myself included." And yet during the final stretch of the his 2004 campaign, when Chicago Tribune polls reported that he had an overwhelming 51 percent lead over his opponent, Republican Alan Keyes, Obama and his media adviser launched an expensive television campaign.

The chances of Keyes winning were slim because he was an out-of-state candidate — replacing the GOP primary winner, who had dropped out amid a sex scandal, leaving the party scrambling to find a rival to the popular rising Democratic star.

Obama was so assured of winning that he was able to leave the state and jet around the country to help raise funds for other Democrats, according to Illinois media reports. And yet, on Sept. 30, he gave his media advisor $2.5 million to book airtime for an ad campaign that started in late October.

His media adviser, Axelrod, says they didn't know whether Keyes would raise funds to advertise heavily in the final days, so they felt it was "the prudent thing to do, to communicate in a modest way."

A few veteran, incumbent senators with safe seats also spent millions of dollars on consultants in 2004 races, even when challengers were severely underfunded.

In Iowa, according to the National Journal Almanac of American Politics, Sen. Charles Grassley wins re-election races handily. In the past three elections, the Republican has won every single one of the 99 counties in his state. In 1998, he was unopposed in the primary and spent $2.8 million against an opponent who spent $165,000.

In 2003 and 2004, his campaign overshadowed his opponent's by a much wider margin. Once again unopposed in the primary, the Grassley campaign spent $6.4 million compared to the Democrat, Arthur Small, who spent only $135,000.

Grassley used a Des Moines marketing firm, Strategic America Inc. to place $2.3 million in television, radio, and newspaper ads. Company chief executive officer Mike Schreurs, who has worked on Grassley's campaigns since his successful 1974 run for Congress, says the senator runs a media campaign to "re-energize the dialog" with constituents and to help Republicans further down the ballot.

"Given the fact that he wins [with] 70 percent of the electorate, he draws other voters who also would support Republicans downstream," says Schreurs. "Senator Grassley is as frugal as his reputation is known for, and he would not spend a dollar unless he feels he needs it."

For video production, Grassley turned to a Hollywood outfit, Strategic Perception Inc., and spent $384,000 for commercials that played up his image as a common man.

The most talked-about ad featured the senator atop a lawn mower with two push mowers attached — a contraption he had devised to cut a broader swath of grass.

"Chuck Grassley is a frugal man and he's well known for that. He figured out a Rube Goldberg way of mowing a lawn in less time. I think it was pretty clever. It said a lot about the man," says Strategic Perception chairman Fred Davis.

The film crews cost $15,000 to $30,000 per day. Fees for the writing, editing, and post-production cost extra. Davis says his ads look and sound better than the standard political ad because his company has movie industry production and creative capabilities.

"We use humor a lot and we shoot them a little fancier than [some of the] others. We're in Hollywood, not Washington. … Our creed is that political ads run right next to Budweiser ads. So for our client, the political client, to have the credibility they need, it has to be produced just as well," he says.

"With his campaign, there wasn't an enormous potential of losing. He just wanted to do something fresh and different," says Davis.

In an e-mail response, Grassley spokeswoman Jill Kozeny said neither Davis nor Strategic America had a role in deciding the size of the media buy. It was decided by the campaign, she says, eliminating any profit motive for the consultants.

"Grassley campaigns have never believed in the arrangement where media advisors get a share of the buy and therefore have an incentive to have a bigger media campaign. It's a bad idea and hasn't been allowed in the Grassley campaigns," Kozeny wrote.

She says the decision to mount a robust campaign was based many other factors, including the uncertainty, until election day, of how serious a campaign an opponent will mount, the history of elections in which outcomes defied polling predictions, the need in Iowa to defend against "soft money" ground operations run by groups such as America Coming Together, the attacks on Sen. Grassley's tax and prescription drug initiatives from John Kerry's presidential campaign — and the risk of projecting an air of complacency, even arrogance, by running a low-key campaign.

The underfunded Democrat, Small, entered the race hoping to draw Grassley out on issues such as tax policy, Iraq, and the trade deficit. But his campaign was never taken seriously by local media and so there was no real debate, Small says. His position papers "fell with a silent thud," as he puts it.

Small says he tried to solicit contributions, spending hours a day on the phone. "It was a god-awful experience. I did it for a few days." His biggest donor sent $50.

He ran no ads. "I didn't have that kind of money to show me mowing my lawn," says Small.

In New York, incumbent Sen. Charles Schumer had no primary opponent and a token challenger in Republican Howard Mills, who spent $629,000 on the 2004 race. Schumer however spent $15 million, including almost $9 million on TV commercials placed by Morris & Carrick. It can cost more than $1 million a week to advertise in the very expensive New York television market.

At the time, news media reports presented the ad campaign as a way of broadening Schumer's appeal for a potential race for governor in 2006, since the media exposure wasn't needed to win re-election to the Senate. Schumer however decided not to enter the governor's race; Elliott Spitzer is now the Democratic candidate.

Experts say incumbents often raise and spend large amounts to scare off challengers, to be able to come to Washington with the cachet of having their constituents' overwhelming support and to prepare for the next race.

Thomas Mann, senior fellow at the Brookings Institution and co-author of The Broken Branch: How Congress is Failing America, says "a lot of money is wasted by incumbents who sense risk where none really exists." Asked specifically about the re-elections of Schumer and Grassley, he says, "But remember, Republicans have won in New York, Democrats have won in Iowa, and so you don't want to show any sign of weakness. You want to blow them away."

But, inherent in any super-sized race, Mann reminds us, are enormous fundraising demands on candidates, "who therefore call on lobbyists, who feel obliged to give and to raise [money] for them."

That, Mann says, can lead to other problems.

"And then, there's oftentimes, [though] not always, a search not just for preferential access, but sometimes for contracts and earmarks," he cautions. "And so the potential for conflicts of interest are serious ones."

Care about freedom of the press? Support independent investigative journalism.

Donate now
Donate now