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Lachlan Brook
Lachlan Brook 19 February 2016

How Do Presidential Candidates Spend $1 Billion?

I came across this article recently in the National Journal written by Stephanie Stamm, and a couple of things really stood out to me. One of the biggest spend categories is “digital advertising.” The average American spends 11 hours a day on electronic media Four years ago, $750 million to secure a second term in the White House. "that’s enough money to send a man to the moon"

So how can a Presidential Candidate remain truly independent of big business given the amount of money required to run for office? I was keen to see if there was any meaningful data available given that although both countries are democracies (although very different models), given similar land mass (7.62 million square km for Australia - 9.16 mskm for The united States of America), and, vastly different populations - 22 million for Australia versus 318 million for USA. What could we learn given politics in America makes far greater use of all media platforms than Australia, and what part will Social Media play in managing communications between candidates and their constituents? The potential for parties to get un spun unbiased opinions, and real time results of public opinions and "hot topics" A lot of work is being done in this pace by the likes of Microsoft in the US and a little known company here in Australia that is rumoured to have internet giant Google watching very keenly called Public Democracy.

As the long march to 2016 begins — 14 candidates declared, more coming soon — analysts already expect total fundraising to break records. But how can one campaign possibly spend that much money? To answer that question, National Journal used data from the Federal Election Commission and The Centre For Responsive Politics to break down President Obama’s 2012 presidential campaign expenditures. As it turns out, campaigns spend money on a lot of things: everything from event spaces to travel to consulting — not to mention advertising and video production. Thanks to the Centre, we can translate often-fuzzy Federal Election Commission filings into consistent categories to see the bigger picture. What we found: Elections are all about advertising. A few companies receive the lions share of campaign funds. This cycle independent expenditures by super PACs are poised to shoot higher than ever — possibly outspending campaigns.

Most of the money is spent on advertising Media spending dominated Obama’s budget, making up 65 percent of the 2012 campaigns $736.9 million in expenditures. This includes outlays such as TV and radio airtime, digital marketing, and print advertising. One of the largest chunks is “digital advertising.” The average American spends 11 hours a day on electronic media, including computers and smartphones — and presidential contenders have caught on. In 2008, Obama spent $21.1 million on digital ads. Only four years later, that more than tripled to $74.5 million — making up 10 percent of his total spending. If this trend continues, a 2016 presidential candidate could easily spend up to $260 million in this category. Sixteen years ago, former President George W. Bush only spent $120,000. A few companies are making a lot of money So who is benefiting from all this campaign spending? Mostly, it’s vendors in the media industry. Advertising strategy firm GMMB was paid $389.5 million dollars — more than any other Obama for America vendor. But big spending wasn’t limited to media. AB Data, a direct marketing consulting group, made $29.8 million. DNC Services Corp, or better known as the Democratic National Committee, made $10.5 million across two categories — $9.1 million in the strategy-and-research category and $1.4 million for administration services. American Express made $2.3 million. As for travel expenses, United Airlines earned over $1.1 million during the 2012 election cycle from Obama alone. Delta Airlines, an airline runner-up, was paid $870,000. The campaign racked up bills totalling $163,000 at Holiday Inn. Obama’s apparent pizza of choice? Dominoes, where his campaign spent nearly $9,300. Surprisingly, staffers spent only about $500 at Starbucks. And then there was the $128,000 paid to “Kitty Purry,” which appears to be Katy Perry’s production company. No word on what that was for. I ndependent expenditures predicted to sky rocket Except for a slight dip in the most recent presidential election cycle — spending was down 12% — campaign expenditures have consistently increased from one presidential race to the next, as have expenditures from independent groups supporting or opposing a candidate.

While there are many reasons that could explain why campaign spending decreased in 2012, two possibilities paint a picture as to what we saw then, and what we might see in 2016. First, 2012 had seven fewer candidates than 2008. Obama, the incumbent, ran alone against a crowded GOP field, potentially reducing spending on the Democratic side. Second, 2012 was the first presidential cycle after the Citizens United v. FEC Supreme Court decision, which removed limits on campaign spending by non-profit groups, giving rise to the now-com­mon “super PAC.” The 2012 election cycle saw over $580 million dollars in independent expenditures, an increase of 217 % from 2008. If 2016 saw the same growth, independent expenditures would reach over $1.8 billion. The 2016 election is still young, and, if history repeats itself, a host of surprises between now and Election Day will change the way the current crop of candidates campaign. But two things appear certain: The money spent on this election will break records -and we won’t get to the moon.

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