Agency Business Agency Models Media Planning and Buying

With ad spend set to hit $9bn for midterms, it’s a lucrative time for agencies

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By Sam Bradley | Senior Reporter

October 26, 2022 | 12 min read

The upcoming US elections boast the biggest war chest ever. We talk to agencies operating in the sector about how it is being spent.

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Over $6bn has been spent on campaign advertising so far this election cycle / Unsplash

This year’s midterm elections are already the most expensive election cycle in US history. By September, $6.4bn had been spent on advertising by campaigns and lobby groups looking to influence voters one way or another in hundreds of Senate, House, gubernatorial, state senate and local elections across America.

With weeks to go until election day, that number is likely to reach $9bn, according to specialist agency Assembly. And a fair amount of that has been spent with ad agencies offering their expert strategic and media counsel to campaigners.

Though the political advertising scene was dominated by a handful of specialist firms, more consumer-focused agencies are muscling in. We speak to three to find out what role they play in each race, how they avoid tension between politically neutral brands and firebrand candidates, and just why the sector is so lucrative.

Everyone has to pick a side

Agencies such as Blue State, Assembly, SKDK and Targeted Victory each offer specialized services to campaigns and political action committees (PACs) at every level of this November’s election cycle. Stagwell agency Targeted Victory works with Republicans, for example, while stablemates SKDK and Assembly offer services to the other sides of the aisle.

“Everyone in the political sector has to pick a side,“ says Zach Moffat, chief executive officer of Targeted Victory. “It’s the same way as with brands; you don’t get to work with both Google and Apple. You don’t get to work with both Ford and GM. You have to pick a lane.”

WPP-owned Blue State, meanwhile, works exclusively for Democrat clients. The business was originally founded by staffers from Howard Dean’s 2004 presidential run and later eased Barack Obama’s path to the White House, being acquired by the holding company back in 2010.

Tessa Simonds, managing director at Blue State, explains that it focuses “primarily on state-wide candidates” and a little on Congress. ”We’ve also done work on presidential cycles in the past,” she says.

Simonds joined the company fresh from working on senator Elizabeth Warren’s most recent tilt at the presidency; her colleague Brendan Summers worked on Bernie Sanders’s 2016 run for the Democratic nomination as caucus director in Iowa.

Stagwell agency Assembly kicked off its political practice under slightly different circumstances. The digital agency was hired by the Bloomberg campaign in 2019 to aid its bid for the Democratic nomination; the would-be candidate ended up spending around $500m on paid media. “It was, at the time, the largest political media buy in history,” notes lead political strategist Tyler Goldberg.

This year, it is working with 60 campaigns nationwide and a further 25 action groups.

Paid media, digital strategy and consulting

Since the ascensions of Barack Obama and Donald Trump – both fueled in part by grassroots fundraising – campaigns at every level of the American political landscape have looked to third parties to help coordinate their efforts to build a campaign war chest. But with voters considering a variety of races on election day, depending on their location (each House seat is up for grabs, but only a third of the Senate), it’s difficult to stand out.

“Political fundraising is a big part of our work and with fundraising comes paid media, both in terms of running ads to get people to donate to your campaign, as well as persuading voters to turn out and vote for you,” says Simonds. The agency also provides strategic services – building websites and digital assets, as well as advising on media strategy. One team at the agency created a website that tracks the participants of the Capitol riots and their involvement in contemporary campaigns.

“That’s a good example of taking campaign thinking and applying it here,” she says. It also provides ’general consulting’ – a conveniently vague term for helping to direct campaigns on the ground, or for hooking them up with a “brain trust” of relevant marketing consultants. “It’s basically having folks on our team who have the right expertise and can bring it to clients as they need it,” she says. Finally, there’s also a team that creates campaign ads for candidates – an area that Simonds says is “stuck in the past” and ripe for smarter thinking.

On the other side of the aisle, Moffat says Targeted Victory’s offering “runs the gamut,” providing fundraising support, making ad creative for candidates and directly consulting on a campaign. In contrast to Simonds, he describes the firm’s general consulting work as a wedge tactic that can lead to new business coming its way in the future.

“We have a relatively small general consulting practice and we use that primarily as a way to have really close relationships with candidates we think are the future of the party – so senator Tim Scott, congresswoman Young Kim, congresswoman Michelle Steel,” he says. “We are a service business, enhanced by digital transformation that creates the platform for success for someone to be able to go and raise money and have relationships and engage with voters.”

Recruitment bias

As you might expect, many staffers at Blue State, Targeted Victory and Assembly boast backgrounds in professional politics. Gorman was communications director for the National Republican Congressional Committee, while Simonds has worked on presidential, congressional and state campaigns.

“Politics is a draw for candidates,” she says, noting that it attracts recruits who would be bored only working on consumer-facing briefs. “You get to do work that is very mission-driven.”

Similarly, Targeted Victory makes a virtue of its center-right associations to pull in like-minded recruits. According to Moffat, it has hired over 170 new staff this year alone.

Campaign experience is necessary for the work, though that might be changing. Simonds notes that while “traditional agencies struggle with politics,” she’d like to see more influence from consumer advertising introduced into the political sphere. “It is very fast and there’s not a lot of thinking about creativity. It’s a fundamentally different business. But I think agencies can bring creativity into politics. I want to see campaigns investing a little more and having a creative perspective.”

The walls between the political and corporate worlds are thinner here, too. Some staff at Blue State work on both political and brand briefs and Simmons suggests she may someday return to campaigning. “I’ve done a lot of tours of duty, and I’m less interested in being full staff on a campaign. But that could change in a couple of years. I still have a taste for it.”

Conflicts of interest

Despite being dedicated political agencies, Targeted Victory and Blue State do have non-political clients. The latter works with several non-profit organizations, while the former markets its political nous to brands aiming to stay abreast of consumer habits.

“Across all verticals, political is only 50-60% of our business,“ says Moffat. “We work with brands, sometimes to provide a right-of-center perspective and sometimes entirely independent of politics because someone likes the speed at which we move, the speed at which we make creative, the insights we provide.“

Even with consumer brands’ aversion to electoral statements, he says the agency rarely encounters tension between its two income streams. “We’re very transparent on the front end. We’re very clear about what we are: you know what you’re getting.”

In Assembly’s case – the agency has many more brand clients than political ones – Goldberg says that its campaign practice is an asset, not an anchor. “This expertise and experience has a tangible effect on helping out clients, and if you didn’t operate in the political space, you wouldn’t have that.

“They want these insights for their overall media strategy. If you’re an advertiser who’s trying to advertise in Atlanta or Phoenix or Boston right now, you are seeing higher rates and less inventory than you would in a few months’ time; that has a practical and tangible effect on how and where you spend your money.”

His colleague Sara Pollack, vice-president of marketing, agrees. “We recognize the opportunity to tap into the data and say: ’These are the messages your consumers are hearing. It’s bipartisan expertise in a commercial setting.’”

Though WPP owns Blue State, Stagwell is the network most involved in US political advertising. That’s no mistake; chief executive and chairman Mark Penn was a political strategist and pollster for Democrat and Republican politicians (including both Hillary Clinton and Donald Trump, albeit years apart). Do the associations of its CEO dissuade candidates of either stripe?

“We have a full spectrum of Republican and Democrat [agencies],” says Pollack. “We play nice as a network. It’s not the challenge you would think it might be, based on his history.”

Money on the table

The flow of advertising cash into campaign cycles in the US is highly unlikely to slow down. It has been on a steady increase since a 2010 Supreme Court ruling (Citizens United) removed prohibitions on campaign spending by corporations, non-profits, unions and PACs.

“It changed how we think about raising money in elections,” says Simonds. “Because a lot more money could come into campaigns, it became important to think about how we bring in money that isn’t ‘dark money’. If our Republican opponents have millions and millions that have been given to them, how do we build fundraising operations based on grassroots donors that aren’t swayed by corporate interest but are based on real people?”

Naturally, that has created demand for a more professional approach to fundraising and created business for agencies supplying it. Assembly estimates that campaign spending will reach $9bn, a 20% increase on the last cycle and a 200% rise on the 2018 midterms. “Until there’s meaningful and really tangible campaign finance reform,” says Goldberg, “the amount of money is going to continue going up.”

While more established practices such as Blue State and Targeted Victory have been around for years, agencies like Assembly see major opportunities on the horizon – Goldberg says the alternative means leaving money on the table. “You can no longer ignore political and leave it to these cast-off parts of the sector,” he adds.

A matter of weeks away from election day, it’s no surprise that it’s a busy time at Targeted Victory. But Moffat notes demand for its services is much higher. “We have a lot of incomings now. It wasn’t always that way – when I started this, we were pitching every time. Now we have a body of work that speaks for itself.

“Professionalization is coming to politics. That’s why we connect with [parent company] Stagwell. We’re doing to politics what they are looking to do to the holding company industry writ large.”

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