It Wasn't Always This Way - How the Business of Politics Ballooned Into a Multibillion-Dollar Industry
The following is an excerpt from the new book Building a Business of Politics: The Rise of Political Consulting and the Transformation of American Democracy by Adam Sheingate (Oxford University Press, 2016):
Ten miles from Baltimore’s Inner harbor, located in a low-rise office building in Towson, Maryland, is a successful business few Americans know about. Mentzer Media Services is one of the leading political consulting firms in the country. Mentzer Media does not design or produce the ubiquitous advertisements we see on television. Instead, the company specializes in the strategic placement of campaign commercials by purchasing airtime on behalf of its many clients, deciding where and when (and how often) an ad should run. Time-buying is a critical component of modern campaign strategy. It is also a highly profitable one. According to the company’s website, Mentzer Media has handled more than $1 billion in media buys. Assuming an industry-standard 10 to 15 percent commission on the ads it placed, Mentzer Media has earned between $100 and $150 million over the past several election cycles. In 2012 alone, Mentzer Media placed more than $245 million worth of ads, half of which were on behalf of Mitt Romney’s super PAC, Restore Our Future.
Mentzer Media is just one of the many consulting firms that profited from the 2012 election. The top Democratic media firm, GMMB, handled $435 million in spending in 2012, 90 percent of which came from the Obama campaign. Together, thousands of candidates, the two major parties, and a myriad of wealthy outside groups spent over $6 billion trying to win office or sway the outcome of a race. More than half of this total, around $3.6 billion, went to consulting firms specializing in media, direct mail, and digital services. Although it is difficult to know precisely how much consultants earn in a given campaign cycle, the top firms in the industry appear to be doing quite well. In 2012, just fifty professional firms, averaging around $50 million in expenditures, handled 75 percent of all consulting services in federal campaigns. Between 2008 and 2012, revenues and billings by the top fifty consulting firms grew in real terms by 66 percent, about seven times the rate of growth in overall political spending during the same period. Much of this increase is due to the pronounced rise in independent expenditures by super PACs and other outside groups. The Supreme Court decision in Citizens United opened the floodgates to more than $1 billion in outside spending in 2012—most of it on television advertising produced and placed by professional consultants.
Even if the political consequences of the 2010 Court decision remain a matter of debate to some, the economic benefits of Citizens United to the consulting industry are crystal clear.
In fact, federal elections are only one potential source of revenue for political consultants. Between 2008 and 2012, for example, GMMB earned approximately $125 million in commissions from political advertisements. During the same period, according to the Center for Public Integrity, GMMB received an additional $124 million in fees from the telecommunications industry, beverage companies, and several other industry groups. According to one study of the political consulting business, firms typically earn less than 40 percent of revenues in an election year from federal races; the majority of income comes from a combination of state and local candidates, ballot initiatives, political parties, corporate clients, and overseas elections. On this basis, the political consulting industry earned an estimated $8.9 billion during the 2012 election cycle. Politics has become a thriving commercial enterprise.
The rise of a multi-billion-dollar business of politics marks a significant change in the conduct of campaigns and the character of our democracy. Over the course of the twentieth century, the old style of political campaigns gave way to the media-intensive and candidate-focused electoral contests we know today. Whereas parties and candidates used to rely on a network of local operatives to rally the party faithful and manage the practical aspects of winning a race, most of the key decisions in contemporary campaigns are now in the hands of consultants who sell a variety of products and services such as media, polling, and direct mail to an array of causes and candidates. In the last hundred years, a modern political consulting industry took shape—and took control of American elections.
In his richly detailed account of nineteenth-century politics, Richard Bensel vividly describes how elections resembled “a kind of sorcerer’s workshop in which the minions of opposing parties turned money into whiskey and whiskey into votes.” At the heart of this wizardry was the party agent who “ran the machinery of democracy.” Hired by party leaders and local bosses to secure victory at the ballot box, the party agent performed a variety of important functions during the nineteenth century, including mobilizing voters, intimidating the opposition, and even working as judges and recording clerks on Election Day. Their job, simply put, was “manipulating the returns where they could, manhandling their opponents where they must.”
And what a job it was. Party agents were “experienced in the customs, traditions, and techniques of party competition in and around the polling place.” This was a valuable set of skills that granted party agents considerable influence over the conduct of nineteenth-century campaigns. Although motivated to some extent by political beliefs, party agents “were also, in much more mundane and personal terms, rewarded by money payments, social recognition, and patronage appointments.” Writing at the turn of the twentieth century, political scientist Moisei Ostrogorski described the American party system in similar terms as an “immense army” of party workers “spurred by the incentive of personal interest.”
Financial reward has long been a feature of American politics because political work attracts individuals motivated by a mixture of partisan and pecuniary interest. This was especially the case in the nineteenth century when armies of fourth-class postmasters and customs workers owed their livelihood to partisan politics. With their jobs depending on the outcome of the presidential contest, patronage workers provided much of the labor for political campaigns and paid a portion of their salary back to the party to help cover electioneering expenses. The graft and corruption associated with some of the urban political machines that flourished through the early part of the twentieth century further illustrate how politics provided financial rewards for the privileged few. Similarly today, helping one’s party succeed can yield personal gains such as a political job or even a presidential appointment. Although partisanship still motivates people to work long hours on political campaigns (often for little or no money), politics has long provided a way to make a living, whether as a nineteenth-century party worker or a twenty-first-century political consultant.
Yet, a crucial difference separates the party agent from the political consultant. Unlike the party worker of the past, consultants operate under a different set of incentives. Today, the profit motive guides the conduct of political work and shapes the character of our politics in a manner and to an extent that did not exist before the rise of the political consulting industry. With the organization of political work into commercial firms, consultants can hedge political risks by working for multiple clients and providing an array of commercial services, addressing the short-run needs of a candidate without sacrificing the long-run interests of the business. Whereas the personal fate of the political operative used to depend almost entirely on the electoral success of the party, today’s political consultants can lose an election without losing their livelihood.
The transition begins at the turn of the twentieth century when Progressive Era reformers embraced the idea of publicity as a way to challenge the power of the trusts and expose back-room deals to the light of day. Publicity subjected politics, and politicians, to careful scrutiny. However, the idea of publicity carried another meaning as well, as an orchestrated campaign of persuasion that could attract public support on behalf of a candidate, a cause, or a corporation. This dual meaning of publicity suggested a new kind of political work, one that depended on appeals to individual opinion rather than partisan identities or affiliations.
With the end of World War I, the progressive promise of publicity gave way to a postwar fear of propaganda. Rather than enlightened and informed, the experience of the war revealed a public that was easily manipulated and even misled. Consequently, many greeted novel methods of publicity and mass persuasion with skepticism or outright hostility. In response, publicity experts and would-be consultants claimed they were specialists in the modern science of behavior. Struggles over the control of political work subsequently played out in attempts to secure professional status as an expert reader and shaper of public sentiments. This professional claim dovetailed with a behavioral turn in the social sciences and the burgeoning academic study of public opinion. One early practitioner was Edward Bernays, a tireless promoter of public relations who worked hard to convince potential clients and the larger public that his techniques were ideally suited to the conditions of modern politics. To achieve his goal, Bernays cultivated close ties with prominent social scientists in order to achieve a degree of professional control over political work.
With the invention of radio, the ability to reach a vast broadcast audience occasioned the need for new sources of information about the effects of mass communication. This was especially the case in the burgeoning field of advertising as advances in market research and commercial polling gave rise to a new science of selling. The toolkit of modern business methods heavily influenced the modern business of politics. As politicians and presidents took to the airwaves, survey research offered a much-needed source of political intelligence especially suited to the radio age. In effect, as Sarah Igo explains, pollsters “transferred the techniques honed for selling soap and cereal from the buying to the voting public.” More than simply a way to measure public sentiment, surveys became an instrument to craft targeted appeals through a union of advertising and polling. Combining the art and science of politics was a critical innovation of the political consulting profession.
Despite these advances in polling and media, most early practitioners were unable to make a living from political work. An important exception was in California, where the team of Clem Whitaker and Leone Baxter hit upon a successful business model that overcame the uncertain and periodic nature of campaigns. Specifically, Whitaker and Baxter forged a lucrative business of politics by discovering new ways to organize business in politics. Through their firm, Campaigns, Inc., the team worked on behalf of various industry groups and trade associations to defeat candidates, ballot measures, and legislative proposals that threatened the financial interests of their clients. Their work had national implications. After Whitaker and Baxter defeated a proposal for universal health care in California, the American Medical Association (AMA) hired the pair to defeat Harry Truman’s plans for national health insurance. Stoking fears of “socialized medicine,” Whitaker and Baxter unleashed a media blitz that cost the AMA $3.6 million and earned Campaigns, Inc. almost $1.2 million in fees between 1949 and 1952.
Despite the important advances made by Whitaker and Baxter in the 1940s, it would take several decades more before a true business of politics emerged on a national scale. This lag points to an ongoing struggle over political work as the consulting profession slowly consolidated its control over campaign services. In the 1950s, Madison Avenue advertising firms took the lead in managing the national television campaigns for presidential candidates. However, this began to change in the 1960s as advertising agencies discovered that involvement in a presidential campaign might compromise relations with their commercial clients.
Advertising firms were ill-suited to the partisan nature of political work, and their exit from campaigns provided a crucial opening for specialists in political strategy and media to build a business of their own. In the 1970s, the political consulting industry took off, aided by a new campaign finance system that required candidates to document each and every dollar spent. In effect, consultants became a legal and legitimate way for politicians to spend money. Meanwhile, technological advances in video production and computing along with lower-cost communication and transportation made it possible for consultants to service a larger number of clients across the country and even around the globe. By the end of the 1980s, a profitable business had taken hold, and the term “political consultant” began to enter wide usage as a way to designate those who provided a range of specialized products and services to political campaigns.
The evolution of political work continues in our own time with the development of digital politics. The use of the Internet as a platform for raising money and the ability to leverage sophisticated data analytics to identify and mobilize armies of supporters have become staples of political campaigns in the twenty-first century. Unlike the advent of radio or the rise of television, however, recent advances in digital campaigning have occurred amid a highly commercialized market for political products and services. Rather than challenge the consultant’s control over political work, digital campaign tools are just another service to sell. Meanwhile, the consulting industry is consolidating into larger firms, and the business of politics itself is increasingly part of a global communications enterprise dominated by a handful of multinational conglomerates.
Adapted from Building a Business of Politics by Adam Sheingate with permission from Oxford University Press USA. Copyright © Oxford University Press 2016 and published by Oxford University Press USA. (www.oup.com/us). All rights reserved.