Taken together, candidates running for Congress in the 2018 midterms spent $2.6 billion on media. Much of this went into the pockets of media consultants, who captured roughly one-third of total expenditures, or $780 million. But these staggering amounts were not drawn equally from both parties.
New research by Gregory J. Martin, an assistant professor of political economy at Stanford Graduate School of Business, shows that these consultants charge Republican candidates a premium for their services. Specifically, Republicans pay about 30 cents more on the dollar than do Democrats. Or, put another way, contributions to Democratic candidates go 30% further in the advertising world than the same contributions to Republican candidates. The results are published in the American Political Science Review.
A party premium
The outsourcing of core campaign functions, like advertising, has become ubiquitous in politics. “And yet there has not been a lot of thought put into the consequences of this outsourcing,” Martin says. This lack of understanding led him and his colleague, Zachary Peskowitz of Emory University, to focus on media consultants. How profitable are they, and what kinds of candidates are the most profitable clients? As it turns out, “the most consistent predictor of profit margin is party affiliation,” Martin says.
To uncover this result, Martin and Peskowitz linked TV advertising outlays reported to Nielsen in the 2010, 2012, and 2014 election cycles with campaign expenditure data captured by the Federal Election Commission. This provided a picture of how much candidates were spending to place their television ads alongside how much (more) they were paying to media consultants. The difference between these two, in general terms, revealed consultants’ fees.
There are good reasons for a campaign to outsource their marketing efforts, Martin notes. Consulting firms possess expertise in producing advertisements and targeting the right demographics, and they likely get discounts in their negotiations with broadcasters. But these advantages are beside the point when considering the results. “Republican candidates pay higher effective prices to advertise on the same program in the same market on the same date than their Democratic counterparts,” he and Peskowitz write. “Republican media consultants appear to be working less hard on their clients’ behalf to negotiate the best prices for media time.”
The price of history
In some ways, a decision from 1960 explains this result. In the 1950s, commercial advertising firms were often called on to assist political campaigns, but candidates were not blind to the potential for electoral sabotage: Would an overwhelmingly Democratic ad company work as hard as it should if hired by a Republican candidate? To put these fears to bed, the Republican National Committee, in 1960, handpicked ideologically sympathetic ad executives to run an in-house shop, Campaign Associates. Over time, this became the standard; political marketing firms factionalized by party and ideology.
But this change didn’t eliminate the root of the problem: “The pool of people going into this work is centered in New York,” Martin says. “It is a generally liberal demographic–people involved in media–and so it is naturally more politically aligned with Democrats.” In short, there is a relative paucity of Republican-leaning media consultants. “Because of that, we argue that Republican candidates are paying more in compensating costs” since firms that cater to Republicans have less competition and therefore more market power.
Such polarity is not evident in the comparable world of lobbying, in which firms comprise a mix of partisan preferences and cater to both major parties. This difference, Martin says, is likely because lobbyists sell access, and access is valuable only if it is to the people in power — meaning whichever party currently holds sway. Consulting firms, on the other hand, are in the business of getting specific candidates elected. It is thus in their interest to signal intrinsic support for a particular type of candidate.
This Republican markup creates one obvious problem–a “hidden drag” on the party, as Martin says. In an equally funded race, Republicans are at a disadvantage when it comes to TV advertising. But the findings cast speculative light on more “interesting, and maybe worrisome, implications” that extend far beyond an individual race.
Though decades ago the RNC may have allayed concerns over explicit electoral sabotage, it’s not as though political candidates and consulting firms now have precisely aligned interests. Yes, candidates and consultants both want to win the race, but consultants also want to make money. This may skew what campaigns do.
For instance, if consultants push for TV advertisements, which are expensive for candidates and profitable for consultants, this will drive politicians to the fundraising treadmill. In turn, this takes time and money from work they could be doing: making policy, or meeting and talking with constituents. It can also shift policy conversations toward the idiosyncratic concerns of a handful of large donors. “If the profit motive is driving consultants toward more expensive choices, then this could have critical downstream effects on actual policy,” Martin says.
Another possible distortion is on the candidates themselves who decide to throw in a hat. Martin pointed to Mike Bloomberg and, more recently, Howard Schultz as prime studies. Their polling numbers are dismally low; they have the slimmest of odds as independents in a two-party system. And yet, “the existence of these firms has the potential to induce too many rich, outsider candidates into the field relative to what voters want,” Martin says. The firms do this through active encouragement by, for instance, producing overly optimistic forecasts of outsiders’ chances. “And these sorts of candidates are hugely important for defining the discourse of a campaign and what rises to the top of the agenda.”
At the end of the day, whether Democrats or Republicans pay more for TV advertising is subsumed by a larger concern: whether political consultants’ profit motives ripple out into the aggregate function–or dysfunction–of U.S. democracy.
This article was originally published on Stanford Business and is republished here with permission.