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 These firms - mostly small, partisan and based in Washington and
surrounding suburbs - have grown in sophistication since the last
presidential election in 2012. A niche sector in a multi-billion
election industry, they are poised to play a much bigger role in
2016 as digital ads assume more importance and change the way
political money is spent on advertising. (Graphic:
http://reut.rs/1E6Ya5E)
The companies, typically privately held and staffed by 30 to 100
people with engineering and developer backgrounds, will operate in
the background of election campaigns. But their influence will
likely be felt in millions of households as they help candidates
tailor online adverts for specific groups of voters.
Their analytical wizardry enables them to "slice and dice" the
electorate so precisely that they can zero in on voters in a single
apartment block. A candidate's ability to micro-target likely voters
with adverts on issues they care about is crucial in a modern
American political campaign.
Firms that target voters with digital ads are multiplying, in some
cases seeing the number of both clients and employees triple each
two-year election cycle, interviews with multiple firms and reviews
of Federal Election Commission records show.
 Some of the companies told Reuters they anticipate hundreds of
campaigns, ranging from presidential to school board, to sign
contracts with them.
Washington-based DSPolitical expects to double in size to 60
employees in 2016 to cope with the increased business, Jim Walsh,
DSPolitical’s co-founder, said in an interview.
When it launched in 2011 it had a hard time convincing candidates
that its ability to target voters with a precision unheard of in
prior races was anything other than a sideshow to the traditional
advertising strategies that focused on television, radio and
newspapers, he said.
But by 2014, the firm, which works mainly with Democratic and
progressive groups, had done more work in one month than it had in
the whole 2012 election cycle.
HOW IT WORKS
Digital targeting works like this: First, partisan data firms, like
i360 and Data Trust on the right and Catalist and TargetSmart on the
left, compile detailed voter databases and scrutinize them for
demographic and geographical information on 190 million registered
voters.
Next, digital targeting firms like DSPolitical, CampaignGrid, and
Targeted Victory, map the voter datasets against commercially
available data like Internet histories and real estate and tax
records.
So, a candidate attempting to reach environmentalists in Detroit
could, for example, send online ads to specific registered voters in
the Detroit metro area who had typed “Honda Prius” into Google.
Predictions for 2016 show online advertising will consume only 8
percent of media budgets, or $955 million. But the growth has been
explosive - up from $270 million in 2014 and just $14 million in
2010, according to Borrell Associates, a research firm that tracks
advertising.
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"2012 WAS REALLY CRUDE"
“Television is still the most effective way to get your message out
there,” said Vincent Galko, a consultant for Republican congressman
Ryan Costello’s winning bid for the U.S. House of Representatives in
2014. “But when you have a finite budget and expensive market,
targeting online and through social media is very effective.”
Costello’s campaign hired CampaignGrid, based in Fort Washington,
Pennsylvania, a political ad targeting firm that has also worked on
New Jersey Governor Chris Christie’s gubernatorial campaigns.
Identifying the total number of firms that offer clients targeted
digital advertising and consulting work is complicated, however.
Many traditional advertising agencies now offer some form of
targeted digital work, as well as campaign consultant
subcontractors. As a result, measuring growth of this cottage
industry is tricky.
Some of the largest strides in digital advertising have come from
the right, which worked quickly to catch up after Democratic
President Barack Obama’s 2012 campaign dominated advertising online
and on social media like Facebook.
“2012 was really crude, because our side didn’t do so well,” said
Michael Palmer, president of i360, the data company backed by
billionaire brothers Charles and David Koch. Since then, the firm
has focused on expanding and refining its data to narrow the
technological gap between Republican and Democratic campaigns.
i360 billed candidates and political committees more than $23
million in the 2014 congressional election, FEC data shows, and now
delivers advertising so personalized that neighboring households can
watch the same television program but see completely different ads
based on their political affinities.
“Think of how much money is wasted running an ad during a sports
program to people who aren't registered to vote,” said Lindsay
Conwell, vice president of accounts and media at i360. “This may be
more expensive, but it’s more effective.”
(Editing by Ross Colvin)
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