Data You Can Believe In
The Obama Campaign’s Digital Masterminds Cash In
by Jim Rutenberg
Rutenberg is a political reporter, not a business reporter, so he tends to be blown away by the claims of ex-Obama staffers now starting up marketing data firms that they are radically out ahead of corporate America in their capabilities.
Grisolano and McLean and the others were part of a singular breakthrough in the field of television-ad buying, where about 50 percent of the campaign’s budget was spent, or more than $400 million. Previous campaigns would make decisions about how to direct their television-advertising budgets largely based on hunches and deductions about what channels the voters they wanted to reach were watching. Their choices were informed by the broad viewership ratings of Nielsen and other survey data, which typically led to buying relatively expensive ads during evening-news and prime-time viewing hours. The 2012 campaign took advantage of advanced set-top-box monitoring technology to figure out what shows the voters they wanted to reach were watching and when, resulting in a smarter and cheaper — if potentially more invasive — way to beam commercials into their homes. ...
The system gave Obama a significant advantage over Mitt Romney, according to Democrats and many Republicans (at least those who were not on Romney’s media team).
I think a more defensible argument is that at least the Obama staffers didn't loot the campaign the way some of Romney's consultants did. Obama took lots of functions in-house and paid salaries, while Romney hired consultants and paid their marked-up fees.
Now A.M.G.’s founders say the company is at the forefront of a move to turn upside down the way the $60-billion-a-year television-ad market has functioned since its start. And they hope to get very rich in the process.
This article's notion that political marketers are so much more sophisticated than consumer marketers that the young guns of Obama 2012 will "disrupt" the way big business operates is not very plausible sounding. Political marketing has always lagged behind corporate marketing because of problems like lack of continuity and reliance on fashionable gurus who have gotten hot lately. The Obama campaign was able to maintain a core from 2008 to 2012, while poor Romney just hired a bunch of fast-talking consultants who saw him as their fat cat chance to pay for their kids' college educations off of a few months' work.
But Gershkoff had come upon a cache of data that all the strategists would come to appreciate. She had contracted with a relatively new firm called Rentrak that was competing with Nielsen and was buying up real-time, raw viewing data directly from cable and satellite companies that had nearly 20 million set-top boxes in eight million homes. When Gershkoff told Grisolano, he was thrilled. Rentrak’s huge new trove of data, he surmised, could help him find out with relative certainty what shows were being delivered to the homes of the roughly 15 million persuadable voters Wagner’s department had identified.
Fortunately, there happened to be a rare expert in set-top-box data, named Carol Davidsen, working in the cave. ... Her previous employer, Navic Networks, was a very early pioneer in the field of set-top-box data collection. And she was one of the early programmers to figure out how to make a television, designed as a one-way path for sending programming into American homes, relay information back about what exactly a viewer was watching.
Davidsen determined that Rentrak could roughly do what Grisolano wanted it to do: produce data that could be checked against Wagner’s list of most-persuadable voters to find matches. Rentrak had access to the set-top boxes in the homes of thousands of the targeted voters in every competitive market of every swing state.
This sounds like science fiction, right? Wow, the Obama campaign must have been light-years ahead of corporate America: they're capturing data on what people were watching from set-top cable boxes!
Except I was doing exactly that for the BehaviorScan market research service on the Procter & Gamble account in 1983-85. For about 30,000 volunteer consumers, we knew every single thing they bought at every supermarket and drug store in town, plus every TV show and commercial they watched in their homes, and we could send different commercials to individual houses via their cable set-top-box.
The set-top box recorded the exact channel each panelist was tuned to by the second. We then employed workers to watch videotapes of all TV shows shown in those markets and write down which commercials started when.
My friend Chris managed the night shift of people who had been attracted to the notion of a job being paid to watch TV. Unsurprisingly, when they found out they had to fast-forward through the shows and only watch the commercials, they weren't the most diligent workers. Every time Chris went to the bathroom, they'd run off to a different floor and party. But they weren't hard to track down because they'd immediately turn their boomboxes up loud and start to boogie. He fired a few and they filed racial discrimination complaints with the EEOC. A federal investigator came by, but he turned out to be a fellow Irish-American Chicagoan; Chris's boombox story cracked him up and he closed the case.
(For instance, Rentrak had 100,000 people in its Denver sample, some 20,000 of whom were on the Obama list; Nielsen had a total of 600 people in Denver.)
But there are lots of market research firms far more ambitious than Nielsen is with its TV ratings. The reason Nielsen always has only a tiny sample size and lags far behind in technology is because it has a monopoly on TV ratings and people seem to like it that way: they like having one set of ratings that sound authoritative because there aren't any competitors. Arbitron, which long had a radio ratings monopoly tried to get into the TV ratings game way back in the 1980s, but there wasn't much client enthusiasm.
Ad-buyers and ad-sellers both agree to use the same set of numbers, even if the quality to cost ratio is mediocre. One problem is that if you switch ratings companies then there will inevitably be changes in ratings due to the switchover, which drive clients crazy. Do you want to be the marketing research executive at CBS who has to explain to Les Moonves and Chuck Lorre that the change in ratings of Two and a Half Men from last week to this week that you are reporting is probably not real, but is just caused because you dumped Nielsen and signed up with a new lower-cost competitor that does things a little differently? For various reasons like these, monopolies or cartels in the various ratings business are remarkably defensible and enduring.
... The campaign determined that two of the top shows to buy were 1 a.m. repeats of “The Insider” and afternoon episodes of “Judge Joe Brown” — shows that were far cheaper than the evening news or anything being shown on the networks in prime time.
This doesn't mean that TV advertising of consumer packaged goods is wasted. You certainly need advertising to get most new brands off the ground. After that, however, heavy advertising may mostly serve a deterrent effect of keeping out new entrants. Many CPG categories are something of a cartel, with the same famous brand names dominating decade after decade, in part because many CPG products work pretty satisfactorily and the CPG firms pay huge amounts of money to remind you that these products have long-established reputations as satisfactory.
In the end, an analysis by the Republican ad-buying firm National Media found that Obama paid roughly 35 percent less per broadcast commercial than Romney did.
To a lot of GOP consultants, who get paid because they pocket 15% of the cost of buying ads, the money wasted by the Romney campaign may have been less a bug than a feature.
The article goes on to lament how the one-time Obama saints are now selling out to corporate America, but the Obama employees getting rich off corporate America tomorrow seems more effective than the Republican consultants' tendency to try to get rich off the candidate today.
The big difference between what the Obama campaign could do in 2012 and what CPG marketers could do a generation before is in data mining social media, pushing the already well-pushed envelope of privacy.
The campaign didn’t go into much detail, at the time, about exactly how it used Facebook. But St. Clair put it in fairly stark terms when I talked to him at A.M.G.’s temporary offices in Williamsburg, Brooklyn, in April. They started with a list that grew to a million people who had signed into the campaign Web site through Facebook. When people opted to do so, they were met with a prompt asking to grant the campaign permission to scan their Facebook friends lists, their photos and other personal information. In another prompt, the campaign asked for access to the users’ Facebook news feeds, which 25 percent declined, St. Clair said.
Once permission was granted, the campaign had access to millions of names and faces they could match against their lists of persuadable voters, potential donors, unregistered voters and so on. “It would take us 5 to 10 seconds to get a friends list and match it against the voter list,” St. Clair said. They found matches about 50 percent of the time, he said. But the campaign’s ultimate goal was to deputize the closest Obama-supporting friends of voters who were wavering in their affections for the president. “We would grab the top 50 you were most active with and then crawl their wall” to figure out who were most likely to be their real-life friends, not just casual Facebook acquaintances. St. Clair, a former high-school marching-band member who now wears a leather Diesel jacket, explained: “We asked to see photos but really we were looking for who were tagged in photos with you, which was a really great way to dredge up old college friends — and ex-girlfriends,” he said.
The campaign’s exhaustive use of Facebook triggered the site’s internal safeguards. “It was more like we blew through an alarm that their engineers hadn’t planned for or knew about,” said St. Clair, who had been working at a small firm in Chicago and joined the campaign at the suggestion of a friend. “They’d sigh and say, ‘You can do this as long as you stop doing it on Nov. 7.’ ”
No bias there! It probably didn't hurt that Facebook billionaire Chris Hughes had been an Obama campaign official in 2008.
Back in the BehaviorScan day, we only used data from volunteers who signed up in writing, we gave them money and prizes for it, and we certainly didn't extract data from their friends.
My presumption is that being able to show more closely targeted ads to the average individual is modestly profitable, but quickly gets countered, and life goes on.
In contrast, knowing a lot about certain individuals can be hugely profitable. If you happened to have the metadata from the CEO of General Electric's cellphone calls, you could probably make some serious money in the stock market anticipating mergers and acquisitions.
If you had happened to have, say, the cellphone metadata of Senator Larry Craig (R-Wide Stance), you could also make money. Hmmmhmmmhmm, the Senator spends a lot of time in public men's rooms ... maybe we should send him some coupons to promote our client's intestinal relief product? Or ... maybe ... we should blackmail him into inserting an obscure clause into tax legislation that will make us zillions of dollars? Which one sounds like a higher ROI?