Cambridge Analytica, the Anglo-American data and behavioral science firm that worked for Ted Cruz and Donald Trump–and that sparked an investigation in the U.K. and inquiries by U.S. lawmakers–has announced two initiatives in the past year that highlight some of the newer techniques in targeted advertising and the complex relationships that surround them.
Since last year’s presidential campaigns, the company has sought to expand further into targeted, or addressable, TV, an emerging type of data-driven ad technology that marketers and political campaigns can use to know not just what key audiences and voters like on TV and in other media, but also to determine what particular messages to show them and when.
In an interview last month at the Advertising Week conference in New York, Duke Perrucci, Cambridge’s chief revenue officer, described the potential of new digital TVs and set-top boxes, and a future when targeted ads take up your whole screen. “Because you know the people in that home, and because you buy commercially available data, you know a lot about those people—there’s tons of data out there—now you can send those targeted ads specifically to those homes, the same way you would to a Facebook profile or to an Instagram account,” he said.
While campaign dollars increasingly flow to internet ads–last year, spending on digital advertising eclipsed TV for the first time–television remains the ground zero of big ad campaigns, and the ad targeting and data capabilities in TV are starting to catch up to what’s used online. The idea is to allow candidates and brands to reach only those viewers who meet a desired demographic (e.g. potential buyer of motorcycle insurance). Rather than buying ads the old fashioned way during a certain program (a college football game, for instance) addressable TV allows advertisers to purchase an audience (like undecided Republicans).
Cambridge’s efforts in addressable TV began last year. In October 2016, during the final stretch of the presidential campaigns, the company announced a partnership with cross platform analytics company ComScore to merge Cambridge Analytica’s “behavioral psychology and data analytics platform” with ComScore TV data, yielding insight “into which programs, stations and dayparts deliver the highest densities of the targeted audiences that the company’s clients seek to influence,” according to a statement about the partnership.
Typically, Cambridge’s political work has drawn significant support from the conservative mega-donor Robert Mercer, and much of its work in U.S. elections has been for candidates Mercer supports. Steve Bannon, Breitbart News CEO and former advisor to President Trump, sat on Cambridge’s board of directors until late last year. But the TV data effort, as well as a mobile data tie-up in Mexico, have links with another lesser-known American billionaire family, one whose large campaign contributions tend to support Democrats.
Charlie Ergen, founder of the broadcast satellite company Dish and the satellite equipment maker EchoStar, is said to be the richest man in Colorado, with a reported net worth of $18.8 billion. He is also a registered Democrat who was once a bundler for long-time friend John McCain ahead of his presidential bid in 2008. In 2016, Ergen and his wife hosted Clinton for a fundraiser at their home, where the candidate collected at least $750,000.
Last October, as part of the partnership with ComScore, viewer data from 52,000 households, including some Dish households, was set to eventually flow to Cambridge Analytica. ComScore taps Dish data thanks to ComScore’s acquisition of analytics company Rentrak, in January 2016. Dish has had close ties with Rentrak since 2008, and, after it acquired 7% of the company in 2012, it agreed to provide Rentrak with exclusive use of its set top box data.
“DISH is a major partner that helped us change the measurement landscape by allowing massive and passive television measurement across a national footprint,” comScore’s CEO, Serge Matta, said in a 2016 statement. A spokesperson for ComScore was unable to describe the outcome of the Cambridge Analytica partnership. Representatives for Cambridge Analytica and Dish declined to comment for this story.
In September, Cambridge’s new brand-focused unit, CA Commercial, announced its own ad targeting TV product, SelecTV, that it said it would roll out in the U.S. and U.K., followed by additional countries and markets in coming months. Available in more than half of all 119.6 million U.S. TV homes, and in every U.S. market, addressable TV “has finally reached a scale that has become very attractive to performance marketers,” Alexander Nix, Cambridge’s CEO, said in a statement.
Born out of a recent campaign to promote a new un-named cable TV show, the technology, Nix said, has led to a “huge tuning uplift” over traditional age and gender targeting, an effect that is “additionally amplified when homes are exposed to both desktop and mobile advertising.” It’s not known yet if or how Cambridge intends to use addressable TV data during upcoming political campaigns, for instance, during the 2018 U.S. midterm elections.
Dish is now America’s second-largest satellite TV operator and fourth-largest pay TV provider, and it’s also at the forefront of the ongoing battle to monetize set top box data to reach voters—one that, between digital and TV and a mix of the two—is expected to grow even hotter next year. In September, the company launched a new targeted TV ad program in partnership with Volvo, which can deliver targeted ads simultaneously on Dish and on the company’s Sling TV over-the-top service.
Dish may have good reason to be casting about for innovative ways to bolster its TV business. While it earned $15 billion in revenue in 2016, its stock price has fallen more than 20% since July, and amid historic declines in TV viewership, it has seen a rapid drop-off in customers: during the third quarter, Dish lost another 129,000 pay TV subscribers, out of a nationwide base of around 13.7 million.
On a recent phone call with analysts, Ergen pointed to existing advertising as part of the problem. Traditional TV, he said, is “suffering declines in part because it’s not as good a product. It’s more expensive. Rates have gone up as viewership goes down. And the commercial load–you’re talking about 30% of the viewing minutes are commercials. That’s an unhealthy viewer experience,” Ergen said. “There’s things as an industry we can do to change that. If the industry starts thinking of creative ways to compete, that market can stabilize.”
The quest to target voters through TV is decades old and bipartisan. But practitioners say it was the Obama campaign in 2012 that signaled a breakthrough in using both social media and set-top box data in an effort to more precisely identify and persuade undecided voters. Rentrak, which is nonpartisan, collected the data and hired a third party to “anonymize” it so that the Obama team would only know that the information was coming from a set-top box of somebody on the persuadable list; personally identifying information would be stripped away.
In the 2016 election, however, the Clinton campaign chose to build their own TV buying and targeting strategy, not to use a more advanced version of the Obama approach. “It’s frustrating when you build something that is available to both sides, and the side you personally support doesn’t use it,” Carol Davidsen, Obama’s TV ad guru, and now a comScore executive, told AdAge in February. (It’s not clear if Cambridge used the comScore system during its work for the Trump campaign.)
US spending on addressable TV ads doubled in 2015 and is set to double again this year, but it’s still only a tiny piece of the ad pie: according to eMarketer, targeted TV ads will account for a mere $2.25 billion, or just under 3%, of all TV spending in 2018, and $3 billion in 2019. Among the efforts to grow those numbers is OpenAP, a system created by Viacom Inc., 21st Century Fox Inc. and Time Warner Inc.’s Turner that aims to standardize the targeting categories ad buyers can increasingly reach through TV. Google and Facebook are also investing in targeted television ads.
“TV is still the strongest media you’ve got to get your message out, but it’s got a lot to learn from digital,” Perrucci, who has been leading Cambridge’s foray into the commercial sector, said at Advertising Week. “Why not take everything we know about the audience and use that to drive much more targeted TV?”
But the combination of otherwise anonymous data on people’s TV viewing habits with social, demographic, psychographic, and other personal data is a growing privacy concern, argues Jonathan Albright, research director at Columbia University’s Tow Center for Digital Journalism. Few voters even know their watching patterns are being watched, whether by Dish or another provider.
“If you know [a voter] watch[es] Fox News at 5 p.m. every day and you also know from that addressable TV data—if someone has DirectTV, TiVo, whatever–how much of Fox News they watch, if they watch all of it or not. That kind of resolution is incredible,” he said. Most people don’t realize “that you can place and you can target like that to TV viewers.”
Many cable operators use opt-out rather than opt-in consent, virtually guaranteeing that many citizens are unaware of how their data is used. In June 2016, communications advocacy group Public Knowledge filed complaints with the FCC and FTC over the technology, and singled out AT&T, Cablevision, and Comcast as the worst offenders.
The group’s FCC complaint asserts that cable and satellite providers do not adequately obtain customer consent to use customer data, while the FTC complaint argues that the industry’s use of customer data without appropriate disclosures or opt-in consent amounts to an “unfair and deceptive” practice that’s in violation of the Federal Trade Commission Act.
A Cambridge-Ergen Connection In Mexico
TV isn’t the only domain where the Ergen family’s business intersects with the Trump data contractor. This summer, Cambridge announced that it would send content to Mexican phone subscribers in advance of their 2018 presidential election through an app that gives users ad-sponsored airtime or mobile internet.
In Mexico, Cambridge Analytica signed an agreement with Pig.gi, an app in use there and in Colombia, in advance of next year’s presidential elections. Pig.gi offers users free airtime and/or email service on mobile phones in exchange for receiving sponsored content. It will allow Cambridge to collect information on and deliver advertising to the phones of 850,000 Mexicans; several political parties have expressed interest in the tie-up.
Among Pig.gi’s investors are Charlie Ergen’s son, Chris Ergen, who’s worked in international business development at Dish since 2014, as well as Variv Capital, which has a joint venture in Mexico with Dish, and Pig.gi’s founders, Colorado brothers Joel and Isaac Phillips, who are connected with Chris Ergen in several vaporous businesses.
Pig.gi, which is currently available for Android in Mexico and Colombia, says its users have seen advertising content half a billion times. “We’re thrilled to be partnering with the app so that their partners can get the right message to the right people at the right time,” Cambridge Analytica CEO Alexander Nix says on the company’s website.
Many Mexicans are “undecided and unmotivated,” Brittany Kaiser, Cambridge’s vice president of business development, told Bloomberg. “There’s a huge opportunity in this country to find the issues that are important for people and actually turn people out to vote.”
Meanwhile, Kaiser, who recently updated her Facebook page to say that she is living in Mexico City, lists Chris Ergen as one of her friends on Facebook. (After an emailed inquiry, the page is no longer publicly visible.) In February 2015, Kaiser was a moderator at a Washington meeting on “Digital Diplomacy” organized by the Digital Future Forum, a company started by Chris’s co-investors in Pig.gi, Joel and Isaac Phillips.
Cambridge is also staffing up across Mexico in advance of next year’s elections. As BuzzFeed reported, Arielle Dale Karro, head of operations in Mexico for Cambridge Analytica, posted a job listing in the Facebook group “Foreigners in Mexico City” on October 23, seeking staff for gubernatorial campaigns in seven of Mexico’s 31 states: Chiapas, Guanajuato, Morelos, Puebla, Quintana Roo, Tabasco, and Veracruz. The company is also looking for someone to work in Mexico City. As of last week, however, Cambridge doesn’t appear in the National Registry of Suppliers of the National Electoral Institute (INE), which is a requirement for any firm that wants to be hired by a political party in Mexico.
The TV and mobile app projects aren’t the only convergence of Cambridge Analytica with the Ergen family. In 2010 Cambridge’s Swiss partner Nicolas Giannakopoulos became a co-shareholder in a company with Charlie Ergen. Giannakopoulos, who describes himself as “a private consultant in security and investigation,” says the company was meant to distribute Dish content on the internet outside the U.S. Ergen joined Giannakopoulos’s firm, CH-Communication SA, six days after its founding on July 22, 2010, and resigned nearly a year later.
That year, Giannakopoulos, a Swiss and Greek citizen was also working with SCL Group, the parent company of Cambridge Analytica. (SCL has a complex capital structure depicted here.) Until recently, one of his stable of Swiss companies shared an address and phone number with SCL’s Geneva office; the address disappeared from SCL’s website after the Sarawak Report questioned his links to SCL’s work in Malaysia. Asked about his activities for SCL in Switzerland by Sarawak Report, Nicolas Giannakopoulos claims to being “their partner for a long time.” But, he said, “the truth is that I have not done anything yet!”
While Charlie Ergen hasn’t been affiliated with CH-Communication for six years, son Chase Ergen is connected with another Giannakopoulos firm, the Organized Crime Observatory. In a January 2015 announcement, OCO said that Chase Ergen was being appointed Special Envoy for Dominica and St Kitts-Nevis, where Ergen reportedly holds a passport. Neither Chase Ergen nor Giannakopoulos responded to emailed requests for comment.
In recent weeks, Cambridge has been thrust further into the political spotlight amid ongoing investigations about Russian interference in the 2016 elections. The company is now turning over to investigators documents related to its role in the 2016 campaigns, while the U.K. Information Commissioner is examining its role working for Leave.eu during a pro-Brexit campaign. Cambridge has issued contradictory statements about whether or not it used personality targeting ahead of the U.S. election and whether it worked for Leave.eu and in what capacity. And perhaps most intriguingly, it was reported last month that Cambridge’s CEO, Alexander Nix, contacted Julian Assange offering his help in releasing Hillary Clinton’s allegedly missing emails.
Cambridge’s current work and partnerships are more complicated and less seductive than a narrative of evil Republican billionaires or Russian agents funding demagogic appeals on social media. They are a reminder that the quest for data and the power that comes with it is increasingly independent of partisanship or ideological belief.
Ann Marlowe, a visiting fellow at the Hudson Institute, is a writer and financial investigator in New York. Follow her on Twitter at @AnnMarlowe. The author wishes to thank journalist Wendy Siegelman for her research and insights. Alex Pasternack also contributed reporting.